Home Business NEITI says Nigeria loses over $5.9bn in 2013 to oil theft

NEITI says Nigeria loses over $5.9bn in 2013 to oil theft

by Business News Report

Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI) Mr Waziri Adio said that Nigeria lost over $5.9 billion in 2013. Adio said at a forum in Abuja that $4.7 billion was lost to oil theft and pipeline vandalism from the $5.9 billion dollars. He said that N20 billion was lost due to delay in payment made by NNPC and its subsidiaries.

“NNPC and its subsidiaries were given 90 days to pay N20 billion, though they paid the amount but could not meet up with the credit grace period given to them by the government. If we calculate all the money that the country lost and put in fixed deposit at 12 per cent rate, on one transaction the country lost N13 billion and N7 billion on the other hand,’’ he said.

He also said that 600 million dollars were under paid due to under assessment, as a result of non renewal of expired MOU with some oil companies. “We signed MOU with some oil companies that expired and because we did not renew the MOUs, the oil companies used a particular pricing methodology called realisable price. Government wanted oil companies to use official selling price; if we calculate the difference between official selling price and realisable price, the country lost 599 million dollars in one year.

He said the money was lost due to under payment and under assessment because the oil companies were using realisable price instead of official price on expired MOUs.

Adio also recalled that the country lost 5.18 billion dollars to crude oil for Product Swap and Oil Shore Processing arrangement in one year.

“It means that we give them crude and they give products, and then calculate the value of the product received, processing allowance, cost of freighting, clearing, demurrage.

“We calculated the value of products received and compared to crude given to them, then we realised that 518 million dollars was lost. Based on our recommendations, the present government has cancelled the arrangement to save money.’’

On non remittance of 3.8 billion dollars by NNPC, he said that the company divested eight assets owned by the country. The country owned 55 per cent of the assets and Shell owned 45 per cent; the country’s assets were valued at 1.8 billion dollars from it 55 per cent and Shell 2.72 billion dollars from its 45 per cent.

“As if that was not bad enough, they divested the assets to NPDC and it paid 100 million dollars out of the 1.8 billion dollars.  The proper value of what Shell got from its own 45 per cent would have been 3.4 billion dollars, meaning the assets were valued at discounted price at a loss of almost 50 per cent. And 100 million dollars out of 1.8 billion dollars was paid and NPDC took full ownership of the assets.’’

He recalled that NNPC collected 1.29 billion dollars outstanding from NLNG in 2013 and acknowledged receipt but did not remit the fund to the government.

However, he said that NEITI was not keen in embarrassing and sending people to jail but things should be done in proper manners.

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