The Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA, formerly Department of Petroleum Resources, DPR) has told the House of Representatives that only the Nigerian National Petroleum Company (NNPC) Limited can explain why it deducted about $1.2 billion from the Federation Account in 2019.
The agency said this in its response to a query from the Office of the Auditor General of the Federation (OAuGF) which asked it to recover the money from the NNPC or face sanction. In its annual report on Federal Government’s consolidated financial statements of the year ended December 31, 2019 submitted to the National Assembly on August 18, 2019, the Auditor General for the Federation (AuGF) reported the deduction of $1,278,364,595.49 by the NNPC from oil and gas royalty assessed by the erstwhile DPR. The report said: “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 the NNPC from the Oil and Gas Royalty assessed by the Department of Petroleum Resources (DPR) for 2019.”
The AuGF gave a breakdown of the deduction as 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.
It added: “The deductions emanated from the assessments based on the Joint Venture arrangement that 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 AuGF stressed that in its response, the management of the DPR, as it was then, said: “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 NNPC.”
The AuGF said the Director/CEO of DPR should be directed to explain why U.S$1,278,364,595.49 was deducted by the NNPC from the Federation Account revenue proceeds, recover the said amount from the NNPC, deduct the 4 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.
Failure to do this, it said, the agency should be sanctioned for failure to collect and account for government revenue as stipulated in Paragraph 3112 (i) of the Financial Regulations.
But when the management appeared before the Public Accounts Committee of the House of Representatives, it said the money deducted by the NNPC was for priority projects of the Federal Government, adding that only the company could explain the deduction.
The NMDPRA said the money, which was supposed to enter an account belonging to the DPR and controlled by the AuGF, never entered the account.