The Nigeria Extractive Industries Transparency Initiative on Tuesday called on the Federal Government to urgently recover the over $21.778bn and N316bn unremitted funds meant for the federation but allegedly held up by the Nigerian National Petroleum Corporation and its subsidiaries.
It stated that if recovered, the funds could be used to finance the country’s Economic Recovery and Growth Plan, adding that a summary of its independent reports of the extractive industry showed that outstanding remittances meant for the Federation Account running into several billions of dollars were sitting at the national oil firm.
In a policy brief, which focused on unremitted funds, economic recovery and oil sector reform, NEITI said the recovery of the unremitted funds was more than enough to jump-start the economy.
“It is not right for government agencies to withhold funds meant for everybody, no matter the excuse they provide,” the Executive Secretary of NEITI, Mr. Waziri Adio, said during a briefing at the agency’s office in Abuja.
The agency in its policy brief, stated, “Findings from a series of audits of the oil and gas sector carried out by NEITI show that the NNPC and its upstream arm, Nigerian Petroleum Development Company, have failed to remit $21.778bn and N316.074bn to the Federation Account.
“These are amounts due from three main sources: Federation assets divested to the NPDC and NPDC’s legacy liabilities; payments for domestic crude allocation to the NNPC; and dividends from investment in Nigerian Liquefied Natural Gas Company paid to but withheld by the NNPC. Recovery of these funds will significantly enhance government’s fiscal position in the short term.”
NEITI said the Federal Government should go beyond recovery of the funds to putting in place adequate measures to ensure the revaluation of the assets divested to the NPDC to determine the actual market prices, with a view to recovering the full value of the assets and securing optimal benefits from them.
It said the government should review the relationship between the NPDC, NNPC and the federation to determine and establish effective lines of accountability of the corporation’s subsidiaries, and determine optimal mode of operation in line with global best practices.
It added that the government should review the process of acquisition of Oil Mining Licences by the NNPC and NPDC to ensure that long-term net positive value was realised given the availability of alternative economic options.
A breakdown of the unremitted funds of the oil and gas industry over the years include outstanding payment of $1.7bn arising from the transfer of eight OMLs from Shell Petroleum Development Corporation and the sum of $2.2m from four OMLs by Nigeria Agip Oil Company to the NPDC.
NEITI said the NPDC had yet to pay for these major national assets that were transferred to it for its commercial operations.
Also contained in the breakdown of unremitted funds was the cash call paid on the transferred OMLs amounting to about $148.28m.
The agency stated that this was in addition to legacy liabilities amounting to $1.5bn and the sum of $15.8bn unremitted to the Federation Account from accrued NLNG dividends between 2000 and 2014.
The agency recommended a comprehensive review of the transactions to conform to EITI’s accountability principles.
It said, “NEITI’s review of transfer of the country’s oil assets to the NPDC also shows that these decisions were not underpinned by sound economic judgment. Although the NPDC was established to foster indigenous participation.” in the upstream sector, it is not really able to produce at substantial levels on its own.
“In mid-2006, total output from its wholly owned production was just 10,000 barrels per day. On the other hand, production from its service contract agreement with Agip was 65,000bpd. Reasons given for the NPDC’s disappointing performance include undue interference by the NNPC, inadequate financial structure, and inability to source project finances.”
On the NLNG dividends, NEITI stated that while there was evidence of payment of dividends from the NLNG to the NNPC, there was no similar evidence to show that the corporation remitted the dividends to the Federation Account as required by Sections 80(1) and 162(1) of the Constitution.