Nigeria loses $11bn to oil theft, vandalism – NEITI

ABUJA — THE Nigeria Extractive Industries Transparency Initiative (NEITI), yesterday in Abuja, said Nigeria lost over $11 billion to crude oil theft and pipeline vandalism between 2009 and 2011.

The NEITI Chairman, Mr. Ledum Mitee, disclosed this at the public presentation of NEITI Audit reports for the Oil and Gas sector for 2009 to 2011, and the Solid Minerals Sector Audit for 2007-2010.

The report, which was carried out by NEITI auditors highlighted the transaction and revenue flows between government agencies and international oil companies operating in Nigeria.

According to the report, more than 136 million barrels of crude oil estimated at $10.9 billion was lost to theft and sabotage during the period in review.

“This amount, which was 7.7 per cent of the total revenue accrued to the federation in the audit period, is considered significant. This was in addition to a loss of about 10 million barrels valued at $894 million as a result of pipeline vandalism in downstream operations,” Mitee said.

The report said that the nation recorded over 2.5 billion barrels of crude oil production amounting to total revenue of $143.5 billion from equity crude sales, royalty, signature bonuses and taxes within the period under review.

The breakdown of the crude oil production given by the report is as follows:

*2009 – 780.9 million barrels

*2010 – 894.5 million barrels

*2011 – 866.2 million barrels

The report said that crude production fell in 2011 due to the activities of vandals, and also decried the lack of agreed pricing methodology between the NNPC and the oil companies for the determination of fiscal values for royalty computations.

The NEITI report also disclosed that the Federal Government paid about N3 trillion as subsidy payments to petroleum marketers during the three year period.

It added that payments to the NNPC alone accounted for N1.4 trillion of the total subsidy claims, while other marketers claimed the remaining N1.60 trillion.  It said: “From the findings of the report, the subsidy payments made through NNPC increased from N198 billion in 2009 to N416 billion in 2010, and nearly doubled in 2011 to N786 billion.

“During the same period, subsidy paid through PPPRA increased from N208 billion in 2009 to N278 billion in 2010, and astronomically to N1.12 trillion in 2011.”

The report also uncovered a disparity of N175.9 billion between the subsidy claims paid from the Federation Account and the one made by the PPPRA.

“The Office of the Accountant-General of the Federation reported to NEITI auditors a total subsidy payment of N2, 825 trillion, while the PPPRA disbursed N3 trillion to marketers during the same period. Some marketers disagreed with the amount ascribed to them by the PPPRA, especially in 2010, where a marketer claimed N2.56billion as fuel subsidy. The PPPRA recorded payment of N1.5 billion, leaving an un-reconciled difference of N1.04 billion,” the report said.

Furthermore, the report said that the N4.423 billion being over-recovery collected from some marketers was yet to be remitted to the Federation Account, while the NNPC and two other companies were yet to refund N3.715 billion being over-recovery for the period under review.

NEITI, however, commended the management of the NNPC for cooperating with NEITI this time around in the audit of the sector and called for stronger synergy among stakeholders to ensure transparency in the sector.

Finance to collect outstanding revenues

The Minister of Finance and Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala, in her brief remarks, commended NEITI for a comprehensive audit of the sector, which she described as critical to the economy.

The minister said that the ministry would seat down with the NNPC and other stakeholders to ensure that all outstanding revenues due to the Federation Account were  remitted promptly.

She said that the Federal Government was working hard to ensure that the recommendations in the report were taken seriously and implemented in line with international best practice.

Earlier, the Group Managing Director, NNPC, Mr Andrew Yakubu, said that the Corporation was committed to strengthening its partnership with NEITI, so as to enthrone accountability and transparency in the sector.

Yakubu said that NNPC had nothing to hide and would continue to work with relevant government agencies to iron out the grey areas raised in the report.

In his remarks, the Minister of Mines and Solid Minerals Development, Alhaji Musa Sada, restated the commitment of the Federal Government to sanitise the mining sector and enthrone transparency and accountability.

Source Vanguard