The House of Representatives has called for a forensic audit of the Nigerian National Petroleum Company Limited (NNPCL) to determine its assets and liabilities as well as its current market value.

According to the House, the audit has become necessary due to the metamorphosis of the Nigerian National Petroleum Corporation into a limited liability company.

The House’s Ad Hoc committee on NNPCL’s assets and liabilities in its report which was presented to the legislature on Tuesday, claimed that its findings showed that asset worth $64bn (about N28tn) was unveiled by former President Muhammadu Buhari but during the transfer, only $58.8bn (N26tn at the official rate of N450 to $1) was transferred, leaving a balance of N2tn unaccounted for.

It recommended that NNPCL should re-assess its accounting system.

The committee presented its report a week after the Group Chief Executive Officer of the NNPCL, Mele Kyari,  said the Federal Government still owed the company N2.8tn that it had spent on petrol subsidy.

The House on December 1, 2021, resolved to set up an ad hoc committee to determine the assets and liabilities of the NNPC before it was fully privatised as prescribed by the Petroleum Industry Act, which was to carry out the exercise within eight weeks.

The probe was based on a motion moved by a member, Ibrahim Isiaka, titled ‘Need to ascertain the total consolidated inventory, assets, interests and liabilities of the Nigerian National Petroleum Corporation and its subsidiaries before transfer to the NNPC Limited to ensure a glossary accounting system.

Following the enactment of the Petroleum Industry Act, the NNPC and its subsidiaries had been unbundled with the creation of an NNPC Limited, the Nigerian Upstream Regulatory Commission, and the Nigerian Midstream and the Downstream Petroleum Regulatory Authority.

The Corporate Affairs Commission also in September 2021 incorporated the NNPCL in line with the provisions of the PIA.

The House, at the plenary on Tuesday, considered and adopted the report of its ad hoc committee to ascertain the total inventory, assets, interest, and liabilities of the Nigerian National Petroleum Corporation and its subsidiaries.

When contacted, the spokesperson for the NNPCL, Garba-Deen Muhammad, told our correspondent that the firm had nothing to hide and would answer any question from the Reps members.

“They have been asking us questions and we’ve been answering them. So if they have any more questions for us, we will oblige and attend to them.

“We respect them and recognise their rights to perform their functions. NNPCL doesn’t have anything to hide.”

On refineries, he explained that the company would ensure that the facilities deliver up to expectation and was working hard to get the plants running.

In its report, the committee stated, ‘’From findings, asset worth $64bn (about N28tn) was unveiled by Mr President (Buhari) but during transfer, only $58.8bn (N26tn at the official rate of N450 to $1) was transferred, leaving a balance of N2tn unaccounted. NNPCL should be meant to re-assess her accounting system.”

 The committee recommended that the NNPCL and Federal Government “should work modalities that will ensure removal of subsidy in accordance with the Petroleum Industry Act that stipulates that subsidy be removed within six months of operation of the PIA.”

The committee also recommended that the investments and operations of international oil companies should “be further investigated and scrutinised” before implementation and Fund for Innovation Development.”

The committee further recommended that “External auditors should audit the liabilities of over N2tn being inherited by NNPC Limited on behalf of the federation. There is a need to further establish the current market values of NNPC, especially under a devalued naira regime.

“The Federal Government should investigate foreign desk offices of NNPC subsidiaries with locations abroad, and make IOCs establish offices in Nigeria and develop a framework that will make the companies answerable to the laws of Nigeria.

“Forensic auditors to first audit all NNPC accounts with all the banks to verify the following: the true amount owed any bank as per loan(s) granted, the exact movements of funds from NNPC accounts as well as overcharges by banks which is a huge amount of money and will be a source of additional revenues to the Federal Government, and the defaulting banks should be made to refund the sum discovered back to NNPC/Federal Government with interest.”

The committee also recommended that the NNPC should “auction the equipment and transfer proceeds of equipment awarded for Port Harcourt refinery in the sum of $250m (yet to be supplied) to NNPC Limited.”

According to its findings, the committee noted that the NNPC was alleged to have over 25 subsidiaries, whose profits, assets, and liabilities were transmissible to NNPC Ltd, “but the NNPC only transmitted records of only 21 subsidiaries.”

The committee noted that the NNPC, in its latest Group Audited Financial Statements, reported total assets of N15.84tn for 2020 and N16.2tn for 2021.

