PricewaterhouseCoopers, the firm of forensic auditors hired by the Federal Government to probe the Nigerian National Petroleum Corporation, has indicted the corporation of making double subsidy claims on petrol and kerosene.
“Our examination of the PMS and DPK import verified by PPPRA revealed that some discharges were apparently verified and subsidy advised to NNPC more than once,” the report stated.
PwC alleged “repeated subsidy” for PMS amounting to N3,709,879,190 ($23,954,796) and another “repeated subsidy” for DPK amounting to N6,169,502,266 ($39,836,652). It added that the there was another $36.05m “over-statement” in PPPRA’s PMS subsidy payment advice to the NNPC.
It also called for a review of the current NNPC Act to make it pay all revenues accruing from crude oil sales into the Federation Account.
In the final report made available by the government on Monday, the auditors said the the corporation over-claimed $980m (N19.3bn based on the interbank exchange rate of N197 to a dollar) as subsidy on Premium Motor Spirit and Dual Purpose Kerosene between January 2012 and July 2013.
The report stated that the NNPC had capitalised on lapses in the current law to spend part of the crude oil sales proceeds without limit or control.
The report stated, “We recommend that the NNPC Act be reviewed as the content contradicts the requirement for the NNPC to be run as a commercially viable entity. It appears the Act has given the corporation a blank cheque to spend money without limit or control.
“This is untenable and unsustainable, and must be addressed immediately. The corporation should be required to create value and meet its expenses entirely from the value created. Proceeds from the FGN’s crude oil sales should be remitted entirely to the Federation Account. Commissions for the corporation’s services can then be paid based on agreed terms.”
The auditors recommended that the NNPC’s model of operation must be urgently reviewed and restructured, as the current model, which had been in operation since the creation of the corporation, could not be sustained.
The report stated, “The accounting and reconciliation system for crude oil revenues used by government agencies appears to be inaccurate and weak. We noted significant discrepancies in data from different sources. The lack of independent audit and reconciliation led to over-reliance on data produced from the NNPC.
“This matter is further compounded by the lack of independence within the NNPC as the business has conflicting interests of being a stand-alone self-funding entity and also the main source of revenue to the Federation Account.”
The Auditor-General for the Federation had on February 5, 2015 released some highlights of the report in which PwC auditors recommended that the NNPC and its subsidiary, the Nigerian Petroleum Development Company, should refund to the Federation Account “a minimum of $1.48bn.”
PwC was last year hired by the Federal Government to carry out the forensic audit of the NNPC following an allegation by the former Governor of the Central Bank of Nigeria, Lamido Sanusi, that $49bn was not remitted to the Federation Account by the corporation.
“Our review of the subsidy documentation revealed that the subsidy due to the NNPC between January 2012 and July 2013 on PMS and DPK imports was $8.99bn compared to the $9.97bn stated by the reconciliation committee,” the auditors’ report stated.
According to the report, the difference was due to the exclusion of October 2011 to December 2011 subsidy claims of $1.2bn, which did not relate to the review period of January 2012 to July 2013; $0.13bn increase in PMS subsidy claimed for the 19-month period; and $0.09bn increase in kerosene subsidy claimed for the period.
The report also revealed N5.6bn ($36.05m) over-statement in the PPPRA’s PMS subsidy payment advice to the NNPC.