Shortfall or short change?

[N8 trillion] to the Federation Account from the value of crude oil liftings in just one and a half years –January 2012-July 2013] promises, if true, to be the biggest scandal in the history of Nigeria. On the other hand, if explanations by the NNPC that CBN’s figures ignored the fact that the corporation is […]

[N8 trillion] to the Federation Account from the value of crude oil liftings in just one and a half years –January 2012-July 2013] promises, if true, to be the biggest scandal in the history of Nigeria. On the other hand, if explanations by the NNPC that CBN’s figures ignored the fact that the corporation is responsible for repatriating only a slice of oil revenue turns out to be true, then it could be the biggest goof in the history of Nigeria.
It all began with the publication of a letter dated September 25, this year that the CBN Governor was said to have sent to President Goodluck Jonathan. The letter’s stated subject matter was 1] non-repatriation to the Federation Account of $49.8 billion by NNPC 2] NNPC’s failure to remit N22 billion in Nigerian Export Supervision Scheme [NESS] levy and 3] other related matters.  
In the letter, Sanusi acknowledged that sources of revenue to the Federation Account from the oil industry include proceeds from export of crude oil, petroleum profit taxes, penalties for gas flaring, oil exploration licences and concession block allocations, among others. He wrote, “Our analysis of 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, 517.57. Out of this amount, NNPC repatriated only $15,528,410,098 representing 24% of the value. This means 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.”
Sanusi said these figures were compiled by CBN’s Trade & Exchange and Banking & Payments System Departments “based on firm documentation in their possession.” He said NNPC’s failure to repatriate those monies “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.
The CBN Governor’s letter to President Jonathan requested for a thorough audit of NNPC’s domiciliary accounts held outside CBN, an examination of banking records of companies involved in oil lifting and swap deals, independent review of the terms and conditions of oil lifting, prosecution of Bureau de Changes that purchased hundreds of millions of dollars from the Inter-bank market but could not account for the monies, as well as “investigation of obvious avenues for money laundering such as companies that sell private jets to Nigerians.” He also asked the president to “require NNPC to provide evidence for disposal of all proceeds of crude oil sales diverted from CBN and the Federation Account.”
Even though this country is daily awash in stories of corrupt deeds by officials and diversion of public funds through all manner of dubious ways, the amount involved here, nearly 50 billion dollars, easily dwarfed every other case of fraud in this country’s history. We use the word fraud because if a public agency collects revenue and fails or refuses to deliver it to where the law states that it should go, as alleged, then there is no other name for it but fraud. Some mystery was added to the whole saga when CBN’s spokesman Isaac Okoroafor refused “to confirm or deny” that Sanusi wrote such a letter to Jonathan. CBN also warned against “politicisation” of the letter, a backhand admission that it indeed wrote one.
State governors that have been complaining for many months about monthly shortfalls in the Federation Account seized on the allegations and demanded a meeting with President Jonathan. Members of the Nigeria Governors Forum [NGF] led by Governor Rotimi Amaechi met in Abuja last Thursday and said they were going to meet with Jonathan over that and other matters. They probably felt that an explanation had been found for the revenue shortfalls despite the high price of oil in the international market. In other words, what is at hand may not be a shortfall after all but a veritable short change of the public till.
Not surprisingly, NNPC did not take the allegation contained in Sanusi’s letter very lightly. First its spokesman Dr. Omar Farouk Ibrahim and then its Group Managing Director Mr. Andrew Yakubu addressed the press on the issue. What the two men said was consistent. Yakubu said CBN was the one trying to play politics with the issue. He said, “The allegation [that NNPC withheld such huge funds] is unfounded, baseless and has become a political instrument in the current politically charged environment.”
The summary of NNPC’s answer is that revenue from various aspects of the oil industry is collected by different agencies which separately remit it to the Federation Account. NNPC crude oil liftings alone are divided into equity crude, royalty oil, tax oil, volume for third party financing and NDPC equity volume. According to Yakubu the total value of all these liftings over the period in question was $67.17 billion, slightly higher than the $65.33 billion cited by CBN. He added, “We wish to categorically state that all the proceeds amounting to $67.12 billion have been remitted as statutorily required. NNPC remitted its portion which is $18.84 billion into the Federation Account.” Yakubu said the alleged shortfall of nearly $50 billion was the value of proceeds from royalties and petroleum profit tax and these were all remitted to the Federation Account by the Federal Inland Revenue Service [FIRS] and the Department of Petroleum Resources, DPR.   
Where therefore lays the truth in this matter? NNPC’s explanation is so simple that it is difficult to believe that the CBN Governor did not know it. His letter did not expressly say so, but is the $50 billion shortfall Sanusi alleged entirely missing only from NNPC’s share of collectible oil revenues or from proceeds from all agencies?
What is required is an urgent and wide ranging public probe of the CBN allegation. If it turns out that any agency or persons withheld huge monies from the Federation Account, they must be fished out and visited with exemplary punishment. If on the other hand it turns out that CBN cried wolf where there was none and made a very serious allegation based on a careless misunderstanding of a simple division of responsibilities, then the consequences should be equally grave, for the institution and for its Governor personally. But first of all, Nigerians want to know for sure who is telling the truth between CBN and NNPC.