From Uche Usim, Abuja
Nigeria lost a whopping $723 million of refined petroleum products in 2015 to faulty Offshore Processing Arrangement (OPA), the Nigerian Extractive Industries Transparency Initiative (NEITI) has revealed. The disclosure was made by its Executive Secretary, Waziri Adio, in a recently released audit report.
According to him, “the loss means that the value of refined products the country received through OPA was less than the value of the crude given by $723 million, even after allowances had been made for costs and margins.”
Adio further revealed that the President Muhammadu Buhari administration cancelled the OPA in November 2015 for being uneconomical. “However, there was an outstanding liability of $498 million by companies contracted under OPA from under-delivery of imported products,” he added.
The NEITI boss also revealed that $90 million was lost through a practice where NNPC used a revised/lower pricing option at the point of payment instead of the higher price at the point of purchase. The report states that NNPC has stopped the practice of double valuation with the coming of the present administration.
“NEITI recommends close monitoring of the Direct Sale Direct Purchase (DSDP) arrangement that replaced the OPA to ensure the country is not being shortchanged. It also calls for government to recover the $498 million OPA liabilities from the affected companies,” Adios stated.
On the legacy liabilities of the Nigerian Petroleum Development Company (NPDC), the upstream arm of NNPC, Adio said it was reduced from $1.45 billion and N80 billion in 2014 to $757 million and N68 billion in 2015. “However, NPDC incurred liabilities of $822 million and N9.6 billion in 2015, bringing its total liabilities at the end of 2015 to $1.5 billion and N78 billion,” he said.
The report also showed that NPDC promised that by December 31, 2017, it will pay the balance of $1.7 billion it owes the country from the eight Oil Mining Licenses (OMLs) divested to it from the Shell JV between 2010 and 2011.
Recall that the OMLs were valued at $1.8 billion, which is believed to be discounted and that NPDC paid only $100 million. The report also showed that the valuation for the four OMLs divested to NPDC from the NAOC JV in 2012 was revised down from $2.25 billion to $1.55 billion by DPR. NPDC claims that the country owes it $95 million, having lifted oil from the divested assets and received payments from gas proceeds between 2012 and 2015.
NEITI, however, recommended that NPDC should pay its outstanding liabilities and that the basis of the revaluation and mode of payment of the divested assets be examined to ensure that the country is not shortchanged.
The report also revealed that between 2011 and 2015, Nigeria earned a total of $268.8 billion from mining and sales of oil and gas from its fields in the Niger Delta. In 2011, Nigeria made $68,442,328 billion from oil sales, and earned $62,944,356 billion in 2012, recording about 8 per cent drop, and another $58,079,681 billion in 2013 with a similar 8 per cent drop. In 2014, the report said Nigeria earned $54,555,279 billion and recorded a 6 per cent drop in oil revenue, while in 2015, it earned $24,791,173 billion but recorded the highest drop in revenue by 55 per cent. All the earnings, the report noted, amounted to $268,812,817 billion.