Sanusi Attacks NNPC Again: You haven’t accounted for $20bn

*Says kerosene subsidy is a scam
*The CBN Governor is ignorant — NNPC
Senate cautions him over unsubstantiated
allegations
By Emma Ujah, Clara Nwachukwu, JOHNBOSCO
AGBAKWURU, JOSEPH ERUNKE & CHRIS OCHAYI
ABUJA—Central Bank Governor, Sanusi Lamido
Sanusi, yesterday, told the Senate Committee on
Finance that of the $67 billion crude oil sales that
was supposed to be remitted to the Federation
Account, only $47 billion had been reconciled
between the Nigeria National Petroleum Corporation,
NNPC and CBN.
But the Committee’s Chairman, Ahmed Makarfi,
cautioned the CBN Governor over making wild and
unsubstantiated allegations without concrete and
specific figures to back them up.
The NNPC, in a swift reaction, however, dismissed
the allegation of another unremitted $20 billion oil
revenue raised against it by the CBN.
It is uncertain how Sanusi came up with the fresh
$20 billion unremitted funds against the initial $10.8
billion. The latter figure was arrived at during the
account reconciliation with the Ministry of Finance,
NNPC and CBN during a public hearing on alleged
unremitted $49.8 billion oil revenue organised by the
Senate.
CBN’s arguments
But the CBN Governor, while making the new
allegation, stated: “All we have said as CBN to which
there is no disagreement is that NNPC shipped
$67bn worth of crude. They have repatriated or we
have established that $47bn has come back to the
Federation Account. There is a $20billion that has
not come back to us. The burden of proof is on
NNPC.
“We have made suggestions that can help to
answer some of the questions and we believe that
even some of that which they (NNPC) claimed were
shipped by NPDC do not belong to the NPDC but to
the Federation.”
He said some of the issues were subject to
investigation which, according to him, had to do with
whether NNPC was repatriating money due to the
Federation Account or not, adding that it was
necessary to investigate the issue because the
NNPC had given a number of explanations on why
the money had not been remitted.
Sanusi said: “May I say, Mr. Chairman, that some of
those issues raised are subject to investigations.
They have to do with whether NNPC is repatriating
money due to the federation account or not and
because NNPC had given a number of explanations
for why money has not come.
“If NNPC, for instance, says we have sold $6billion
worth of crude belonging to NPDC, and if the CBN
believes that part of that money should come to the
Federation Account, it is related to this matter and it
had been captured in our presentation.
“We are here because they are related to the
question of whether NNPC is returning to the
Federation Account, all the amount it is
constitutionally and legally required to return.
“I have a 20-page presentation with 30 appendages,
but we have to first of all agree on what has been
paid into the CBN. NNPC did a presentation. We
have all agreed earlier that $14billion out of the
$67billion they shipped came in to the dollar
account of the federation.
“That is agreed. We have looked at Federal Inland
Revenue Service,FIRS, numbers and we have
confirmed that $16billion paid by international oil
companies to the FIRS account was not paid by the
NNPC but paid by IOCs.
“It was the proceeds of crude lifted in the name of
NNPC but sold on behalf of FIRS. That $16billion had
been confirmed by FIRS and had been accepted.
There is $1.6bn that DPR also received from IOCs
which was part of that crude and which CBN had
accepted.
“We have provided evidence in the naira crude
account out of the $28billion domestic crude
shipped by the NNPC, it had repatriated $16billion.
“Out of the $67billion that has accrued to the NNPC
account we have accounted for $47billion. Out of
the $67billion that the NNPC shipped, $47billion had
been repatriated to the CBN. What we are talking
about is the balance of the $20billion and what
explanations had been given.
“NNPC had said some of it do not belong to the
Federation Account so, $6billion NPDC we have held
the position that some of the crude shipped by the
NPDC is shipped from oil wells that belonged to the
federation. Joint Ventures that Shell went out of,
which NNPC took over and handed over to NPDC,
which then handed over to two Nigerian companies
and transferred revenues that should come to the
Federation Account for remittance.
“I have given free legal opinion to this committee,
on the unconstitutionality and illegality of that
transaction.
“Secondly, NNPC had explained that 80 per cent of
that money yet to be repatriated was on kerosene
and fuel subsidy. I have submitted to this committee
written evidence of a presidential directive
eliminating subsidy since 2009, and NNPC needs to
provide its authority for buying kerosene at N150
from the Federation Account and selling at N40 and
inflicting that loss on the federation.
“NNPC had also said that it is DPR but for us in the
CBN, every month NNPC sends report to the Federal
Allocation Account Committee. And every month
NNPC indicates how much it has deducted as PMS
subsidy.
“From April 2012 to date, NNPC had submitted
reports to the FAAC consistently showing it is
deducting nothing from PMS, so we are surprised
that having submitted nil returns since April 2012,
we are now being told that deductions were being
made.
“I don’t know whether they were made and whether
the DPR had approved them. We are waiting for the
reconciliation with the PPPRA. The other part of the
third party financing which were not appropriated
had no documentation or proof.”
