Barely a week after a letter sent
to the President by the governor of the Central Bank of Nigeria, Sanusi Lamido
Sanusi over an alleged non-remittance of huge oil funds caused tremendous
stirs; the CBN governor beats a retreat, bites the humble pie and admitted his
allegation was wrong
Sanusi Lamido Sanusi, the governor of the
Central Bank of Nigeria, CBN ate the humble pie last week when he retracted his
earlier allegations that the Nigerian National Petroleum Corporation, NNPC
failed to remit $49.8bn (about N8tn) oil proceeds to the Federation Account
between January 2012 and July this year.
The CBN governor, who appeared before the
Senate Committee on Finance, alongside Minister of Finance, Dr. Ngozi
Okonjo-Iweala, Minister of Petroleum Resources, Diezani Alison-Madueke,
Director-General, Budget Offi ce of the Federation, Dr. Bright Okogu; and the
Group Managing Director, NNPC, Andrew Yakubu, denied saying that $49.8 billon
was missing from the Federation Account, stating that he only said that there
may be unremitted amount of monies into the federation account.
Though the CBN governor admitted that he
indeed, wrote the letter to the president, he said that “in truth, there is no
missing money. Chairman, we did not see the letter as a conclusion of our
investigation, but an invitation to investigate. “So, the conclusion that $49.8
billion was missing was wrong, even though, we had the allegation that it was
un-remitted,’’ Sanusi said.
He expressed regrets that the letter found
its way into the press, adding that it was born out of concern over low rate of
accruals. “I found it very unfortunate, it was leaked to the press and the
answer is ‘Yes’, the CBN governor did send that letter with those contents. By
way of those contents, the Central Bank and Finance Ministry and the government
were very much concerned over the years at the very low rate of accretion to
the reserves.”
The CBN governor, however, said that a lot
had happened since the letter became public and that all stakeholders involved
were working together to rectify the situation. “We (the Minister of Finance,
Minister of Petroleum Resources, Central Bank, FIRS, and DPR) have set up
technical team which has started a process of reconciliation and there has been
a lot of progress made.”
He said the committee had made a lot of
progress, especially with the NNPC explanation that $24bn of the amount in
question, which was put at $67bn, was actually not its crude but that which was
shipped on behalf of third parties.
He said the third parties included oil
companies that paid taxes in crude and the Nigerian Petroleum Development
Company for third party financing, adding that “that already addresses half of
the fi gure ($49.8bn).
Sanusi added that the second part of the
alleged missing funds was about domestic crude lifting, which was put at $28bn,
and “from which we feel there is a shortfall and we had a press conference and
talked about that shortfall.”
“Now, we are still in the process of
reconciling that figure and we have not yet started talking about the export
sales tax, which is $20bn, which we will reconcile.
“The finance ministry has told us that even
before this letter, there had been ongoing negotiations and discussions with
the NNPC and the FAAC, and these numbers have always been discussed at the
level of convenience of the fi nance (ministry).
“So, since the objective of this committee
and for all of us on this side is actually to get to the bottom of it and fi nd
out exactly the amounts that need to be remitted and what needs to be done and
recommend action, what I will like to do is that given the progress, we have
made a request to be given more time to continue with this process and come
back with a fi nal position among us.”
However, Sanusi’s effort to rationalise his
position fueled further controversy when Okonjo-Iweala interjected his comments
that there was a general consensus among all the agencies involved during their
reconciliation meetings that there was indeed, a $12bn shortfall.
Contrary to the CBN governor’s assertion,
Okonjo- Iweala said that what was found out during reconciliation was $10.8bn
and not $12bn, adding that although the shortfall had been acknowledged by the
NNPC, its magnitude was still being disputed by the corporation.
Okonjo-Iweala said, “We have been able to get
to the bottom of the $49.8bn that was indicated in the CBN memo. But also due
to the way that the accounting for the crude was read, some of it that was
being lifted for other parties to the tune of $24bn was said to be missing, but
it has been accounted for.
