Audit-Report-on-NNPC

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013)
2.9. Pipeline maintenance and management costs
Additional $2.8billion cost communicated by NNPC
After the submission of our initial report to the <strong>Audit</strong>or-General for the Federation on 28 November
2014, the following was brought to our attention by NNPC regarding Pipeline Maintenance and
Management Costs:
o Initial submission made to the Senate Committee was understated and did not include all
the costs defrayed from the proceeds of domestic crude revenue by NNPC in accordance
with the NNPC Act. These costs also largely include the amounts incurred by the
Corporation’s subsidiaries.
o The total additional costs amounting to $2.81billion was funded from domestic crude
revenue accruing from liftings of January 2012 to July 2013, and third party liabilities as
follows:
Expense type Total ($)
Salaries and benefits 1,522,258,663
Monthly operations 478,684,782
Other third party payments (including training 955,212,837
course fees, estacodes, and consultancy fees)
Total costs 2,811,153,197
2.10. Crude oil and product losses
Computation of Crude Oil loss
NNPC used a conversion rate of $100/barrel to value differences between the quantity of crude oil
pumped at the terminals and quantity received at the refineries. We adopted the monthly average
Platts 12 price to value the losses, considering that the revenue generated from Crude oil lifted during
the review period had been accounted for using such Platts information instead of a fixed rate.
Applying the monthly average Platts price to value the crude oil losses amounted to $73,851,144.93 13
higher than PPMC’s computation.
Vanguardngr
12
Platts is an Energy and commodity price reporting Agency
13
See Table G5 in Section 4.7.4.1
Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation.
PwC 30