“However, in direct contrast to that position, NAPIMS alone, in its audited account for 2020 reported N21.04tn,” it stated.

According to it, NAPIMS has total assets of N4.84tn more than NNPCL, which it claimed was a mystery that needed to be unravelled.

The report partly read, “The issue of subsidy/under-recovery that has bedevilled the nation over the years seems to have reared its ugly head in our findings. There is evidence that the subsidy/under-recovery cost is being overestimated. The same costs seem to be charged against the federation in the audited accounts of both NNPC and NAPIMS.

“Nigerian publications on the 3rd of January 2022, pointed to the fact that NNPC is asking the Federal Government to pay additional $1.5bn to five IOCs as outstanding cash-call balance. This is additional liability about to be passed on to NNPC Ltd.

“However, our findings show that as a matter of fact, the federation has actually paid the liabilities of over $2bn through President Muhammadu Buhari’s directive; found a liability of over N2tn that NNPC Ltd is about inheriting on behalf of the federation. No reasonable basis has been established for this liability which is associated with Nigeria Agip Oil Company.”

The committee said available information showed that the NNPC assets were stated at “historical cost and written-down values,” while some subsidiaries of the NNPC, with locations in foreign countries, buy crude oil and gas from NNPC “without evidence of their payments for the purchases.”

It added, “These companies are indicted to be operating without employees and no fixed assets; yet over N30bn is traceable to some of them;

“Standard Chartered Bank is closing all its Nigerian branches and the nation has so much to worry about, considering the huge funds warehoused therein in the names of NAPIMS and NNPC.”

According to the committee, 80 companies supposedly owe the sum of $5.76bn on royalties, $1.0bn on gas flare penalty, while concession rental is $13.173m and royalty on gas is $409.58m, with royalty on gas in naira, N39.82bn.

“Hence, the recommendation is to recover the above debts and transmit to NNPC Ltd or confiscation of assets value of the debt from the debtors and transfer to NNPC Ltd,” the panel declared.

The committee also disclosed that NNPC spent over N1.48tn ($396m) on the rehabilitation of refineries between 2015 and 2022 “without significant outcome.” The Port Harcourt refineries received about $1.5bn for total rehabilitation, which was awarded to Technimont SPA of Italy, “whereas the same refinery awarded the contract for equipment of the refinery for over $250m yet to be delivered.”

The report further read in part, “The Ministry of Petroleum Resources; Ministry of Finance, Budget and National Planning; Central Bank of Nigeria, Auditor-General for the Federation and the Accountant-General of the Federation could not provide the committee with the exact monetary value of total assets and liabilities of NNPC. The CBN was only able to provide how much was paid into the Federation Account by NNPC and deposit banks of the organisation.”

The House of Representatives also called on the Federal Government to outsource the nation’s three refineries to international companies.

The refineries have a combined capacity of 410,000 barrels per day, for maximum production

The House also asked the NNPCL to take full responsibility for the delays in rehabilitating the moribund refineries, urging the nation’s oil firm to be sincere with Nigerians on the true state of the facilities.

However, the Trade Union Congress opposed the calls for the privatization of the refineries, describing the move as a ploy by the political elite to sell the assets to their cronies.

The Secretary General of the congress, Nuhu Toro described the idea as “laughable.” He said, “It is laughable. They want to sell the refineries to themselves. We don’t agree. It is a no, no. They can’t be allowed to sell our national assets.”

But the Petroleum and Natural Gas Senior Staff Association of Nigeria said the call by the National Assembly to allow private entities to run Nigeria’s refineries was in order.

The National Public Relations Officer, PENGASSAN, Kingsley Udoidua, said, “PENGASSAN has always declared what should be done on matters like this. If you look at the NLNG (Nigeria Liquefied Natural Gas Limited) model, it is both the combination of privatisation and the government’s stake in it, which is the model we’ve been canvassing for.

‘’So, if that’s what the National Assembly means, then it is fine because PENGASSAN’s position is that the government should follow the NLNG model. If you study that model, it is partly government and private.’’

The Director General of the Nigeria Employers’ Consultative Association, Wale Oyerinde, emphasised the critical importance of transparency in the privatisation of refineries, as he lent his support to the growing demand for the privatisation of the facilities.

He said, “The oil refineries are some of the many national assets that have faced serious operational challenges for reasons yet unclear. To improve efficiency in the operations of government assets, we believe that transparent privatisation, with Nigerians owning a majority share, will serve the best interest of Nigeria and its citizens.’’

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