Derivation Fund: Oil Communities Allege N7tn Misappropriation

Oil-producing communities in five states of the federation have accused their respective state governors of misappropriation of about N7.282 trillion. It was alleged that the governors received the amount as payments for the 13 per cent derivation for the past 13 years. The states include: Akwa Ibom, Rivers, Edo, Bayelsa and Ondo

The communities, in a joint letter to the Nigerian Extractive Industries Transparency Initiative (NEITI), appealed to the agency to support their efforts to halt the illegal and unconstitutional payment of 13 per cent derivation into any state government account. They maintained that: “The illegal and unconstitutional payment of 13 per cent derivation fund through the state governments have left the actual oil and gas producing communities in abject poverty. The situation has caused monumental fraud against the oil and gas producing communities.

The communities also charged NEITI to visit the oil and gas communities to undertake physical audit in order to see the degree of poverty, lack of infrastructure and means of livelihood as well as the level of devastation, environmental degradation, pollution and health hazard while carrying out the financial audit on the 13 per cent derivation.

Oil producing firms owe FG N336bn

The Federal Government has been able to recover only N68.94bn out of the $2.6bn (N404.98bn) underpayments by operators in the oil and gas sector, leaving a balance of N336.03bn yet to be recovered. The underpayments were revealed in three audit reports for 1999-2004, 2005, and 2006-2008 conducted by the Nigerian Extractive Industry Transparency Initiative.

The Executive Secretary, NEITI, Mrs. Zainab Ahmed, said at the release of the Solid Minerals Sector Audit Report 2007-2010 in Abuja that measures put in place by the organization in collaboration with other government agencies had led to some recovery amounting to N68.94bn. The Chairman, NEITI, Mr. Ledum Mitee, also said the nation lost N4.04bn in the solid mineral sector between 2007 and 2010 due the use of outdated rates in the calculation of royalty payments.

Ahmed said the three audit reports showed that the Federation Account was boosted by $269bn (N41.89tn) between 1999 and 2008 through revenues from the oil and gas sector.

On the solid minerals sector, Mitee said the audit commissioned by NEITI earlier in the year revealed a discrepancy between what companies claimed they paid to the government and what government agencies claimed they received.

NEITI to Audit Excess Crude Account, Derivation Fund

The Nigeria Extractive Industries Transparency Initiative (NEITI) will commence a comprehensive and independent audit of the fiscal allocation and statutory disbursements of the extractive industries revenue funds from the federation account to Nigeria's three tiers of government.

The audit will amongst other objectives establish how funds from the account were distributed and received by the federal, state and local government councils.

A statement from NEITI in Abuja stated that the Federal Executive Council (FEC), presided over by President Goodluck Jonathan, approved the project at its last meeting on Wednesday, November 28.

NEITI said in the statement that the audit was equally designed to provide base line information and data to the three tiers of government on the basis of computation of who gets what, how and why.

It added that the exercise would also explain if each of the three tiers gets from the funds their actual due.

NEITI also noted that the audit is expected to review policies and procedures in the disbursement and utilization of extractive revenue funds by the three tiers of government and that major agencies to be covered by it include the Niger Delta Development Commission (NDDC), Petroleum Development Technology Fund (PDTF), Central Bank of Nigeria (CBN) and the Federal Government's share of derivation and ecology funds.

NEITI: Oil companies owe FG N1.3tn in taxes

The Nigeria Extractive Industries Transparency Initiative has said that oil producing companies operating in the country owe the Federal Government $9.81bn (about N1.3tn) in underpayment and non-payment of taxes on their operations. The Chairman, NEITI, Mr. Ledum Mitee, disclosed this at a stakeholders’ forum on the Petroleum Industry Bill, according to a statement issued by the Director of Communications, NEITI, Mr. Ogbonnaya Orji, in Abuja.

Mitee urged relevant government agencies responsible for the custody and management of extractive resources’ revenue, including the Federal Inland Revenue Services, Central Bank of Nigeria, Office of the Accountant-General of the Federation and the Department of Petroleum Resources to take practical steps to recover the outstanding money. He explained that the debts were enough to wipe out the fiscal deficit in this year’s federal budget.

According to him, the debts, which accumulated between 1999 and 2008, have remained because the agencies responsible for their collection have not made adequate efforts to recover them.

Oil Payments: NEITI Summons NNPC, Shell Others

Nigeria Extractive Industries Transparency Initiative (NEITI) has invited the Nigerian National Petroleum Corporation (NNPC) and some oil companies to streamline its audit report of petroleum proceeds accruing to the Federal Government between 2009 and 2011. Also invited are Shell Petroleum Development Company (SPDC), Chevron Nigeria Limited, and Nigeria Agip Oil Company (NAOC) Ltd among others to validate and reconcile payments they made to the government.

The invitation is also extended to all companies and government agencies involved in payment and receipt of revenue from Nigeria’s petroleum sector is expected to validate all payments within the period under review to avoid condemnation of its audit report when published.

It is also expected that the exercise will afford all parties involved an opportunity to reconcile such payments with data collected by NEITI’s independent auditors, as well as review presentations on system documentation by companies and relevant government agencies in line with the audit requirement.

Others companies to appear before it in Lagos are NNPC, SPDC, NAOC, Chevron, Shell Nigeria Exploration and Production Company (SNEPCO), Nigeria Agip Exploration (NAE), Agip Energy Natural Resources (AENR), Mobil Producing Nigeria Unlimited, Esso Exploration and Production Nigeria Limited, Nigerian Petroleum Development Company (NPDC) and CONOCO Phillips.

Also among the list are the Office of the Accountant General of the Federation, Power Holding Company of Nigeria (PHCN), Nigeria Gas Company (NGC), Nigeria Liquefied Natural Gas (NLNG), Federal Inland Revenue Services (FIRS), Department of Petroleum Resources (DPR), Central Bank of Nigeria (CBN), Nigeria Maritime Administration and Safety Agency (NIMASA) and the Nigeria Petroleum Investment Management Services (NAPIMS).

The invited companies are expected to tender documents such as system documentation on production and financial flows including payments and receipts of such flows by relevant government agencies on behalf of the federation as well as evidence of streams of payments made by companies.

NEITI’s audit of Nigeria’s oil and gas sector has come with disclosure of anomalies in revenue remittance by oil and gas companies to the federation account, with NNPC majorly accused in the audit reports of falling short in its remittance of oil proceeds to the government.