Nigeria and ‘unremitted’ revenues

By Editor, Guardian on 28/02/2014

Share on facebook Yahoo mail icon Gmail icon

Views: 5267


THE Federal Ministry of Finance earns full blame for dereliction of responsibility by condoning, over the years, opaque handling and retention by the national oil company, Nigerian National Petroleum Corporation (NNPC), of significant amounts of oil proceeds that ordinarily should have been audited regularly and remitted to the Federation Account (FA). Explanations that the unremitted funds were intact and within the system merely confirm wilful abandonment of the ministry’s statutory duty of ensuring full collection and remittance of government revenues as and when due to enable FA beneficiaries to plan and implement their budgets without borrowing or, if need be, by incurring minimal deficit as a means of providing the requisite foundation for a sound and productive economy. That foundation has, sadly, remained elusive.  

    There are at least two areas to rummage for unremitted oil revenues. To begin with, a little analysis of the Central Bank data on liftings on crude oil by NNPC since January 2012 shows that the amount of $12 billion that could not be readily reconciled by the relevant agencies tallies with the value of approximately 47 per cent of domestic crude allocation (DCA) of 445,000 barrels of crude oil per day over the period that was swapped or refined offshore. Because the combined value of non-petrol derivatives of crude oil that was refined offshore exceeds that of the petrol portion that was imported, the NNPC nets some profit on swapped crude oil which, after reconciliation, should be remitted in dollars to the FA.

    NNPC locally refines the balance of about 53 per cent of the DCA. Apart from petrol, refined petroleum products including kerosene (in practice) are deregulated. NNPC, therefore, enjoys full cost recovery and even makes some savings or profit on locally processed DCA, too. Consequently, the naira value of the entire petrol obtained from the DCA (using the world price of crude oil) should be remitted to the FA. This sum exceeds by far the Sure-P subsidy savings, which should be subsequently stopped. The foregoing shows that in addition to swelling the FA, “if NNPC properly manages the allocation of 445,000 barrels per day effectively, the availability of (various refined) products can be achieved by the NNPC alone”, as the House Ad-hoc Committee on Fuel Subsidy concluded in April 2012.

    Twenty months on, the NNPC has stuck to its operations which are not only steeped in corruption but also withholds oil receipts from the FA thereby undermining the economy, which to all intents and purposes is an act of economic sabotage. The Ministry of Petroleum Resources exulted in self-defence at the recent reconciliation exercise that the Federation Account Allocation Committee (FAAC) had long been aware of a shortfall in FA oil accrual. That display of unconcern underscores the official unwillingness to do things right. The allegations of unremitted oil revenues, whatever figure, remain a stigma that must be cleared with thorough investigation.

   In the circumstance, there is need to ascertain publicly the size of the naira and dollar proceeds arising from NNPC’s less than-transparent handling of the DCA for as far back as the statute of limitations permits. Any outstanding proceeds should be remitted to the Federation Account without delay. In order to reduce the endemic corruption in the national oil company’s operations and help improve the economy, several other measures should be adopted urgently. In the first place, the domestic crude allocation should stop. Like refineries elsewhere, government or privately owned petroleum refineries in the country should purchase their crude oil in the open market at the going world price.

   Second, to ensure optimal performance, the NNPC refineries should be privatised as planned. Third, all volumes of crude oil and gas produced and sold by various oil operators should be published daily and by ownership for public consumption and ease of monitoring by relevant agencies and interest groups. This step will shed light on, for example, the huge differences between crude oil import data into the U.S. from Nigeria as published by the U.S. government and released NNPC crude oil export figures to that country. Nigerians in their own right should have access to such information and they should, therefore, demand it. Fourth, the National Assembly should enact the long-delayed Petroleum Industry Act to help enthrone transparency in the petroleum sector. The Act should proactively reflect the envisaged true federal structure of the country, reassign and redefine the responsibilities of the various public institution of the petroleum sector accordingly.

   The other area where, in the final analysis, the Finance Ministry half-heartedly attempts to get collected oil revenues corruptly withheld from the FA by various petroleum sector operators relate to the Nigeria Extractive Industries Transparency Initiative (NEITI). Last year’s end, the Secretary to the Government of the Federation (SGF), inaugurated an expanded Inter-Ministerial Task Team (IMTT) of high-ranking officials. The team was charged with the responsibility of recovering all unremitted revenues that NEITI audit reports (they began to be issued in 2006) have unearthed. Regrettably, that move is a classic case of passing the buck despite Goodluck Jonathan administration’s hypocritical conviction “that once transparency is implanted in the management of the nation’s abundant extractive resources, it will boost the government’s efforts towards poverty reduction, sustainable development, social harmony as well as better investment climate.” Yet, the early NEITI reports already risk being overtaken by the statute of limitations. The truth is that NEITI audit findings and recommendations that are not counted by reports of the Auditor-General of the Federation do not require the imprimatur of further time-buying bureaucratic contraption that is again headed by the NEITI chairman before the President or the SGF, upon receipt of statutorily mandatory FMF requisition, issues appropriate directive to put the audit decisions into effect. All outstanding NEITI findings, therefore, only need to be implemented complete with associated sanctions against any defaulting firms and individuals. That would be the beginning of value for money or value for blessings for Nigerians in their oil industry.

 

Posted on March, 1 2014

Share on facebook Yahoo mail icon Gmail icon


You may also like...
ALEX OTTI: LIES AND DECEIT WON'T WIN ELECTIONS...

Who is this Zik sef (2); by Kelechi...

ABIA AND POLITICS

FESTUS KEYAMO'S MIGHTY FALL

The angel of death that stalks the corridors...

Yes, Ndi Igbo, ‘go home

Fajuyi, Nnamdi Kanu, and the Virtue of Loyalty...

Ikpeazu: We can't go back to Babylon

The Five wise men from the East

THE BUHARI PROPAGANDA HAS PASSED EXPIRY DATE

Biafra: Way forward for Ndigbo, Sen Ekweremadu writes...

OPINION: The Audacity of Change By Onyebuchi Ememanka...
Opinions Editorial (4) Letters (12) Perspectives (344)

 

 

Advertisement

 

Latest Opinions ABSU Versus Abiapoly: the Tale of Two Abia Parastatals Governor Ikpeazu's Futuristic Initiative Again Clears The Coast For PDP In Abia State - Don Ubani ALEX OTTI: LIES AND DECEIT WON'T WIN ELECTIONS IN ABIA How Gov. Ikpeazu will win 2019 Guber election OPINION: Alex Otti has gone mad again... Orji Uzor Kalu and the delusion of a professional gamji man And Ikpeazu flies the PDP Governorship flag Justifying the place of Equity in 2019 Guber race in Abia ~ Chief Isaac Ogbonna Abia State: Between APGA and the Deceptive Consolation of Hired Mourners Kanu, Biafra, Buhari and The Igbos

 

Most Read Kebbi 2015: Dakingari’s legacy and friendly enemies within (5,859 views) APUGO’s STOOGE MENTALITY (5,322 views) Nigeria and ‘unremitted’ revenues (5,267 views) FG predicates Sanusi’s suspension on loss of confidence in his ability to lead CBN (5,137 views) Understanding Kalu’s Anger (1) (5,084 views) Discourse on Our “Mumu”, Part 3 (4,988 views) Discourse on Our “Mumu”, Part 1 (4,867 views) Before We Crucify Jonathan…. (4,749 views) It Is All Lies, Muhammadu Buhari Never Built Any Refinery (4,551 views) Buhari’s Indistinct Body Language (4,363 views)