Home Finance Nigeria losses $11 billion to crude oil theft, pipeline vandalism —- NEITI report

Nigeria losses $11 billion to crude oil theft, pipeline vandalism —- NEITI report

by Business News Report

The Nigeria Extractive Industries Transparency Initiative (NEITI), yesterday in Abuja said Nigeria lost over 11 billion dollars to crude oil theft and pipeline vandalism between 2009 and 2011.The NEITI Chairman, Mr Ledum Mitee, disclosed this at the public presentation of NEITI audit reports for the Oil and Gas sector for 2009 to 2011 and the Solid Minerals Sector Audit for 2007-2010.

The report, which was carried out by NEITI auditors highlighted the transaction and revenue flows between government agencies and international oil companies operating in Nigeria. According to the report, more than 136 million barrels of crude oil estimated at 10.9 billion dollars have been lost to theft and sabotage within the period under review.

“This amount which was 7.7 per cent of the total revenue accrued to the federation in the audit period is considered significant. This was in addition to a loss of about 10 million barrels valued at 894 million dollars as a result of pipeline vandalism in downstream operations,’’ Mitee said. The report said that the nation recorded over 2.5 billion barrels of crude oil production amounting to total revenue of 143.5 billion dollars from equity crude sales, royalty, signature bonuses and taxes within the period under review.

The breakdown of the crude oil production given by the report indicated that 780.9 million barrels were recorded in 2009. It said that 894.5 million barrels were recorded in 2010 while the number of barrels recorded in 2011 declined slightly to 866.2 million barrels due to activities of vandals. The report also noted that the Federal Government paid N3 trillion as subsidy payments to marketers of refined petroleum products during the period.

It said that the NNPC accounted for N1.4 trillion of the subsidy claims while other marketers claimed the remaining N1.60 trillion. “From the findings of the report, the subsidy payments made through NNPC increased from N198 billion in 2009 to N416 billion in 2010 and nearly doubled in 2011 to N786 billion. During the same period, subsidy paid through PPPRA increased from N208 billion in 2009 to N278 billion in 2010 and astronomically to N1.12 trillion in 2011,’’ he said. The report also uncovered a disparity of N175.9 billion between the subsidy claims paid from the federation account and the one made by the Petroleum Pricing Regulatory Agency (PPPRA).

“The Office of the Accountant-General of the Federation reported to NEITI auditors a total subsidy payment of N2, 825 trillion while the PPPRA disbursed N3 trillion to marketers during the same period. Some marketers disagreed with the amount ascribed to them by the PPPRA, especially in 2010 where a marketer claimed N2.56billion as fuel subsidy. The PPPRA recorded payment of N1.5 billion, leaving an un-reconciled difference of N1.04 billion,’’ Mitee said.

The report said that N4.423 billion being over-recovery collected from some marketers had yet to be remitted to the federation account while the NNPC and two other companies were yet to refund N3.715 billion being over-recovery for the period under review. The report also decried the lack of agreed pricing methodology between the NNPC and the oil companies for the determination of fiscal values for royalty computations. Mitee, however, commended the management of NNPC for cooperating with NEITI this time around in the audit of the sector and called for stronger synergy among stakeholders to ensure transparency in the sector.

The Minister of Finance and Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala in her brief remarks, commended NEITI for a comprehensive audit of the sector which she described as critical to the economy. Okonjo-Iweala said that the ministry would seat down with the NNPC and other stakeholders to ensure that all outstanding revenues due to the federation account were remitted promptly. She said that the Federal Government was working hard to ensure that the recommendations in the report were taken seriously and implemented in line with international best practice.

Earlier, the Group Managing Director of the NNPC, Mr Andrew Yakubu, said that the corporation was committed to strengthening its partnership with NEITI so as to enthrone accountability and transparency in the sector. Yakubu said that NNPC had nothing to hide and would continue to work with relevant government agencies to iron out the grey areas raised in the report. In his remarks, the Minister of Mines and Solid Minerals Development, Alhaji Musa Sada, restated the commitment of the Federal Government to sanitise the mining sector and enthrone transparency and accountability.

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