‘PwC’ forensic audit report vindicated NNPC, no money missing’

GMD lists obstacles to implementation of recommendations

THE Nigerian National Petroleum Corporation (NNPC) has reiterated its position that PricewaterhouseCoopers’ (PwC) forensic audit report on its books did not indict it in anyway but rather absolved it of culpability on all counts.

   Making this claim Wednesday at a press conference in Abuja to clarify the highlights of the report, the Group Managing Director (GMD) of the corporation, Dr. Joseph Dawha, expressed joy at the successful completion of the forensic audit exercise, which rested the 15-month controversy over the allegedly missing $49.8 billion.

   According to him, the report “has clearly vindicated our long-held position that the alleged unremitted crude oil revenue was a farce from day one.”

   Contrary to some media analysis and interpretations that NNPC was indicted, he explained that the amount was actually the balance of the book value of the divested assets transferred to NNPC upstream subsidiary, the Nigerian Petroleum Development Company (NPDC), excluding taxes and royalties.

   However, the recommendation that the corporation be empowered to meet its costs and expenses entirely from the value it creates may not happen until the Petroleum Industry Bill (PIB) is passed by the National Assembly.

   Dahwa explained that the NNPC does not receive any level funding from government and defrays its operational costs from oil proceeds as provided for in the Petroleum Act of 1969.

   He noted that the NNPC management was fully in support of the ongoing process of reviewing the laws governing its operations and has commenced internal transformation ahead of the passage of the Petroleum Industry Bill (PIB) currently undergoing legislative processes at the National Assembly.

   He called on the media to eschew sensationalism and help disseminate the facts regarding the alleged missing money as contained in the reports of the various probes instituted to get to the bottom of the matter.

   “The forensic audit report also acknowledged that section 7 sub-section 4 of the NNPC Act empowers the corporation to defray its costs and expenses, including the costs of its subsidiaries, from crude oil revenues, though it also recommended that the law be reviewed to make the corporation meet its costs and expenses entirely from the value it creates,” he said.

   “However, it should be noted that NNPC currently receives no funding for value destruction through pipeline vandalism, sabotage and crude oil and products theft, an issue that causes enormous losses to NNPC’s operation.”

   On the outstanding $1.48 billion, Dahwa explained that the money is “NPDC signature bonus” and was the balance of the book value of the divested assets as assessed by the Department of Petroleum Resources (DPR) yet to be paid into the Federation Account by the NNPC. This, he said, cannot be termed an indictment of the NNPC, and is being reconciled with the DPR.

   He added: “Let me emphasize that there is no money missing. However, the delay in payment of the true value of the divested assets is due to the unfinished reconciliation process among NNPC, DPR and other agencies of government. 

   “It is pertinent to note that the $1.48 billion was not part of the alleged unremitted revenues from crude oil sales but the balance of the good and valuable consideration of the divested assets as assessed by DPR.”

 The GMD said that what the DPR sent to NNPC as the estimated value of the assets was $1.847 billion, out of which the corporation paid over $300 million as a token to indicate its commitment to acquiring the assets pending resolution and reconciliation by NNPC and DPR.  

   On remittances of proceeds from crude oil sales into the Federation Account from January 1, 2012 to July 31, 2013, he explained that the PwC forensic audit report was clear that NNPC remitted $50.81 billion out of a total of $69.34 billion, adding that the report acknowledged that the balance was spent on petrol and kerosene subsidy as well as the corporation’s operation costs.

   He explained that both the Senate Finance Committee probe report and the PwC forensic audit report corroborated the corporation’s position that subsidy on kerosene was still in force as the presidential directive of October 19, 2009, was not gazetted in line with the provisions of Section 6, Subsection 1 of the Petroleum Act of 1969.

   According to Dahwa, contrary to reports of indictment, the NNPC or any of its subsidiaries was not indicted by the PwC forensic audit report. Rather, “the entire revenues accruable to the Federation Account during the period have been fully accounted for in the report and various components of the accruable revenue have also been clearly categorized.”

  Explaining the effect of pipeline vandalism on the agency’s operation spending, the NNPC Group Executive Director, Gas, Dr David Ige, said the corporation had never experienced the level of pipeline vandalism that has taken place in the past one month.

   “There are challenges with the number of pipeline vandalism we have had since January,” he noted. “As we speak, we have breach on the Escravos pipeline just about 24 hours ago. 

   “Going to places where pipeline vandalism occurs is not such a challenge but assessing the area remains a big challenge. These are parts of the unwanted costs that the NNPC incurs every time there is pipeline vandalism.”