Audit-Report-on-NNPC

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013)
4.6. Pipeline Maintenance and Management Costs
4.6.1. Introduction
NNPC, stated that $0.91billion had been incurred on Pipeline Maintenance and Management during
the review period.
During the Senate Public hearing, the Corporation provided a breakdown of the Pipeline
Maintenance and Management costs for the period January 2012 to July 2013. The costs are
NNPC/PPMC internally generated costs incurred during the period, which they funded from the
crude oil sales revenue before remitting to the Federation Account. The Corporation provided
internal payment vouchers, approval memos and correspondences, contract awards, and remittance
advices; to authenticate their claims.
We have reviewed and analysed the alleged costs claimed by NNPC, assessed the reasonableness of
the claims, and matched information with sufficient support documents, in order to confirm the
claim that $0.91billion of the unremitted oil revenue was incurred on pipeline maintenance and
management costs.
NNPC categorized the pipeline maintenance and management costs into the following:
1. Salaries and Upfront benefits of PPMC staff
2. Pipeline Vandalism Repair Cost
3. Pipeline Surveillance and Security Cost
4. Alternative Crude Oil Transport Cost –via Marine
5. Environmental Remediation and Community Cost
6. Management Charge out Rate
7. Capital Expenditure (CAPEX)
Components of the Cost
Salaries and Upfront Benefits of PPMC
Pipeline and Product Marketing Company (PPMC) is a fully owned subsidiary of the Nigerian
National Petroleum Corporation (NNPC) responsible for the administration of the local refineries in
Nigeria. They also act as the dominant supplier of all refined petroleum products 72 .
NNPC claimed the sum of $320,971,870.60 as salary payment to PPMC’s staff for January 2012 to
July 2013. These costs relate to salaries and upfront payments made to PPMC staff whose functions
are directly related to the supply and distribution of refined products in Nigeria.
Pipeline Vandalism Repair Cost
These were costs of repair of the pipelines vandalized across Nigeria. A total sum of $11,896,654.70
was claimed as repair cost between January 2012 and July 2013.
Pipeline Surveillance Cost
Vanguardngr
These were payments to security agencies to facilitate logistics and the deployment of military men
and Police officers to NNPC’s pipelines nationwide and also the cost of maintaining the Pipelines
72
Source: PPMC’s website
Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation.
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