Audit-Report-on-NNPC

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Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 2.7. PMS and DPK Subsidy $0.98 billion over claim of subsidy by NNPC Our review of the subsidy documentation revealed that the subsidy due to NNPC between January 2012 and July 2013 on PMS and DPK import was $8.99billion compared to the $9.97 billion stated by the Reconciliation Committee. The difference was due to the following: o o o Exclusion of October 2011 - December 2011 subsidy claims of $1.2billion. This does not relate to the review period of January 2012 to July 2013. $0.13billion increase in PMS subsidy claimed for the 19 months period. $0.09billion increase in DPK subsidy claimed for the 19 months period Duplicated discharges noted in subsidy computations Our examination of the PMS and DPK import verified by PPPRA revealed that some discharges were apparently verified and subsidy advised to NNPC more than once. The repeated subsidy for PMS amounted to N3,709,879,190 ($23,954,796). The repeated subsidy for DPK amounted to N6,169,502,266 ($39,836,652). $36.05 million over-statement in PPPRA’s PMS subsidy Payment Advice to NNPC o Our review of the Subsidy Payment Advice sent by PPPRA to NNPC for discharges between January 2012 and July 2013 revealed that PPPRA applied the pre-2012 Ex-Depot Price (N49.51) on some discharges in 2012 instead of the approved Ex-Depot Price of N81.51. o A total of 174,449,778 litres of PMS was affected in these PPPRA computations. o The error in computation resulted in an over-statement of PMS subsidy by N5.6 billion ($36.05 million). Estimated $205 million DPK subsidy over-charge by NNPC Vanguardngr o Our review of a sample of the copies of the Pro Forma Invoices (PFIs) issued to the other marketers of DPK across different geopolitical zones of Nigeria, revealed that the 0ther marketers bought DPK from NNPC/PPMC prior to arrival at NNPC depot in Nigeria at N40.90. o The marketers are thereafter required to incur the Lightering expenses 10 , NPA charges, Jetty Throughput Charge and Storage Charges before bringing the product into Nigeria. o Subsidy is calculated as Landing Cost minus Ex-Depot Price; 10 NNPC claimed that this cost is incurred by both NNPC and the marketers. For the purpose of this report, we have considered this cost as a cost incurred by the marketers. Over-charge of subsidy above depends on PPPRA’s decision to either consider this cost in favour of NNPC or in favour of marketers of kerosene. Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 28
Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) o Per PPPRA’s template, Landing Cost also includes the extra expenses incurred by the other marketers. o By selling DPK to marketers at N40.90 and claiming subsidy at an Ex-depot price of N34.51 without adjusting the Landing Costs for the extra costs borne by the marketers, NNPC had over deducted subsidies to an estimated amount of N31,522,234,881.06 ($204 million). 2.8. NPDC lifting Under-recognition of NPDC liftings by $0.82billion by Reconciliation Committee The Reconciliation Committee put the value of liftings in favour of NPDC at $6billion. We did not receive any supporting documentation from NPDC to validate this figure other than the submission to the Senate by the former MD of NPDC, Mr Victor Briggs, who disclosed the total value of NPDC liftings from all its assets as $6.82billion. While we were unable to verify the $6.82 billion directly at NPDC, we performed a recomputation of the values of liftings using information provided by COMD and arrived at a value of $5.65 billion 11 . Discussions with COMD revealed that lifting data captured by COMD for NPDC might not be complete as COMD does not capture liftings done directly by NPDC’s Strategic Alliance Partners. Volumes recorded by DPR for NPDC did not contain the necessary pricing information for valuation. Cash payments of $863 million by NPDC to FIRS not captured by Reconciliation Committee For the period under review, NPDC was yet to be assessed for tax by the FIRS. However, the company made several cash payments during and after the period which amounted to $863million. These payments were confirmed by FIRS to have been received. We also traced the payments to CBN/FIRS bank statements with JP Morgan. Cash payments of $839 million by NPDC to DPR not captured by Reconciliation Committee Vanguardngr For the period under review, NPDC made several payments to DPR based on self-estimated royalty. We traced several cash payments made by the company to CBN/ DPR JP Morgan account statement, to the tune of $839 million. 11 Appendix 6.1.1 – Valuation of crude oil revenue (NPDC section) Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 29
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