Audit-Report-on-NNPC

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Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) Right of Way (PROW). The payments for security were made to the Nigerian Army and Nigerian Police Force for security guards deployed to safeguard the pipelines. Alternative Crude Oil Transport Cost- via Marine These were costs, totalling $327,022,954.07, incurred by NNPC to transport crude oil and refined products using vessels, due to the significant losses experienced through pipeline vandalism. The costs also cover manning and management of NNPC’s storage vessels; MT Tuma and MT Olobiri, and other throughput expenses. The detailed breakdown of the cost is listed below; a) Charter Hire/Product distribution: charter of vessels loaded with refined products, during the review period b) NACJ/SPM Repair: Rehabilitation, operation and maintenance of damaged sections of New Atlas cove jetty facilities and Single Point Mooring (SPM) Cantenary Anchor Leg Mooring (CALM) Buoy, during the review period. c) NIMASA: Outstanding 2% cabotage fees (deducted at source) of the contract sum of coastal trades performed by MT Tuma and MT Olobiri. Cabotage involves carriage of cargo between two points within a country by a vessel registered in another country. The Coastal and Inland Shipping (Cabotage) Act was established in 2003 to restrict the use of foreign vessels in domestic coastal trade thereby promoting the development of indigenous ship acquisition capacity and providing financial assistance to Nigerian operators in domestic coastal shipping. The Act reserves the commercial transportation of goods and services within Nigerian coastal and inland waters to vessels built and registered in Nigeria, wholly owned and manned by Nigerians. d) MT Tuma and MT Olobiri: These are oil vessels owned by NNPC, used as haulage and storage facilities of excess crude oil and refined petroleum products when the NNPC storages tanks are fully utilized. Costs claimed relate to amounts incurred to sustain the full crew on board these vessels and the maintenance/repairs of the vessels. e) Crude Transport: Payments for crude oil transportation from Escravos terminals to Warri refinery Jetty, using marine vessels. f) Marine /Throughput bills: bills paid by NNPC to tank farm owners to utilise their tank farm. The total amount claimed during the review period was $327,022,954.07. Environmental remediation & Community cost Vanguardngr These costs were requested by PPMC for special funding to pay out of court settlements/ indebtedness to Industrial Trust Fund (ITF) and also some outstanding third party liability 73 . The total amount claimed during the review period was $10,899,421.83. Capital Expenditure – CAPEX NNPC claimed the sum of $123,252,435.75 as money spent on maintaining, repairing and revamping its depot facilities. 73 Sources: PPMC Internal brief to NNPC on the Out-of-Court settlement, NNPC Submissions. Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 90
Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) Supporting documents provided were copies of certificate awards, payment certificate and NNPC’s internal vouchers. 4.6.2. Procedures Performed The various procedures performed are as follows: 1. Reviewed NNPC’s submissions during the Senate Hearings on pipeline maintenance and management cost. 2. Checked the arithmetical accuracy of the figures contained in NNPC’s submissions. 3. Reviewed the report of the two consultants (Sada Idris & Co and Ayorinde Osomo & C0) appointed by the Senate Committee, to audit and give their professional opinion on these costs. 4. Checked the claims with the provided supporting documents to highlight any discrepancies. 5. Documented findings and conclusions. 4.6.3. Limitations Unsubstantiated claims: We were not provided with support documents for some items of expenditure categorized under the pipeline maintenance and management cost. 4.6.4. Key Findings 4.6.4.1. Approximation error of $4.68m NNPC’s actual claim for Pipeline Maintenance and Management cost was $905,318,411.32, which was approximated to $910million, thereby, creating a difference of $4,681,588.68 74 . 4.6.4.2. Unsubstantiated Cost of $305.89m The sum of $305,885,083.77, could not be substantiated due to a lack of or insufficient supporting documents and duplication of entries. Vanguardngr 74 Breakdown of NNPC’s Claim submitted during the Senate Hearing. Breakdown obtained from NNPC. GM Finance’s office Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 91
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