The Nigerian Downstream and Midstream Petroleum Regulatory Authority (formerly known as the Department of Petroleum Resources) has denied withdrawing about $1.2bn from the Federation Account in 2019.
The NDMPRA asked the House of Representatives’ Committee on Public Accounts to demand an explanation from the Nigerian National Petroleum Company Limited on the withdrawal as it was difficult to recover the amount from the oil company.
The NDMPRA said this in its response to a query issued by the Office of the Auditor-General of the Federation, which asked the authority to recover the fund from the NNPC or be sanctioned.
The office, in its annual report on the Federal Government of Nigeria’s consolidated financial statements of the year ended December 31, 2019, submitted to the National Assembly on August 18, 2019, reported the deduction of $1,278,364,595.49 by the NNPC from oil and gas royalty assessed by the defunct DPR.
The query read in part, “Audit observed from the review of 2019 Joint Venture Ledger and other related records that the sum of US$1,278,364,595.49 was deducted by Nigeria National Petroleum Corporation (NNPC) from the Oil and Gas Royalty assessed by the Department of Petroleum Resources (DPR) for 2019.”
The office said the deduction included Distribution of Mid/Downstream Cost, $992,693,875.57; Repayment Agreement (RA) – Oil Royalty, $215,664,380.91; Modified Carry Agreement (MCA) – Oil Royalty $59,075,576.79; and Modified Carry Agreement (MCA) – Gas Royalty, $10,930,762.22.
The query further read, “The deductions emanated from the assessments based on the joint-venture arrangement that the NNPC has with other operators in 2019, and no justifiable reasons were provided for the deductions of the above amount from proceeds of assessments before remittance into the Federation Account.”
The report quoted the DPR to have responded stating, “The department may have little or nothing to do in this regard because the deductions of the amount in question were made in accordance with the directive from the Federation Accounts and Allocation Committee (FAAC), and it is difficult to recover the amount from the NNPC.”
The office asked the Director/CEO of DPR to explain why the sum of $1,278,364,595.49 was deducted by the NNPC from Federation Account revenue proceeds, recover the said amount from the NNPC, deduct the four per cent cost of collection due on the amount, and forward evidence of remittance into the Federation Account to the Public Account Committees of the National Assembly.
The query stated that in the event that it fails to do this, the DPR should be sanctioned for failure to collect and account for government revenue in Paragraphs 3112 (i) of the Financial Regulations.
The DPR, now NDMPRA, however, said the money deducted by the NNPC was for priority projects of the Federal Government, stating that only the NNPC would be in a position to explain the deduction.
The NMDPRA management, while appearing before the committee on Friday, said the money, which was supposed to enter into an account belonging to the DPR and controlled by the Accountant-General of the Federation, never entered into the account.
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