“So, the bulk of the sum of $49bn has been
accounted for and that is what the reconciliation exercise is about. So, it is
very clear that this is not missing.
“However, both fi nance (ministry) and NNPC
have been in discussion to reconcile. We do so every month after the Federation
Accounts Allocation Committee meeting. We reconcile our fi gures. It is not an
easy thing.
“In the course of the reconciliation, from
January 2012 to July 2013, we have looked at a shortfall of about N1.7tn, the
equivalent of $10.8bn. That is the amount that we have been discussing; and of
course, the NNPC has been disputing some of it, but it is an ongoing
reconciliation. We will still continue; we do it every month.
“We will continue our work after now until we
can come to terms with what is actually the shortfall and what is due to come
to the Federation Account,” the minister said.
While explaining the reason for the
shortfall, the NNPC, in a joint statement with the CBN and the Ministry of
Finance, blamed it on subsidy claims, undiscovered crude, product losses and
cost of strategic petroleum product storage not currently captured in the
Petroleum Products Pricing and Regulatory Agency’s template for refunds.
The corporation said the fi gures were well
known to all stakeholders at the Federation Accounts Allocation Committee,
adding that the shortfall was always updated on monthly basis.
It, however, said all parties concerned were
working through the ongoing reconciliation efforts to resolve the shortfall.
Admitting that there was some level of
shortfall in the amount remitted to the Federation Account, Alison-Madueke
argued that the defi cit had been known for a long time., “We have come to
a very clear understanding that there is a listed amount of which most part has
been accounted for. There is a shortfall, which has already been mentioned but
that shortfall has been known for quite some time.
“It has been acknowledged by the NNPC, but
the extent of the shortfall has also been disputed by the NNPC for quite some
time now. The NNPC has always participated in the reconciliation meetings with
the CBN, FIRS and DPR, and that will continue,” Alison-Madueke said.
She said that the reconciliation efforts are
in order to come to an agreed fi gure. She stressed that crude oil production
in Nigeria had been under a lot of scourge due to the high level of theft.
“We have been very aggressive to increase our
production and reduce the level of theft. In terms of our efforts, we have over
the last two weeks seen an increase from a drop of 2.2 million barrels per day
to what it is today, which is 2.38mbpd,” the minister said.
It would be recalled that the CBN governor had
caused a stir two weeks ago, when a letter he wrote to President Goodluck
Jonathan dated September 25, 2013 in which he leveled several allegations
against the management of the NNPC, found its way to the media.
The CBN governor had in the letter said that
the apex bank’s “analysis of the value of crude oil export proceeds based on
the documentation received from pre-shipment inspectors shows that between
January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude valued at
$65,332,350,514.57.
“Out of this amount, NNPC repatriated only
$15,528,410,098.77 representing 24 per cent of the value. This means the NNPC
is yet to account for, and repatriate to the Federation Account, an amount in
excess of $49.804 billion or 76 per cent of the value of oil lifted in the same
period.
The CBN governor had also in the
controversial letter, advocated that the president should authorise “A thorough
audit of activity on any domiciliary accounts held by NNPC outside of the CBN.
This, he said is because the CBN has no record of either the dollar proceeds of
these diverted sales or the naira equivalent being transferred to the
Federation Account.
“An examination of banking records of
companies involved in oil lifting and swaps deals, including audit trails of
regular payments to third-parties; an independent review of the terms and
condition of oil lifting and swap contracts for fairness and equity and
transparency,” Sanusi Lamido had stated.
The CBN governor had also alleged that the
NNPC has failed to keep up with payments of its levies under Nigerian Export
Supervision Scheme (NESS) in line with this law, and currently owes the Federal
Government N22 billion.
“As banker to the Federal Government and
Economic adviser to the President, I am obliged to draw the President’s
attention to these serious issues of which you have most probably never been
aware in this detail,” Sanusi Lamido had said.
In his recommendation, the CBN governor said
that the NNPC should provide evidence for disposal of all proceeds of crude
sales diverted from the CBN and the Federation Account; investigate crude oil
lifting and swap contracts, as well as the financial transactions of
counter-parties for equity, fairness and transparency among others.
