There Is No Missing Oil Money- Allison-Madueke
Last week we brought you the first of interview of former Petroleum Minister, Deziani Allison-Madueke. In the second phase of the interview, she explained on allegation of missing oil money, the importance of Petroleum Industrial Bill (PIB) and local contents which are her initiative in Nigerian oil industry
An inter-ministerial committee that first tried to unravel the mystery noted a few accounting discrepancies but said no fraud was involved. The Senate committee chaired by Senator Ahmed Makarfi discovered no wrong doings and concluded after exhaustive sessions that money was not stolen. The upper legislative chamber also wholly adopted that report. So yes, I would certainly say that the report by PwC has put the matter to bed and vindicated the NNPC.
But conspiracy theorists wouldn’t let the matter lie, even though one of the world’s leading auditors, PwC, was brought in to investigate.
According to the report, there was indeed a shortfall between the amount ($69.34billion) the NNPC received from crude oil lifting and total cash ($50.81 billion) that the NNPC remitted to the Federation Account for the period January 2012 to July 2013. The report goes on to state clearly that the “NNPC has provided information on the difference leading to potential excess remittance of $0.74billion”.
In other words, according to the NNPC act, the corporation is allowed to run its expenses from the money it receives from crude oil and remit the balance to the Federation Account. This is absolutely permissible in accordance with the law as the corporation does not have any other source of income to run its operations. PwC found that the expenses NNPC actually incurred were more than it had deducted from crude oil receipts. So on that ground, it was the Federal Government that owed NNPC money and not vice versa.
Secondly, the PwC audit report found that there is some money that the NNPC has not duly paid to the Federation Account but they clearly state that this is not from the crude oil lifting that sparked the CBN governor’s missive. Rather it is from two quite unrelated transactions, the signature bonus for divested assets ($1.75 billion) and the unpaid self-assessed taxes and royalties of NPDC ($0.47 billion). After offsetting the $0.74 billion that NNPC had overpaid on crude oil lifting into the Federation Account, the net balance owed by NNPC to the Federation Account was $1.48 billion.
So did the report say that any money had been misappropriated or anyone corrupt? No. Did the report highlight any fraud or monies that could not be accounted for? No. Even where the report said NNPC was challenged to explain the selling of DPK to bulk DPK marketers at N40.90 rather than the regulated ex-depot price of N34.51, it immediately provided the explanation of the miscellaneous charges (including bridging, transport and administration) that accounted for the difference.
Thirdly, the report also said that given the amount deducted from crude oil lifting to defray NNPC expenses in the audited period and the fall of crude oil prices by over 60% since June 2014, NNPC’s ability to fund its operations was in peril since NNPC has no independent sources of revenue, other than from crude oil lifting receipts, meet its expenses.
Finally, in line with third point above, the report recommends, [which in many ways vindicates all of my reform activities and proposals at the start of my tenure], that the ‘NNPC model of operation must be urgently reviewed and restructured, as the current model which had been in existence since the creation of the Corporation cannot be sustained’. This is precisely what I have been saying since 2010, and backed up with action in the form of the extensive review and the submission of the Petroleum Industry Bill (PIB) to be passed into law – this is bearing in mind that the PIB had been sitting in abeyance for over 12 years!
So what is the approval process like between the NNPC and the Ministry as for everything that happens in the sector, people are always quick to call your name. In other ministries the relevant parastatals take the heat or should I say the responsibility for their decisions?
My brother this is a very good point and good question. Why am I always the “fall-guy” when the parastatal heads are quite capable of taking responsibility! My name is perhaps one of the most searched on the internet why? Yes it’s an important role but there are lines of responsibility.
In the light of this question and the references in the press about “vague headings” in the PwC report, it will be instructive for me to mention the approval process between NNPC and the Ministry. As you know, NNPC is the technical/ operations arm while the Ministry gives policy direction. One of the first few things I did at the ministry was to ensure that there was a clear line of separation between the contract award process and myself. This was to remove any opportunity for bias, create clear walls and ensure contractors adhered to due process. This was not fully entrenched when I got into office and given the pressure that sometimes exists, I had to put layers into the process to ensure a cycle of critical checks across relevant parastatals and in-house technical experts before anything gets to my table for review or approval. This is a very sensitive and most important sector as every single decision has implications for Nigerians and cannot be taken lightly.
As a snapshot, for every operational decision NNPC’s technical team develops a proposal, which is reviewed by in-house technical staff of the appropriate parastatal. Together they check the soundness of the proposal and ensure that it meets the NNPC legal framework. That document then goes to an ad-hoc Executive Board committee who would review and refine. Then it goes the appropriate technical staff within the Ministry to review and comment working with the NNPC before it gets to the office of the Minister. At this point the team of experts presents the proposal to me and an ad-hoc ministerial technical review team (constituted based on subject matter expertise). Depending on the decision reached at this stage the proposal either goes back to the NNPC for further investigation or I place it before the Federal Executive Council for approval. So there is a rigorous process in place.
There are so many senior and technical staff involved in every decision and the ones that come to me are those that fit strict criteria while others are approved by the appropriate heads as specified by the law. So why is there are always so many attempts to spin the story to portray me in a bad light with such vitriol – such hate and anger? Is it because I am a woman? Is it because I am from a minority region in the country? I don’t understand. It always seems that people are so quick to persecute women in office much harsher. It really is quite sad. The thing is these women are someone’s mother, sister, aunty, even grandmother. They are trying to build for posterity. Time will judge and time will wipe out all of the social media nonsense and the truth will prevail. Anyway, despite it all I have soldiered-on channeling my energy into constantly improving and advancing the sector – doing my job for the great people of Nigeria. I always try to keep myself above the noise and not be dragged down by the persecution.
I took the backbench and allowed the groups to work without let or hindrance.
Members of the task forces were allowed full access to the parastatals under the Petroleum Ministry to deal with all elements of their Terms of Reference to the extent members enjoyed full independence of thought and action. Today many of the recommendations of those committees are making a difference to how the sector is run.
Second, was the drafting of the new PIB. Following the submission of the draft Bill from the PIB Technical Committee I set up an inter-paratstatal team to review the recommendations to ensure that it would bring about significant gains for all Nigerians. Most importantly, the number ONE objective of the PIB was to remove the ‘Chinese-walls’ and make the Ministry including its parastatal more open, transparent and accountable to the people of Nigeria. Let us not forget that the industry had been operating under a 50 year old law that did not benefit Nigerians extensively – I wanted to change that. It is Nigeria’s resource and so Nigerians should be able to tap-it and benefit from it economically. This was my goal.
More specifically the PIB, represents the most aggressive review of Nigeria’s oil and gas legislation since the enactment of the Petroleum Act in 1969, and is an amalgamation of 16 previously existent laws. It is an omnibus regulatory instrument intended to reposition Nigeria’s oil and gas industry to allow Nigerians benefit even more from the output of the sector primarily by unbundling the NNPC and privatisation. The original law was extremely punitive to Nigerians and favoured the IOCs. The PIB would put the running of the corporation into the hands of Nigerians, making it accountable and more importantly, transparent.
Let me quickly explain how:
(1) It would break up or unbundle the NNPC and make it more accountable and transparent to Nigerians. It would also, for the first time in history, give ordinary Nigerians a chance to participate in the running of the sector through a number of proposed privatisations that would have the effect of diluting the power of the minister in many ways. The Unbundling of NNPC as presented in the new PIB would lead to the creation of a National Oil Company that would focus on promoting indigenous operational capacity development and indigenous production.
So what was the big fuss about passing it to law, as all I can hear is benefits to the Nigerian public?
What is your view on the impact of this Act?