Audit Oueries: House C’ttee tackles NNPC over feductions on sales

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▪︎Says all earnings should go into Federation Account

▪︎Gives 17 Subsidiaries 2-week ultimatum to appear before it

The House of Representatives on Thursday faulted the Nigeria National Petroleum Corporation (NNPC) for making unilateral deductions from the sales of petroleum products before paying accruing revenue into the Federation Account

The Public Accounts Committee of the House being Chaired by Hon Busayo Oluwole Oke expressed displeasure over the practice when the management of the Corporation appeared before it on the various Audit queries raised against it and its 17 subsidiaries by the office of the Auditor General of the Federation .

The Committee, while insisting that all earnings must go into the Federation account, before any deduction could be made in line with the provisions of the the 1999 Constitution, as ammended, warned that doing so in future would
attract punitive measures against the Corporation

Chairman of the House of Committee
pointed out that making such deductions from source contravened section 162 of the 1999 constitution, of 1999 as ammended, which stipulates that all revenues collected by all revenue agencies should be paid into the Federation Account in full.

He however said that the law governing the operations of the NNPC should be amended to enable government make provision for an amount to be paid to the NNPC as collection fees as it is done to other revenue agencies such as the Nigeria Customs Service and the Federal Inland Revenue Service.

The NNPC had failed to appear before the House Committee for about 10 times to defend the audit queries against the Corporation while also asking its 17 subsidiaries not to honour the invitation from the parliament thereby drawing the anger of the lawmakers.

The NNPC was however represented at Thursday hearing by the Chief Financial Officer, Umar Ajiya and the Group General Manager, Federations Accounts, Bello Abdullahi following a letter of apology written to the Committee by the GMD over his inability to personally appear due to due pressing Natiional assignment.

Ajiya however told the Committee that the subsidiaries could not honour the House invitation because as the Chief Financial Officer of the Corporation, he was in a position to defend their actions.

However, Hon. Oke told the NNPC team that “this parliament’s rules and the constitution of the federal republic of Nigeria have given us the window to conduct our activities in a manner that is suitable for us.

“When we ask your subsidiaries to cause appearance, it is pursuant to section 88 and 89 of the constitution. We want to hear from them and obtain evidences from them because they are subsidiaries and there are chief executive officers.

“We have queries against NAPIMS. Yes, NAPIMS reports to you, but it is our own right in this parliament to determine how we conduct our own business. We have a mystery to cure. We want to be able to ask the MD of Warri Refinery or the MD of Kaduna Refinery questions because there is queries from the Auditor General against them.

“I am from the corporate world and would have agreed with you. But when the Auditor General of the Federation specifically listed agencies, they must cause appearance before this committee. DPR has been here and have answered all their queries.

“Our ruling is that all subsidiaries under NNPC should cause appearance within two weeks. We don’t want to engage any agency of government in mudslinging. Members of the public are asking us why we have not laid our report.”

While responding to the query on the N865 billion deducted from the 2015 revenue by the Corporation, Ajiya said the money represented payment to joint venture partners as captured in the appropriation act for the year, adding that it is treated as “a first line priority charge against the oil revenue as provided for and to ensure that we satisfy our obligations to our JV partners in accordance with the joint operating agreement entered into with them.”

But Oke said it was not a defence for them to dip their hands into the accounts because they have access to the fund rather than paying the money into the federation account as stipulated by the law.

According to him, “the offence there is that you took the money from source and did not wait to be given what is budgeted for you. That offends the constitution. You should ask for what is yours and not take it by force like you have done. Going forward, this must stop and must not happen again. Maybe the government should agree on what should be given to the NNPC as cost of collection.”

On the non-remittance of N3.8 trillion to the federations account from the sale of domestic crude, Ajiya said a reconciliation carried out by KPMG showed that the federal government was actually indebted to the corporation to the tune of N237 billion.

He said the KPMG reconciliation which was ordered by the Governors Forum and the National Economic Council was to determine the whereabout of the money, adding that the report indicated that instead of N3.8 billion, the NNPC was indebted to the Federations Account to the tune of N557 billion.

He said further “the same report also showed that the federation account was owing the NNPC the sum of N787 billion. In effect, the federations account was owing the NNPC the sum of N237 billion.”

The House Committee however decided to work out a timetable for the Corporation to appear before it on a daily basis for the next two weeks to defend all audit queries against it.

The Committee also directed the NNPC to account for about $228.9m from the sale of domestic gas that was not remitted to the federations account as well as the sum of N3.878 trillion unremitted to the federations account from the sales of domestic crude.

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