The Nigeria Extractive Industries Transparency Initiative, NEITI, on Monday asked the federal government to immediately revisit and re-valuate the transfer of some oil asset by the Nigerian National Petroleum Corporation, NNPC to its upstream subsidiary, the Nigerian Petroleum Development Company, NPDC.
The Executive Secretary of NEITI, Waziri Adio, made the call in Abuja as part of the transparency agency’s continued review of the highlights of its latest edition of NEITI Policy Brief entitled “Unremitted funds, oil sector reforms and economic recovery.”
Mr. Adio underlined the importance of the review, considering NNPC’s under-valuation and refusal to pay for the assets.
Also, he said, the review was necessary in view of NPDC’s inability to either make returns on investments on the asset, or be accountable to the federation over its management of the oil assets in its custody.
The NEITI Policy Brief has put the total unremitted revenues to the federation by the NPDC at a total of N1.76 trillion, consisting $5.5 billion and N72.4 billion.
According to NEITI, details of the outstanding unremitted revenues by the NPDC to the Federation Account in respect of the transferred oil asset by the NNPC include $1.7 billion in respect of the transfer of oil mining leases, OMLs from the Shell Petroleum Development Company, SPDC joint venture.
Another $2.23 billion was also outstanding in respect of the transfer of four OMLs from the Nigerian Agip Oil Company, NAOC joint venture.
NEITI report said the NPDC was yet to refund about $148.3 million and about N2.42 billion, being cash-calls paid to it by the federal government for the transferred OMLs.
Other outstanding revenues unaccounted for also include legacy liabilities of $1.46 billion and N70.02 billion.
“Beyond the issue of unremitted monies, there are issues of transparency and efficiency with the operations of NPDC,” NEITI noted in its report.
‘‘Since 2005, NNPC has transferred 16 OMLs to NPDC. However, the process of transfer of these assets raises serious questions, as there appears to be no clear-cut criteria for transfer of oil mining assets to NPDC.
“The process for the transfer of Federation’s assets to NPDC does not seem to pass the transparency test. One of the upshots of this is the undervaluation of these assets, thereby depriving the Federation of optimal value for the assets,’’ the transparency agency stated.
The undervaluation, NEITI report said, resulted from NNPCs divestment of its 55 per cent shares in the SPDC JV valued at about $1.8billion.
NEITI pointed out that the valuation of the same asset by globally acknowledged audit firm, PricewaterhouseCoopers, PwC, was put at about $3.4 billion.
Besides, NEITI compared the valuation of the asset with that of four other asset divested in 2012 by NNPC to NPDC under the NAOC JV, which the Department of Petroleum Resources, DPR, valued at about $2.225billion.
The agency said the NPDC, which has so far paid only $100 million, was still contesting these valuations despite that it was currently operating the 12 OMLs without paying neither the full value, nor the new figures arrived at by PwC and the DPR.
“In total, the non-payment for the 12 oil blocks by NPDC sums up to $3.925billion,” NEITI said.
“NPDC continues to be unaccountable to state institutions and the laws of the country. NPDC has consistently refused to give account of its operations and its management of national oil assets in its possession. NPDC failed to cooperate with the forensic audit ordered by the Auditor-General of the Federation in 2015. The company failed to cooperate with NEITI for five audit cycles, and only partially cooperated during the 2013 and 2014 audits,” the agency added.