Audit-Report-on-NNPC

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013)
S/N
Source
Amount
$
1 Credit note 11,388,184
2 Initial funding deposit 112,222,988
3 Technical cost 9,011,894
4 Debt servicing (1,999,975)
5 Bank charges 639
Total 130,623,730
Table B4 – Summary of variances in equity
Source: COMD profile and JP Morgan statement
We made enquiries from NNPC on the nature and use of these identified cost and the following
explanations were given.
4.2.4.2.2. Credit notes
NNPC sometimes gives credit notes to its customers who at one time or the other incurred demurrage
or cargo losses upon lifting of equity crude. To compensate them for such expenses, the customers get
credit notes. Such credit notes could be utilized by the customers at any time in the future upon
liftings made.
In utilizing the credit notes, the customers make remittances for subsequent liftings to the JP Morgan
account less the value of the credit. We obtained the credit notes for the applicable transactions
during the period and no exception was identified.
4.2.4.2.3. Initial funding deposit
Initial deposits are sometimes required to be made by customers before the actual liftings are carried
out. This has the effect of reducing the amount eventually remitted by the customers as the value of
the lifting is reduced by the amount of initial deposit made.
We verified these deposits by confirming from the JP Morgan statements that the amount had been
remitted in the months prior to the customer lifting. No exceptions were noted.
4.2.4.2.4. Technical costs
Technical cost, one of the items identified to have given rise to variances between amount remitted
and amount due to have been remitted into the JP Morgan account, is made up of Unit development
fee, Opex fee, Abandonment Tariff and Shared Facilities Tariff.
These technical costs relate specifically to liftings with “Zafiro” as the crude type. On examination of
the Utilization and Unit Operating Agreement, we noted that the technical cost to be applied on the
total quantity of crude oil lifted per day for the period under review was $9.515. We performed a
check to ascertain the reasonability of the technical charge and obtained contract agreement that
relates to the charge and we noted no exceptions.
4.2.4.2.5. Debt servicing
Debt servicing, another source of variance identified, relates to the amount owed by Duke Oil to
NNPC from debt servicing arrangement with Pan Ocean. The debt was repaid by Duke Oil in addition
to the value of the lifting which resulted in the receipt of a higher amount than what was expected to
be paid to the Federal Government. We verified this arrangement by examining the invoice and
payment instruction between NNPC and Duke Oil. The total debt being repaid by Duke Oil was $2
million.
Vanguardngr
Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation.
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