PWC Forensic Audit Report Contradicts FG $1.48bn and Indicts NNPC over Double Subsidy Payments

A contradiction as to how much should be remitted by NNPC  has been identified in the figures released last week by the outgoing administration of President Goodluck Jonathan as disclosed by the Minister of Petroleum Resources, Deziani Allision-Madueke and the auditing firm that conducted the forensic audit of Nigerian National Petroleum Corporation (NNPC) financial dealings since 2011, PriceWaterhouseCoopers.

While the Minister for Petroleum Resources during a chat with the media, said $1.48 billion (about N291,560,000,000.00 at interbank exchange rate of N197) is  yet to be remitted to the Federation Account by NNPC, the audit document reported that the oil giant should refund $4.29billion (N845,130,000,000.00).

Until the Presidency ordered the release of the 97page report on Monday evening, April 27, 2015 details of the report were exclusive preserve of the President and his inner chamber officials. The document was jealously guarded and shrouded in outmost secrecy before it was released.

Apart from the contradictions in the remittance figures, double payments of subsidy claims by NNPC were also discovered in the corporation financial dealings during the forensic audit. PWC equally reported the uncooperative attitude and hostile posture of the NNPC officials it worked with in course of conducting the auditing services. 

In the analysis and sequential highlights of its findings, the auditing firm itemised some indicting discoveries and made recommended as follows:

Our examination of the Premium Motor Spirit (PMS) and Dual Purpose Kerosene (DPK) import verified by PPRA revealed that some discharges were apparently verified and subsidy advise to NNPC more than once. Repeated subsidy for PMS amounting to N3,709,879,190.00 ($23,954,796) and N69,169,502,266.00 ($39,836,652) for DPK. NNPC also over-claimed $980million (19.3bn at interbank dollar exchange rate of N197) as subsidy on PMS and DPK between January 2012 and July 2013.

The corporation capitalised on lapses in the current law to spend part of the crude oil sales proceeds without limit or control. We recommend that the NNPC Act be reviewed as content contradict the requirement for the NNPC to be run as a commercially viable entity. It appears the Act has given the corporation a blank cheque to spend money without limit or control. This is untenable and unsustainable and must be addressed immediately.

The corporation should be required to create value and meet it expenses entirely from value created. Proceeds from the Federal government of Nigeria’s crude oil sales should be remitted entirely to the Federation Account Commission for the corporation’s services can be paid on agreed terms.

The accounting and reconciliation system for crude oil revenue used by government agencies appears to be inaccurate and weak. We noted significant discrepancies in data from diffirent sources. The lack of independent audit and reconciliation led to over-reliance on data produced from the NNPC. The matter is further compounded by the lack of independence within the NNPC as the business has conflicting interests of being a stand-alone, self-funding entity and also the main source of revenue to the Federation Account.