Audit-Report-on-NNPC

Recommendations

Info

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.2. Revenue Remitted 4.2.1. Introduction 4.2.1.1 Overview It was established from NNPC’s submission to the Senate that a total of $67 billion revenue had been generated for the Federation during the period January 2012 to July 2013, out of which only $47 billion had been remitted, consisting; 1. $14 billion from equity crude sales 2. $15 billion PPT from FIRS 3. $2 billion Royalty from DPR 4. $16 billion from domestic crude sales This review verified the remittances listed above and identified any other remittances that might have been made to the Federation Account during the period under review. Proceeds from crude oil sales are received in various forms depending on the source of the revenue and the type of arrangement that created the revenue. The various revenue sources and how proceeds are received by the Federal Government have been summarized below: 4.2.1.2 Equity Crude Oil The purchaser of the crude oil cargo opens a 30-day Letter of Credit (LC) in favor of the NNPC. Payments for the crude oil are credited to the NNPC/CBN JP Morgan Chase Crude Oil and Gas US Dollar (USD) account on expiry of the 30 day period. The CBN maintains the NNPC/CBN Oil and Gas US dollar accounts with JP Morgan Chase on behalf of the NNPC and both parties monitor the accounts for payments as a LIBOR based interest penalty applies to late payments. 4.2.1.3 Domestic Crude Oil Product exchange (swap) transactions SWAP transactions involve sale of crude oil, by NNPC, in exchange for refined petroleum products on a value-for-value basis. The proceeds from the sale of refined products are paid by buyers into NNPC local Deposit Money Bank (DMB) accounts as designated by PPMC. The DMBs periodically remit these funds into the CBN/NNPC crude oil revenue (Naira) account based on NNPC’s instruction. NNPC subsequently issues a remittance advice to CBN informing them of the transfer from the DMBs to CBN’s remittance pool account and then another remittance advice to move the funds to the Federation Account. The inflows through sale of products from the SWAP transactions are in Naira. Offshore Processing Arrangements (OPA) OPAs involve the use of a refinery outside Nigeria to process crude oil into refined products. The refinery is paid refining fees. Proceeds of subsequent sale by NNPC of the refined products are deposited in the NNPC local Deposit Money Bank accounts. NNPC issues an instruction to the Deposit Money Bank to move the funds into the CBN remittance account. The CBN remittance account is further debited by the CBN through a remittance advice from NNPC into the Federation Account. Vanguardngr Allocation to Local refineries The proceeds from sale of the refined products are likewise deposited in the CBN remittance accounts by the Deposit Money Banks through a remittance advice from the NNPC. The CBN also through a remittance advice from the NNPC credits the inflow back to the Federation Account. Unutilised Domestic Crude Oil Sales Proceeds from sale of unutilized crude sales are paid into designated USD accounts with DMBs. Note – All the proceeds from domestic crude liftings are subject to a 90 day credit period which means that revenue from liftings in a particular period are remitted three (3) months after the lifting. Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 52
Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.2.1.4 FIRS This goes through the same process as equity crude oil. However remittance is made directly to the FIRS JP Morgan account. FIRS then issues remittance advice to CBN, instructing the Bank to remit the proceeds in the JP Morgan account into the Federation Account. 4.2.1.5 DPR This goes through the same process as equity crude oil. However, remittance is made directly to the DPR JP Morgan account. DPR then issues remittance advice to CBN, instructing the Bank to remit the proceeds in the JP Morgan account into the Federation Account. 4.2.1.6 Senate submissions The Senate Committee set up to investigate the alleged unremitted crude oil revenue for the Federation requested for submissions from relevant parties including CBN and NNPC. In addition, the Ministry of Finance set up a Reconciliation Committee (consisting of CBN, NNPC, DPR, FIRS, OAGF, the Budget Office of the Federation, Federal Ministry of Finance and Federal Ministry of Petroleum Resources) to align the differing figures that were being reported and a final reconciled remittance figure of $47 billion was agreed. S/N Total Revenue NATURE ($bn) 1 Equity 14 2 Domestic Crude 16 3 FIRS 15 4 DPR 2 TOTAL 47 Table B1 – Summary of crude oil revenue remitted for the period of January 2012 to July 2013 as reported by NNPC 4.2.2. Procedures Performed 1. Conducted interviews with relevant process owners to validate understanding of each agency’s remittance procedures. 2. Traced equity remittances to CBN/NNPC JP Morgan account to confirm the total amount received from equity crude sales. 3. Traced domestic remittances to various DMB accounts to confirm the total amount received from domestic crude sales. Vanguardngr 4. Traced FIRS remittances to CBN/FIRS JP Morgan accounts to confirm total amount received in respect of PPT 5. Traced DPR remittances to CBN/DPR JP Morgan accounts to confirm total amount received in respect of Royalties 6. Compared amounts in procedures ‘2’, ‘3’, ‘4’ and ‘5’above to FAAC reports to establish completeness of remittances to the Federation. 7. Examined remittance advice issued by NNPC to CBN to transfer payments to the Federation Account to enable comparison with FAAC reports. 8. Documented findings and conclusions Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 53
Page 1 and 2: Forensic Services Audit</st
Page 3 and 4: Table of Contents Review of crude o
Page 5 and 6: Table of Contents Review of crude o
Page 7 and 8: Investigative Forensic audit of cru
Page 51: Investigative Forensic audit of cru
Page 103 and 104:
Investigative Forensic audit of cru
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199:
show all

Audit-Report-on-NNPC

Create successful ePaper yourself

Delete template?

Save as template?