Shell is yet to pay into the Federation Account, a total of N137.572 billion ($946.878 million) made from gas sales from the Bonga oil field, according to the NNPC (NAPIMS) Financial Statements for the year ended 31 December 2009, the Ribadu Petroleum Revenue Special Task Force has revealed.
Shell is the production sharing contractor operating the field. Included in the amount is the sum of N17.325billion which is the gas tax payable on the amount, the Ribadu report shows.
The Nigerian Liquefied Natural Gas (NLNG) has also been accused by the Task Force of short changing the Federation Account, of revenues to the tune of $29 billion, over a 10 year period. The Ribadu Task Force observed that the price at which Liquefied Natural Gas, is sold to NLNG “seems too generous, compared to prices obtainable on the international market.
“The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10 year period, amounts to approximately US$29 billion” the Ribadu report states. This brings the cumulative debt from both organisations to the Federation to $30 billion.
Another shocking disclosure by the Ribadu Task Force, is that the Nigerian National Petroleum Corporation (NNPC) and its 16 subsidiaries ran an operational deficit, or spent N298 billion more than they earned in 2009. The N298 billion deficits or loss was shown in the Group’s 2009 audited financial statement, the last audited financial statement that was available for the the Ribadu Committee to take a look at. There were no audited statements for 2010 and 2011.
NNPC is however also owed N27 billion, including current debt, total overdue, disputed debt and total debt outstanding, by the major marketers of petroleum products. The corporation on the other hand, is yet to pay suppliers of petroleum products approximately US$3.6 billion (N565 billion), of which US$2.7 billion (N423 billion) represents amounts outstanding for over 365 days as at December 31, 2011.
The Task Force however admitted that the NNPC does not receive the required capital to grow its assets or meet operating costs, forcing the corporation to increasingly rely on the FGN for lines of credit, and deduction of oil revenue due to the Federation Account.
The Task Force makes several recommendations on the restructuring of NNPC. The recommendations include asking that the Federal Government set up a process independent of the NNPC, to review the use of oil traders and NNPC’s system for selling crude, on grounds of value for money and probity.
That the Federal Government undertakes a strategic review of all NNPC subsidiaries before the PIB passes, with a view to privatising, repositioning or scrapping non-performing, redundant or irrelevant business units.
The NNPC should be required to make a full public report of the amount, costs and terms of all cash call debts; improve reporting of this information to the National Assembly as part of the annual budget and oversight process; Pass an oil sector transparency law that requires all oil companies active in Nigeria to report all payments, costs and earnings for each license or transaction, and to publish all contracts and licenses.
Other recommendations include that the Federal Government create a special, properly-trained Oil and Gas Sector Financial Crimes Unit for law enforcement; Appoint a new NEITI Board, establish an embedded and independent office of transformation for the sector, implement an aggressive debt collection process for outstanding signature bonus payments; revoke blocks from non-paying firms; sanction those agencies that failed to collect and conduct an independent process audit of all upstream cost control rules and mechanisms, including the use of cross-country price benchmarking.
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