Audit-Report-on-NNPC

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Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.2.3. Limitations 1. Up till the time of writing this report, our request for bank statements from CBN was not responded to. 2. Due to the limitation identified above, we relied on the account statements obtained from other stakeholders to carry out our independent check on the remittances made. 4.2.4. Key Findings 4.2.4.1. Under-reported revenue remittance figure of $2.33bn The total revenue remitted from our analysis from all revenue streams amounted to $49.33 billion. We discovered a difference of $2.33 billion between the amount reported by NNPC to the Senate Committee and our analysis. This was as a result of the following; 4.2.4.1.1. Domestic remittance The monthly remittances relating to domestic sales which we traced to the Federation Account added up to $14.5 billion 23 . This is $1.5 billion lower than the amount reported to the Senate by NNPC. Our investigation revealed that NNPC added the receipts from domestic crude sales to the Federation from January 2012 to July 2013. This is however incorrect because receipts for domestic crude sales are usually remitted 90 days after the sales/lifting which means that receipts for the period under review were remitted from April 2012 up till October 2013. This is the reason for the $1.5 billion difference. 4.2.4.1.2. FIRS remittance We established that the total revenue generated from FIRS was $16 billion which is $1 billion higher than the amount reported to the Senate of $15 billion. The additional $1 billion was also remitted bringing the total remittance from FIRS to $16 billion 24 . 4.2.4.1.3. Other remittances We identified revenue from sources that were not previously reported to the Senate including $1.7 25 billion receipt from NPDC and $1.4billion 26 receipt from third party financing arrangements. The Third Party Financing arrangement with Total E&P Nigeria Limited (TEPNG) resulted in Federation getting a share of $211,421,677.33 from the USAN Field TMP project which represents Royalty ($193,478,061.15) and Profit oil ($17,943,616.18). Mobil Producing Nigeria Limited (MPN), in its submission to the Senate, stated that the value of crude oil lifted from the third party financing arrangement with NNPC amounted to $1,376,820,327.36. The amount is made up of lifting from the Reserve Development Project ($858,750,973.04) and the Satellite Field Development Project ($518,069,354.32). We confirmed the sum of $300 million was paid by MPN to the NNPC/CBN JP Morgan Account from the Satellite Field Development project out of the total sum of $518 million while the total $858 million from the Reserve Development Project was received in the same account. See detailed work done in the section titled ‘Other Third Party Financing’ section 4.3. Vanguardngr 23 See Appendix 6.1.4 – Domestic remittance 24 See Appendix 6.1.5 – FIRS remittance 25 See Appendix 6.1.6-7 – NPDC remittance 26 See Appendix 6.1.8-9 – Third party financing remittance Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 54
Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.2.4.1.4. NPDC remittance The proceeds due to NNPC and hence the Federal Government from total NPDC revenues include royalties and PPT. NPDC stated in its submission that a total of $2,175,635,436 was due to the Federal government, PPT being $1,147,552,371 and Royalties being $1,028,083,065; out of which a total sum of $1,701,991,619 had been paid to both FIRS and DPR. See detailed work in the section titled ‘NPDC’ section 4.5. 4.2.4.1.5. Equity and DPR remittance The revenue remitted from equity crude proceeds was $14.16 billion 27 ; which was $0.2 billion higher than the figure reported to the Senate Committee. Also, a total of $1.56 billion 28 was traced to the CBN/DPR account; which was $0.4 billion lower than the figure reported to the Senate Committee. These changes were in line with the changes identified from the total revenue generated from each area. Total revenue remitted NATURE Expected per NNPC Remitted per Variance Analysis $’Billion $’Billion $’Billion Equity crude 14.0 14.16 0.16 Domestic sales 16.0 14.54 (1.46) FIRS 15.0 16.0 1.0 DPR 2.0 1.56 (0.44) NPDC - 1.7 1.7 Third Party Financing - 1.37 1.37 TOTAL 47 49.33 2.33 Table B2– Comparison of total revenue with expected and reported remittances Source – PwC analysis 4.2.4.2. Amounts not remitted to the Federation 4.2.4.2.1. Equity revenue due but not remitted We noted a variance between the total equity revenue expected to be remitted and the actual remittances received in the JP Morgan account. A difference of $130 million 29 was discovered. SOURCE Volumes (bbls) Values ($) Vanguardngr COMD 128,741,037 14,293,600,200 PwC 128,741,037 14,162,976,470 Difference - 130,623,730 Table B3 – Difference in equity revenue generated and remitted This variance was as a result of various issues noted including; use of credit notes, initial funding deposits, technical costs, debt servicing and bank charges. All variances were investigated and confirmed to supporting documentation. See breakdown of costs below 27 See Appendix 6.1.10 – Equity remittance 28 See Appendix 6.1.11 – DPR remittance 29 See Appendix 6.1.12 – Details of unremitted equity revenue Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 55
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