Nigeria: NEITI Carpets NNPC Over Subsidy Payment

This is an important review, for those interested in audits of the oil industry

Vanguard

8 February 2011

Nigeria: NEITI Carpets NNPC Over Subsidy Payment

Abuja — The Nigerian Extractive Industries Transparency Initiative, NEITI, has rapped the Nigerian National Petroleum Corporation's method of paying itself subsidy for importation of petroleum products, before it remits monies from sale of domestic crude to the Federation account.

This infringement, NEITI noted in its latest reconciliation report posted on its website, was inimical to the principle of transparency and credibility in the measurement of revenue flows from exploration of oil and gas.

According to the report, "Subsidy payments should normally be made from the Central Bank of Nigeria (CBN) through the Petroleum Support Fund (PSF) on the approval of the Accountant General of the Federation based on claims approved by the Petroleum Products Pricing Regulatory Agency (PPPRA).

"However, we observed that the NNPC deducts the subsidy claims directly from the domestic crude proceeds before remitting to the Federation Account."

The report therefore recommended that "the Corporation, like other petroleum product importers, should draw claims for subsidy from the PSF."

The NEITI report, which covered activities in the oil and gas sector between 2006 and 2008, also revealed impropriety in the sale of tax and royalty oil by the Corporation.

Read more ...