PwC audit reveals NNPC owes Federation Account $1.48bn

The Nigerian National Petroleum Corporation (NNPC) and its wholly owned subsidiary, the Nigerian Petroleum Development Company (NPDC) have failed to remit at least $1.48 billion to the Federation Account, according to the report of a forensic audit conducted by professional auditors, 

PricewaterhouseCoopers (PwC).The report was submitted to President Goodluck Jonathan on Monday, February 2 and it was only yesterday that the Auditor-General, Ukura Samuel, gave reporters some highlights of the audit report.

The audit also found that the NNPC spent $3.38 billion on illegal kerosene subsidies,  flouting an executive order by late President Umaru Yar’Adua,  stopping subsidy on kerosene as far back as June 2009.

“Based on information available to the PwC, and from the analysis above, the firm submitted that NNPC and NPDC should refund to the Federation Account, a minimum of $1.48 billion,” Samuel told reporters in his office.

The Federal Government commissioned the forensic audit following allegations by immediate past CBN governor, Sanusi Lamido Sanusi, that about $20 billion oil money was missing from the Federation Account, which the NNPC ought to have remitted between January 2012 and July 2013.

The PwC investigation has taken almost a year to conclude, and the findings are far reaching.

The corporation has quickly refuted this allegation, citing legalities overlooked by the government, by not gazetting the order as prescribed by a 46-year old Petroleum Act.

Unpaid signature bonuses, petroleum profit taxes and royalties amounting to $2.22 billion are due from the NPDC.

The PwC report suggests that the NPDC may have failed to reflect $5.11 billion of revenues in its financial statements, from which substantial dividends would be accruable to the federation account.

The report also showed that NNPC’s 55 percent share of eight oil mining leases (OMLs)in the Shell Petroleum Development Company (SPDC)divestments, were transferred to NPDC for an aggregate amount of $1.85 billion.

So far, only $100 million has been remitted.

Beyond the alarming figures, PwC raised concerns that NNPC “operates an unsustainable [spending] model.”

The Auditor-General explained that the “Corporation is unable to sustain monthly remittances to the Federation Account Allocation Committee (FAAC), and also meet its operational costs entirely from the proceeds of domestic crude oil revenues, and had to incur third party liabilities to bridge the funding gap.”

As Nigerians await decisive government action on the findings of the PwC audit, a recent corruption scandal of similar scale in Brazil has led to the resignation of the head and senior executives of state-run oil giant Petrobras.