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CBN, NNPC ‘Reconciling $10.8b’



Just how much is the shortfall of the cash that should have been sent to the Federation Account?
The question remains as knotty as it was since Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi broke the news of a missing $48.9billion.

“We will continue our work, until we can come to terms of what is actually the shortfall and what is due to come to the Federation Account,” Finance Minister Dr. Ngozi Okonjo-Iweala said yesterday in Abuja at a news conference.
With the minister were Sanusi, Petroleum Resources Minister Mrs Diezani Allison-Madueke and Nigerian National Petroleum Corporation (NNPC) Group Managing Director Andrew Yakubu.
Mrs. Okonjo-Iweala was speaking on the findings of a revenue reconciliation meeting convened among the CBN, NNPC, the Ministry of Finance and other stakeholders to clarify the discrepancy.

Said the minister: “At the meeting, the NNPC noted that the actual proceeds from crude oil exports over the period amounted to US$67.12 billion, and was thus about US$1.79 billion higher than the revenues reported by the CBN (possibly due to timing differences and Nigerian Petroleum Development Company (NPDC) listings, which were not included in the CBN report).”
According to the NNPC records, the Finance Minister said, the total revenue of US$67.12 billion comprised revenues which directly accrued to NNPC (for the Federation Account) of US$14 billion; and additional revenues lifted by NNPC on behalf of other parties as follows: for FIRS (US$15 billion), for DPR (US$2billion), for NPDC (US$6 billion) and for other third party financing (US$2 billion). In addition, domestic crude lifted by the NNPC amounted to about US$28 billion.

This domestic crude component, she said, was not reflected in the CBN’s foreign accounts, but rather paid directly in naira into the Federation Account.
As such, “taking account of these various exports conducted on behalf of the non-NNPC parties, the total of US$67 billion was mostly accounted for. This substantially addresses the issues raised by the CBN” she said.

Mrs. Okonjo-Iweala added that “the Federation Account indicates that over the period January 2012 to July 2013, a shortfall of US$10.8 billion was recorded from the domestic crude oil receipts.” This shortfall she said, has been acknowledged by NNPC, but the magnitude of the shortfall is still disputed by NNPC.
The shortfall is explained to be the result of subsidy claims, unrecovered crude/product losses, and cost of strategic petroleum storage (which is currently not captured in the Petroleum Product Pricing Regulatory Agency (PPPRA) template for refunds).
This figure, she said, is also well-known to all stakeholders at the Federation Account Allocation Committee (FAAC), and is reported and updated monthly.
“However, all parties concerned are working assiduously through the ongoing reconciliation efforts to resolve this. Both Finance and NNPC have been in discussions to reconcile; we do so every month after Federation Account Allocation Committee (FAAC) meeting we reconcile our figures, it is not an easy thing,” Mrs Okonjo-Iweala said.
She added: “In the course of the reconciliation, from January 2012 to July 2013, we have looked at a shortfall of about N1.7trillion, the equivalent of $10.8billion. That is the amount that we have been discussing and, of course, NNPC has been disputing some of it. But it is an ongoing reconciliation. We will still continue; we do it every month.”
A statement released to the media to capture the efforts to trace the “missing” fund noted that “as a result of the changing structure of the business arrangements- from joint ventures to production sharing contracts, alternative financing arrangements, and the impact of the fiscal regime on gas development- the government, take in recent years has been declining. In this regard, a quick passage of the Petroleum Industry Bill (PIB) will help to reverse this trend.”
Sanusi said what the CBN had in its records was $65billion shipped by NNPC and about $15billion returned as equity to the Federation Account, but after his letter to the President, it was discovered that “out of the $65billion that NNPC shipped, $24billion did not belong to NNPC; it was crude that was paid by oil companies as tax and royalties and shipment for them from NPDC and so on. So that explains half of the sum. Now the outstanding issues are with the $28billion domestic crude, which has been taken by NNPC. From our records, we have received $16billion. There is a shortfall of $12billion and we are told that that shortfall has always been a part of an ongoing discussion with ministries of Finance and Petroleum and NNPC. So this is where we are. Finance, NNPC; all parties are going to try to resolve this matter.”
Sanusi said: “The CBN has a duty to perform and if we see anything that should worry government, we alert and that is what we have done. We have alerted and this has been investigated, and looked at and this is the conclusion, the letter was not the end of the investigation.”
Mrs Allison-Madueke said to mitigate and minimise the incidence of crude theft, the government has extended an “invitation to the United States to partner and assist us in this, particularly the international dimensions of this crude theft”.

“We are in on going discussions with them; we met with a cross sectional team of intelligence experts last week and we had very crucial discussions that cut across many areas of the business,” she said.

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