Audit-Report-on-NNPC

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Office of the <strong>Audit</strong>or-General for the Federation Abuja Nigeria 2 February 2015 Dear Sir, REPORT ON THE INVESTIGATIVE FORENSIC AUDIT INTO THE ALLEGATIONS OF UNREMITTED FUNDS INTO THE FEDERATION ACCOUNTS BY THE NNPC Per our engagement letter dated 5 June 2014, PricewaterhouseCoopers Limited (“PwC”) has performed the investigative forensic audit into the alleged unremitted funds into the Federation Accounts by the Nigerian National Petroleum Corporation (“NNPC”) between January 2012 and July 2013. Our services were performed and this <strong>Report</strong> was developed in accordance with our engagement letter dated 5 June 2014 and subject to the terms and conditions included herein. Our Scope of work included the following: 1. Analysis of remittance shortfalls from NNPC into the Federation Accounts; 2. Analysis of submissions made by key stakeholders in relation to these alleged shortfalls; and 3. Producing an independent Forensic report detailing our findings. The procedures we performed did not constitute an examination or a review in accordance with generally accepted auditing standards or attestation standards. Accordingly, we provide no opinion, attestation or other form of assurance with respect to our work or the information upon which our work was based. Our report, submitted on 28 November 2014, was limited to the specific procedures and analysis described herein and was based only on the information made available through 31 October 2014. In adherence to your instruction dated 7 January 2015, we have received and analysed further information made available by NNPC subsequent to 28 November 2014 through 29 January 2015. Accordingly, changes in circumstances after this date could affect the findings outlined in this <strong>Report</strong>. This <strong>Report</strong> and all PwC deliverables are intended solely for the Office of the <strong>Audit</strong>or-General for the Federation, for their internal use and benefit and are not intended to nor may they be relied upon by any other party (“Third Party”). Neither this deliverable nor its contents may be distributed to, discussed with, or otherwise disclosed to any Third Party without the prior written consent of PwC. PwC accepts no liability or responsibility to any Third Party who gains access to this deliverable. We appreciate the opportunity to assist you with this matter. Yours faithfully For: PricewaterhouseCoopers Limited Pedro Omontuemhen Engagement LeaderVanguardngr PricewaterhouseCoopers Limited, 252E Muri Okunola Street, Victoria Island, P.O. Box 2419, Lagos, Nigeria T: +234 (1) 271 1700, F: +234 (1) 270 3108, 270 3109, www.pwc.com TIN: 00290010-0001 RC 39418 Directors: S Abu, UN Akpata, O Alakhume, D Asapokhai, C Azobu, R Eastaugh (South African), E Erhie, I Ezeuko, F Gumel, P Kinisu (Kenyan), D McGraw (American), A Nevin (Canadian), P Obianwa, B Odiaka, T Ogundipe, P Omontuemhen, A Oputa, T Oyedele, AB Rahji, GI Ukpeh
Table of Contents Review of crude oil revenue Table of contents 1. Background 7 1.1. Introduction 8 1.2. History of allegations 9 2. Executive Summary 11 (The executive summary is not a stand alone document, and must be read with the full report) 11 2.1. Summary Findings 12 2.2. Our approach to this mandate 19 2.4. Revenue Generated 26 2.5. Revenue Remitted 26 2.6. Other Third Party Financing Arrangements 27 2.7. PMS and DPK Subsidy 28 2.8. NPDC lifting 29 2.9. Pipeline maintenance and management costs 30 2.10. Crude oil and product losses 30 3. Overview 31 3.1. Detailed Timeline of Events 32 3.2. Scope Reconciliation 34 3.3. Crude Oil Value Chain 37 3.3.1. Overview of crude oil production and sales flow (Federation’s portion) 38 3.3.2. Equity crude oil and revenue flow 39 3.3.3. Domestic crude oil and revenue flow 40 3.3.4. Other crude oil and revenue flow to the Federation 41 4. Methodology and Detailed Findings 42 4.1. Total Crude Oil Lifting 43 4.1.1. Introduction 43 Vanguardngr 4.1.2. Procedures Performed 45 4.1.3. Limitation 46 4.1.4. Key Findings 46 4.1.5. Summary of findings 50 4.1.6. Other findings 51 4.2. Revenue Remitted 52 4.2.1. Introduction 52 4.2.2. Procedures Performed 53 4.2.3. Limitations 54 4.2.4. Key Findings 54 4.2.5. Summary of findings 58
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