The publication, expectedly, had triggered a
rash of counter- accusation, with the NNPC accusing the CBN governor of lacking
the requisite knowledge of the workings of the oil and gas industry and the
modality for remitting crude oil sales revenue into the Federation
Account.
Besides, the corporation said the letter was
leaked to embarrass it and the government as part of the campaign for the 2015
general elections.
The Group Managing Director of NNPC, Engr.
Andrew Yakubu insisted that the NNPC is not in the business of withholding
proceeds of crude oil sales due to the federation account or any other
statutory remittances.
Yakubu said that it is not in the
corporation’s character to join issues or trade blames with other agencies of
government but said that considering the high level of publicity that the
recent letter from the Governor of the Central Bank of Nigeria (CBN) to the
President has generated, and the erroneous impression it has created among
Nigerians, it has become necessary to set the records straight.
The NNPC GMD said that all NNPC crude oil
lifting is made up of equity rude, royalty oil, tax oil, volume for third party
fi nancing, and NPDC equity volume, stressing that remittances of proceeds from
the above lifting are made according to statutory and production arrangements.
Accordingly, he said that proceeds from
equity crude is paid by NNPC into the Federation Account which is held by the
Central Bank of Nigeria, while the proceeds from Royalty oil is paid to
Department of Petroleum Resources, DPR, whose designated account is managed by
the same CBN.
Similarly, Yakubu said that the proceeds from
Tax Oil or Petroleum Profi t Tax lifted by NNPC is paid directly into the
Federal Inland Revenue Service, (FIRS) account also managed by the CBN, while
the Third Party Finance and Trial Marketing volume are paid into designated
Escrow accounts, while NPDC equity proceeds are remitted to NPDC account.
The NNPC boss said that contrary to the CBN
letter which claims that for the period 1st Jan 2012 to 31st July 2013, total
National crude oil liftings was 1.287 billion barrels, the corporation’s
records show that the total national crude lifting for the same period was
actually higher at 1.330 billion barrels.
On the alleged N22bn unpaid levies to the
National Export Supervisory Scheme, the corporation said that the levies are
paid to third party inspectors based on services rendered to the Federal
Government. “Payment to the NESS is update as per value of work done,” it said.
The current position, according to Yakubu is
that, NNPC has paid a total of $114.78 million from inception of NESS in 2009
up to October 2013 as against the total budget of $117.08 million for the same
period. “These payments have been reconciled with the CBN, who are again the
custodians of the NESS account that is operated on a draw-down basis by the
CBN.”
The NNPC boss said that the allegation is
“unfounded, baseless and a political instrument” for the 2015 general elections
and an attempt to ridicule the corporation and its management.
Curiously, however, while the NNPC management
took time out to deny the CBN governor’s allegations, the CBN governor merely
said that it considers any further discussion on the issue as inappropriate.
In a statement
by Ugochukwu Okoroafor, director, corporate communications, CBN, the apex bank
said it would neither confirm nor deny the existence of such a letter but said
the bank was aware of a proposal to set up a technical team made up of
representatives from the Federal Ministry of Finance, the NNPC and the CBN to
examine the sources of any revenue leakages and propose appropriate fiscal
controls.
“The CBN welcomes these initiatives and
believes that they represent a positive contribution to the process of
improving the management of the economy, especially if they lead to greater
oversight of the fi nance ministry over oil revenue and improvements on
disclosure and transparency in the oil industry,” the statement said.
It noted that the capacity of the CBN to
perform its role effectively is strengthened or undermined by the extent to
which the nation is able to increase foreign exchange earnings and savings from
these earnings, thus boosting the Excess Crude Savings Account, raising revenue
levels, providing currency stability and moderating interest rates with limited
risks to infl ation and fi nancial stability.
“In the performance of this role, it is
natural for the CBN to be concerned at the low level of accretion to reserves
of the Excess Crude Account, in spite of strong international oil prices,
especially, as Nigeria’s performance is compared with other oil producing
economies.”
