LAWMAKERS were stunned yesterday to learn that $22.8 billion oil proceeds did not reflect in the books of the Nigeria National Petroleum Corporation (NNPC).
The Nigeria Extractive Industries Transparency Initiative (NEITI) made the disclosure at the Hon. Muraina Ajibola- headed House of Representatives Joint Committees of Petroleum (Upstream), Petroleum (Downstream) and Justice, investigating the allegation by a Swiss- based Non-Governmental and Advocacy organisation, Berne Declaration, that two Swiss oil trading companies – Vitol and Trafigura – in connivance with the NNPC, skimmed the country of about $6.8 billion in two years.
In a 29-page presentation before the joint committee, NEITI Executive Secretary, Hajiya Shamsuna Ahmed, said: “These transactions, which sum up to $22.8 billion, are off balance sheet items (not disclosed in NNPC’s Audited Financial Statements). The implication is that there may be significant contingent liabilities to the Federation that are not being disclosed.”
According to her, the funds are from the NNPC’s alternative funding/financing arrangements with its Joint Venture partners in form of third party financing from external financial markets and Modified Carry Arrangement (MCA), which are loans from existing JV partners (international oil companies).
NEITI faulted the alternative funding transaction entered into by NNPC on behalf of the Federal Government and recommended that “there is, therefore, the need for transparent disclosure of all alternative funding arrangements in the audited financial statements (AFS) of NNPC.
NEITI also said that $1.73 meant for Joint Venture cash calls had been diverted by NNPC.
“Non cash call items totaling $1.73 billion were financed from the CBN/NNPC JP Morgan Chase Cash Call Dollar Account. This reduced the amount available for funding JV operations with the attendant implications of NNPC seeking alternative funding arrangements to fund cash call shortfalls,” NEITI said.
The organisation said the practice should be discouraged and that the NNPC should spend the money on what it is meant for.
The revelation came as the extractive transparency organisation indicted the national oil corporation over the 2013 Berne Declaration report, alleging an $6.8bn fraud through connivance between the NNPC and some Swiss oil trading companies.
According to NEITI, the allegation by the Swiss-based organisation “has substance”.
Answering a question from a member of the committee, Hon. Sunday Karimi, Mrs Ahmed said: “We were not here yesterday (Tuesday), but someone said the GMD NNPC said the Berne Declaration document was baseless. But we think it has quite a lot of substance in it.
“If it is taken for what it is, then what we need to do is bring greater transparency and better disclosures. Then it will be a useful process.”
The position of the NEITI is in sharp contrast to that of the Group Managing Director of the NNPC, Andrew Yakubu who said on Tuesday that the claims of the Bernes Declaration “are baseless and without material substance”, requesting that the committee members “set it aside in its entirety”.
At Tuesday’s hearing, the NNPC said its selection of traders “has standard criteria, which evaluate buyers’ facilities, volume of transactions, turn-over and financial health of the companies.”
It was, however, revealed during Tuesday’s proceedings that for the year 2011, 500,075,239.3 million litres were under supplied by four oil trading companies and Nigeria is losing about $8 billion every year through a swap agreement entered into by the NNPC.
NEITI yesterday said it is of the opinion that the NNPC cannot manage its 445 barrels per day crude oil allocation.
The NEITI boss recommended that “the 445,000 barrels per day allocation should be reviewed to the actual refining capacity of the refineries” and that the Federal Government should consider privatisation of the refineries.
She said the refineries are performing at far below their name plate capacities and that the operational and overhead costs are the same, irrespective of the volume of production.
Kingsley Moghalu, Deputy Governor (Operation) at the Central Bank of Nigeria (CBN), answering a question from the committee, said the CBN would check its books to see if it can find any transaction relating to the $6.8 billion allegation.
He said: “We take note of the Berne Declaration. We will look at our records and see if there’s anything relating to it and get back to the committee.”
