12th March, 2014
The Nigerian Extractive Industry Transparency International (NEITI) on Wednesday denied a report credited to it over the nation’s alleged loss of eight billion dollars annually through crude oil swap.
Mr Ogbonaya Orji, the Director, Communications, NEITI refuted the claim ascribed to it during its presentation at the House of Representatives’ public hearing over alleged connivance of NNPC with SWISS oil dealers
It said that the report was not only wrong but misleading, noting that what NEITI presented and explained at that hearing was that “there is no cost efficiency in the transactions with the offshore processing organisations.’’
“By this we mean that the total cost of offshore processing when compared with the reported price of PMS, DPK, AGO and other retained products proceeds paid to NNPC is not economically beneficial to the country.
“This is as a result of the under deliveries of petroleum products to the tune of 866 million dollars by the companies involved in the swap,” the agency said in the statement.
The agency also denied another report attributed to it that NEITI had uncovered 22.8 billion dollars unremitted funds to the Federation Account.
It stated that the presentation to the house committee had been largely misconceived, misinterpreted and misrepresented by some sections of the media.
“This clarification has become necessary in the overriding public interest, NEITI stakeholders, our international partners and the global Extractive Industries’ Transparency Initiative.
It recalled that on Feb. 26, the NEITI Executive Secretary, Mrs Zainab Ahmed, was invited to make a presentation to the House of Representatives Committee on Petroleum Upstream, investigating the alleged connivance of the NNPC with Swiss Oil Dealers.
It stated that NEITI’s presentation to the committee was based on the findings and recommendations of its 2009-2011 independent Oil and Gas Industry Audit Report, which was in the public domain and on the NEITI website.
It stated that contrary to the alleged reports, what NEITI presented at the public hearing was that the Federal Government, through the NNPC, entered into alternative funding/financing arrangements with its JV partners.
“This is done in the form of third party financing from external financial markets (i.e. banks) and Modified Carry Arrangements (MCA) which are loans from existing JV partners (IOCs). NNPC’s share in the third party financing is paid to CBN/NNPC crude oil and gas dollar revenue account and subsequently swept to the federation accounts.
“Under the MCA, an escrow account is opened at the lenders’ bank into which buyers pay proceeds from the crude oil and gas sales.”
NEITI observed that these transactions which summed up to 22.8billion dollars were off balance sheet items (not disclosed in NNPC’s audited financial statements).
It stated that the implication was that there might be significant contingent liabilities to the federation that was not being disclosed.
“We need to state further that it does not mean that NEITI has discovered some funds hidden somewhere or monies that were unaccounted for by the NNPC,” it stated.
It said that was why NEITI had recommended that all alternative funding arrangements should be disclosed in the audited financial statements of NNPC for clarity and openness in line with the EITI principles.
“These misrepresentations notwithstanding, NEITI appreciates the continuous support of the media in the implementation of the principles of the Extractive Industries Transparency Initiative in Nigeria,” the statement further declared