Sanusi is ignorant — Yakubu
But taking up Sanusi on his presentations, the Group
Managing Director, NNPC, Andrew Yakubu,
expressed surprise over the CBN governor’s
outburst. More so, as efforts were being made to
reconcile all the differences, even with the
assistance of an audit firm of high repute, saying the
CBN governor was speaking from a point of
ignorance.
Yakubu said: “We have made submissions but this
meeting was not of detailed discussion of the
submission. We came here for the Chairman to brief
us on the programme and agenda on the detailed
reconciliation that we are doing.
“As you were told in the meeting we are reconciling
and are at the point of conclusion on the
reconciliation process with the various agencies. It
is at the end of this that we will submit our detailed
reconciled position which the committee will study
and then commence detailed review. What is
reported is exactly the true position of things.
“As you are aware, the major chunk of the amount
in question – over 80 per cent of it is on subsidy for
both PMS and kerosene.
“The issues that were raised are not new at all. You
see we came out in details because we don’t have
anything to hide and we gave a detailed breakdown
of the so called $49billion and we came out clearly
to state the various streams that are associated
with what he was talking about.
“Now, we also made it clear that NPDC, if we had
anything to hide, we would not have made it clear
that NPDC was part of the stream, because NPDC
which is NNPC’s upstream operation, is a limited
liability company registered by the Companies and
Allied Matters Act (CAMA) to do upstream business
just like any other independent company.
“Now, if you are in your business, will you take
your gross revenue and pass it on? What we simply
said was to account for the streams that the CBN
governor erroneously captured.
“Now let me make this point very clearly: CBN is a
banking outfit, so I really, really understand why
they will not understand some petroleum
engineering issues and they are not also an auditing
outfit.
“Now what they try to do is to audit and I heard
some statements made here that they do not have
this document, they don’t have that document. They
are not the auditors. We have certified bodies and
arms of agencies that are charged with the
responsibility of auditing.
“They are banking right? So what he said was not
really new. We said clearly that we stated an
amount that went to NPDC and that amount was the
gross lifting.
“But there are other streams that go back to
government in terms of taxes just like any other
business player. So we have royalties, we have
Petroleum Profit Tax and so on and so forth.
“Now these are subject of other detailed
discussions and investigations and they are open.
We give access to the Auditor General of the
Federation, we give access to Accountant-General,
and we give access to agencies that have business
to do with auditing of our own business.
“At the Federation Account too, we render this
report as you are told on monthly basis and these
are issues that are subject of reconciliation on
monthly basis.
“So really for issues like this to come to the public
glare again becomes worrisome that we throw
away numbers, we throw away allegations that at
the end of the day we clarify but then the damage
would have been done.”
It will be recalled, that at a press briefing held by the
Minister of Finance and Coordinating Minister of the
Economy, Dr. Ngozi Okonjo-Iweala; the Minister of
Petroleum Resources, Mrs. Deziani Allison-
Madueke; the Governor of Central Bank and heads
of DPR and FIRS,the initial figure of $49.8B was
reconciled to $10.8B. On the same day, at the
Senate hearing the CBN gave a figure of $12B
which was corrected by the Coordinating Minister of
the Economy to $10.8B.
While NNPC and other relevant Government
Agencies are in the process of reconciling the
$10.8B as accepted by all parties, we are surprised
by the new $20B figure introduced by the CBN.
According to CBN the $20B is made up of $12B
subsidy claim, $6B NPDC gross revenue and $2B
third party revenue. It is worthy to note that the CBN
accepted NNPC submission with respect to $16B
royalty and PPT payments into the federation
Account through the FIRS. This indicates that the
CBN cherry picks the figures. For example in taking
the entire $6B gross revenue accruable to NPDC
and allocating same to the federation account, CBN
simply multiplied the gross production by the crude
oil price; thereby failing to account for the operating
costs (opex) and amortized capital expenditure that
underpin the production. In other words, the CBN
failed to take into account the cost of production.
We reiterate that NPDC has been remitting the
royalty and petroleum Profit Tax, PPT to the
Federation Account. NPDC as a subsidiary of NNPC
operates a business model similar to other
international companies in Nigeria and abroad and
will continue to be governed by these global best
practices  in the execution of these assets.
Regarding the subsidy claim on kerosene, it is
important to note that NNPC as the supplier of last
resort is the only company supplying this product in
Nigeria for the benefit of the citizenry. If kerosene
has been deregulated why are the independent
marketers not supplying this product in line with
what is applicable to diesel (AGO). NNPC owes a
duty to Nigerians to ensurethat there are adequate
products in the country. This mandate has without
question been accomplished in the past four years.
NNPC deserve to be commended rather than
battered, for ensuring adequate supply of kerosene
at regulated price of N50.00k.NNPC cannot be held
responsible for any differential pricing from non
NNPC retailers. This is the basis for NNPC’s claim
on kerosene subsidy.
At the end of the session, the Committee’s
chairman, however, granted one week’s grace
requested by the parties to reconcile all the
differences and then bring all the necessary
documents to back up their claims.