The Office of the Auditor General for the Federation (OAuGF) has issued audit queries against Department of Petroleum Resources (DPR) now Upstream Petroleum Regulatory Commission (NUPRC) over non-remittance of over $2.041 billion revenue accrued from sales of crude and gas, into the Federations Accounts for the 2020 financial year.
According to the 2020 Auditor General’s report, “the sum of N151.121 billion was deducted by Nigeria National Petroleum Corporation (NNPC) from the oil royalty assessed by the Department of Petroleum Resources (DPR) now Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for 2020.
“The deductions by NNPC were purportedly for handling government priority projects, strategic holding costs, crude oil and product losses, among others.”
while noting that the deductions were made prior to remittance to DPR (now NUPRC), oAuGF further observed that there was no evidence to show details of the priority projects and approval by Federation Account Allocation Committee (FAAC).
In its management response.to.the audit query, NUPRC argued that: “the NNPC makes deductions for Government priority projects at source before remittance of royalty to NUPRC with the latter having no control over this. Thus, NNPC is in better position to provide necessary approvals to justify these deductions.
“The office of the Accountant General of the Federation has been duly written on the payment of 4% Cost of Revenue Collection to NUPRC for money deducted at source by NNPC for Government priority projects.”
In its recommendation, Auditor General however insisted that NUPRC Chief Executive Officer should be requested account for the sum of N151.121 billion that was deducted by NNPC from Federation Account revenue proceeds.
The report put outstanding royalties payable by the Nigerian National Petroleum Corporation (NNPC) to the Department of Petroleum Resources (DPR) now Nigerian Upstream Petroleum Regulatory Commission (NUPRC) with respect to Production Sharing Contracts (PSC), Repayment Agreement (RA) and Modified Carry Arrangement (MCA) lifting as at 31st December, 2020 at US$437,505,612.21.
Similarly, oAuGF observed that out of the amount, the NUPRC received US$417,731,114.06 leaving an outstanding balance of US$19,774,498.15 as outstanding royalties from two operators as at 31% December, 2020 without any justifiable reason.
oAuGF also reported that from the review of highlights of 2020 annual crude oil royalty and Gas, Gas flare payment and concession rentals reconciliation minutes of meeting between DPR (now NUPRC) and NPDC, it was discovered that the sum of US$2,021,411,877.47 from outstanding Royalty from Crude Oil and Gas sales and Gas flare, were reported as set off of Nigerian Petroleum Development Company’s (NPDC) claims against the Federation per inter agency reconciliation for 2020.
In the same vein, oAuGF disclosed that the sum of N13,313,565,786.49 in respect of Gas sales Royalty (Domestics) was reported as set-off of NPDC’s claim against the Federation as per inter agency reconciliation for the period under review, but there were no documents to substantiates such claims, adding that the unjustifiable set off drastically reduced the balance of the outstanding liabilities due to be paid by NPDC.
