Nigeria’s state oil company operates an “unsustainable model” and should refund a minimum $1.48 billion to the government, a PricewaterhouseCoopers LLP audit recommends.
The Nigerian National Petroleum Corp. (NNPC) spends 46% of domestic oil proceeds on operations and subsidies, according to highlights of an 18-month review between January 2012 and July 2013 released by the office of Nigeria’s Auditor General. The NNPC can’t sustain monthly remittances to government or meet operational costs from crude revenue and incurs third-party liabilities to fund the gap, according to the statement.
“PwC therefore recommended that the NNPC model of operation must be urgently reviewed and restructured,” according to Auditor General Ukura Samuel’s statement. “The current model which has been in operation since the creation of the corporation cannot be sustained.”
The audit came after the former central bank governor of Africa’s largest oil producer, Lamido Sanusi, wrote to President Goodluck Jonathan in late 2013 alleging the NNPC had retained almost $50 billion in revenue that was due to the government. He later amended the figure to $12 billion at a news briefing with the finance minister before raising it to $20 billion at a Feb. 4 meeting with lawmakers. The NNPC has denied the allegations.
Jonathan then suspended Sanusi in February last year for alleged financial recklessness and misconduct. Jonathan’s office said that under Sanusi’s watch the central bank was “distracted” from its mandate.
The audit “has absolved the NNPC of culpability over the allegation of non-remittance of $20 billion,” Ohi Alegbe, a spokesman for NNPC based in the capital, Abuja, said in an e- mailed statement. “The $1.48 billion was never in dispute as it is made up of statutory payments such as signature bonus, taxes and royalties which are statutory payments that come with assets acquisition.”
Total crude sold during the audit period was $69.3 billion and not $67 billion earlier claimed by NNPC, according to the audit highlights, with the state oil company spending $8.7 billion on gasoline and kerosene subsidies.
Petroleum Minister Diezani Alison-Madueke “has directed the NNPC to defray the signature bonuses, taxes and royalties in line with the recommendation of the forensic audit report,” Alegbe said.
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