Recent report that the Nigerian National Petroleum Corporation (NNPC), its subsidiary, the Nigerian Petroleum Development Company (NPDC) and some companies in the oil and gas sector are yet to remit $22.06 billion and N481.75 billion into the Federation Account should be thoroughly investigated. The Nigeria Extractive Industries Transparency Initiative (NEITI) made the disclosure recently at a remediation conference.
READ ALSO: NNPC, oil companies owe Nigeria $22.06bn – NEITI
Other issues from the NEITI audit include unpaid consideration on four Oil Mining Licences (OMLs) and the Joint Venture Contracts (JVCs) assigned to NPDC in 2012, domestic crude allocation and management. The non-remittance of public revenue to the Federation Account contravenes Section 162 (1) of the 1999 Constitution (as amended). We decry the inability of the oil behemoth and other entities concerned to renege in remitting the revenue to the government.
According to the report, the total losses to the Federation Account arising from crude oil production, processing and transportation amount to $3.038bn and N60.997bn, while unreconciled differences arising from allocation, sale and remittance of proceeds from domestic crude allocated to NNPC stand at N317.475bn.
A breakdown of the reported unpaid revenue shows that oil and gas producing companies owe the Federal Government $152.69m and N5.2bn, while oil firms involved in Offshore Processing Contracts are yet to remit $498.6m. Sadly, NEITI does not have the power to compel the oil companies to remit such revenues as its duty stops at pointing out discrepancies in public accounts.
About one year ago, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, revealed that the amount yet to be recovered from the NNPC was $60bn arising from non-payment of Capital Gain tax and other levies in the oil and gas sector. The Supreme Court had 18 years ago, in a landmark judgment, ordered the Federal Government to recover revenues lost to oil majors under the Deepshore, Offshore Inland Production Contract.
Therefore, we call on the Federal Government to thoroughly investigate the NEITI report and bring those involved in the financial malfeasance to justice. If the NEITI report is waved aside, it will encourage more corruption in the oil sector. It will also deny the government of funds to develop the country. We recall that in June this year, the meeting of the Federation Account Allocation Committee (FAAC) was deadlocked for weeks due to the controversy over the under-remittance of oil money to the Federation Account by NNPC for the month of May. The remittance was said to be short of N20bn. This claim was stoutly refuted by the corporation. Its spokesman, Mr. Ndu Ughamadu, claimed that the corporation surpassed what it was supposed to remit by N35bn.
However, considering the recent report of unremitted revenue by the corporation and others, it has become expedient to make sure that all oil companies operating in the country comply with international best practices. They should be made to remit all government revenues to the Federation Account. We have had enough of unremitted oil money. Oil companies that fail to do so should be held to account for such money with heavy penalty as it is the case with some telecoms operators.
To ensure sanity in the oil sector, we urge the government to look into the report of the Investigative Forensic Audit of crude oil revenues and remittances of NNPC by PriceWaterhouseCoopers from January 2012-July 2013. Government should implement some of its recommendations which include the need to run the corporation as a commercially viable entity.
All oil companies must account for any shortfall over remittance of oil revenue. Henceforth, proceeds from crude oil sales should be remitted fully without deductions as recommended by previous audit reports, including the latest by NEITI. Anything short of this will lead to more controversies over non-remittance of crude oil revenues to government treasury.
READ ALSO: Saving oil revenues for the rainy day
