Case of the “missing” 3.25 trillion naira

“From the analysis of the crude oil lifting and repatriations” prepared by staff of the Trade & Exchange Department and Banking & Payments System Department on the basis of firm documentation in their possession, “the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and […]

“From the analysis of the crude oil lifting and repatriations” prepared by staff of the Trade & Exchange Department and Banking & Payments System Department on the basis of firm documentation in their possession, “the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude valued at $65,332,350,514.57, according to Sanusi’s letter. Out of this amount, NNPC repatriated only $15,528,410,098.77, representing 24% of the value. This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.804 billion or 76% of the value of oil lifted in the same period”, the letter went on. These revenue leakages, he argued, dwarfed losses from oil theft, vandalism and illegal refineries in the Niger Delta.
“The failure of NNPC to repatriate these amounts” the CBN Governor argued, “constitutes not only a violation of constitutional provisions but also of both the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act No. 17 of 1995 and the Pre-Shipment Inspection of Exports Act No. 10 of 1996, which stipulates that “An exporter of goods, including petroleum products, shall open, maintain and operate a foreign currency domiciliary account in Nigeria into which shall be paid all exports proceeds corresponding to the entire proceeds of the exports concerned”.
The general public was understandably outraged. Despite many attempts to play down the amount actually unaccounted for or unremitted, and after much acrimonious exchanges between CBN, NNPC and the Federal Ministry of Finance, to say nothing of the embarrassing portrayal of the CBN Governor as being inconsistent about the actual figure “missing”, the inescapable conclusion is that something is seriously amiss with the way oil revenues are accounted for, remitted to the Federation Account and reconciled by all the parties involved.
The Senate’s decision directing its relevant Committee to get to the root of this problem and establish what is actually going on is therefore a welcome move.
Yet even aside of what has been actually remitted or not, other fundamental problems need to be resolved as well. One such issue is the amount allowed and the legal foundation authorising unilateral deductions by the NNPC for its operations. A second issue is the rather murky transactions surrounding product swaps and the entire “subsidy” affair. Does the NNPC have the power to deduct and pay importers without recourse to the Petroleum Products Pricing and Regulatory Agency (PPPRA) and the Federal Budget? Was there a Presidential decision to end subsidy on domestic kerosene; if so, why is the NNPC still ignoring it?
It is imperative to establish whether the problem is systemic and come up with remedies or if any financial improprieties are involved and punish the culprits appropriately. While no one would like to see the national oil company crippled because of too much regulation, it is also not appropriate to allow it to continue operating as if it is a “state within a state”.
A thorough audit of the activity on all domiciliary accounts held by NNPC, and other agencies handling oil payments, levies and taxes is therefore needed. This should be complemented by a thorough review of the remittance and reconciliation processes involved.  
Whether it is 50 billion, 12 billion, or 10 billion dollars that is ‘missing’, or unremitted, any audit of these processes must unravel what happened and locate where the money is, the actual amount involved and who, or what agency, has spent it without appropriation by the National Assembly.