FG Loses $518m To Oil Swap, Offshore Deals | Independent Newspapers Limited
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FG Loses $518m To Oil Swap, Offshore Deals

Posted: Jul 18, 2016 at 6:11 am   /   by   /   comments (0)

The Federal Government lost approximately $518 million to oil swap and offshore processing agreements (OPAs) in 2013 due to inefficiencies by the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries.

The Economic and Financial Crimes Commission (EFCC) would soon be involved in investigating and prosecuting major culprits for appropriate sanctions over the revenue losses.

The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, Waziri Adio, made the disclosures in an interview.

Adio said the federation lost $211.88 million to crude for product swap and $306.16 million of OPA, totaling $518 million.

Adio, who spoke against the backdrop of the just released 2013 oil and gas industry audit report, noted that the NNPC and its subsidiaries also withheld some of the monies that are due to government.

He said: “For instance, they withheld $3.8 billion and N358 billion, respectively.

“Now let us break it down this way: If you remember NNPC divested some of its interests in Shell joint venture, about eight Oil Mining Leases, to Nigeria Petroleum Development Company, $1.29 billion from NLNG; N354 billion from unpaid domestic crude debt; N3.98 billion from subsidy over-recovery in 2012; and N2.17 billion from cash-call refunds.”

Furthermore, Adio said the report discovered $4.7 billion from theft and vandalism in three Joint Ventures — Shell, Agip and Chevron; and N20 billion from not observing the 90-day credit time value of money at 12 percent.

The issues captured, according to him, still needed further elaboration.

He said: “Now NNPC divested 55 percent in eight assets (OMLs) in Shell JV: OMLs 4, 26, 30, 34, 38, 40, 41, and 42.

“They were valued by DPR at $1.8 billion, but according to PricewaterhouseCoopers they should have been valued at $3.4 billion, given that Shell got $2.72 billion for its 45 percent interest in those same assets.

“This then means that Shell’s 45 percent valued at 47 percent higher than the federation’s 55 percent.

“Let us look at it another way: Given the disparity between $3.4 billion and $1.8 billion, assets valued at 47 percent loss or discount.

“But even with discount or loss, NPDC paid only $100 million, leaving an outstanding of $1.7 billion.

“This means that NPDC paid only 5.6 percent of the discounted value of $1.8 billion and 3 percent of actual value of $3.4 billion and yet enjoyed all the benefits, as oil from those assets lifted on behalf of NPDC and not the federation.”

Speaking on the four assets under the Nigeria Agip Oil Company JV similarly divested: OMLs 60, 61, 62, and 63, Adio noted that no valuation was done on those four OMLs, no consideration paid and yet oil was lifted on behalf of NPDC, not the federation.

He said despite the fact that 12 OMLs in the Shell and Agip JVs divested to NPDC and not fully paid for or not paid for at all, NAPIMS paid cash-calls on some of these OMLs, namely, $536 million paid as cash call on the four OMLs from Agip JV, $389 million refunded to NAPIMS, but refund not remitted to Federation, apart from an outstanding of $147.8 million not paid at all.