Audit-Report-on-NNPC

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013)
These costs relate to amounts incurred by NNPC (and its subsidiaries) in
executing its mandate. We observed that there were documents supporting
these expenses.
E
This represents
the revenues
due to NPDC
from crude oil
sale for the
period from
January 2012 to
July 2013. The
balances used in
this analysis
were obtained
from the
submissions
made by the
former MD of
NPDC Mr
Victor Briggs,
during the
Senate
Committee
hearings. We
could not find
proof or
evidence that
these revenues
were remitted
by
NPDC/NNPC
into the
Federation
Accounts
For the purpose of this report, PwC has included these expenses as verified, and
treated them as legitimately incurred in the process of the Corporation
executing its mandate.
Verified costs (NPDC yet to complete payment for assigned assets).
It is important to note that the relationship between NNPC and NPDC as it
relates to OMLs 30, 34, 40, 26, 4, 38, 41, 42 controlled by NPDC, is a key
limitation to our scope. We had no access to NPDC management; our work
relied on discussions with NNPC management (Section 6.3.2) and review of
submissions to the senate (Exhibit A1).
From our reviews of the NNPC Act (section 6(1 c & d)), we noted that the
Corporation is empowered:
(c) to enter into contracts or partnerships with any company, firm or person
which in the opinion of the Corporation will facilitate the discharge of the
said duties under this Act;
(d) to establish and maintain subsidiaries for the discharge of such functions
as the Corporation may determine;
Sections 6(1c & d) are critical to establishing the nature of sale of these OMLs.
We have analysed these as follows:
(Factors supporting a sale)
1. NPDC paid taxes and royalties with a total of $1.7 billion. We have not
been able to establish the assets on which these taxes and royalties
were paid. However, the practice of payment of these statutory
deductions suggests that the revenues from the related assets belong to
the Company. According to NPDC’s submission at the senate hearing,
NPDC has not been assessed for royalty and PPT for the review period
by DPR and FIRS respectively. The Company made part payments
based on estimates.
Vanguardngr
2. Existence of a Deed of Assignment: As part of our work, we were
informed of a document (Deed of Assignment) that transferred the
assets from NNPC to NPDC. We were availed with copies of Deeds of
Assignment for OML’s 26,30,40,42. We were not provided with copies
of Deeds of Assignment for OML’s 4,38,41,34.
3. An outright sale to NPDC means that NPDC would be expected to
make a payment to the Federation accounts for procuring the asset.
DPR assigned a total value of $1.85 billion dollars as reasonable
amounts to be paid for the eight OML’s in consideration, out of which
the Corporation had paid $100 million.
An outright sale will also require dividend remittance by NPDC to NNPC (and
Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation.
PwC 22