NIGERIA: NO RECORDS FOR IMPORTED PETROLEUM PRODUCTS FOR 4 YEARS

Report Indicts NNPC, Chevron, Shell, Agip, Total and other Oil Majors.

Abuja (THEWILL) - As the Federal Government prepares to commence full blown deregulation in the downstream sector of the petroleum industry, indications emerged recently that there are no records to show the massive importation of petroleum products into the country by the Nigerian National Petroleum Corporation (NNPC), the nation’s only eye in the oil and gas sector.

A survey carried out by an independent team of investigators, Messrs. Telemetry Nigeria Limited consulting for the Nigerian Extractive Industries Transparency Initiatives (NEITI) and the British Department for International Development (DFID) discovered that the downstream sector operates completely in the dark and in isolation as no records were kept for the total amount of petroleum products imported into the country and distributed by the respective depots across the country, thereby making the whole plan of the Federal Government convincing the Nigerian populace of removing the subsidy a huge hoax.

The investigation, which was intended to analyze oil measurement in both the downstream and upstream oil sectors, was sponsored by NEITI and DFID.

Managing Director of Telemetry Nigeria Limited Engineer Yabagi Yusuf Sani who spoke exclusively to THEWILL said the team made two shocking discoveries during the two-week tour, which was concluded mid -November 2009.

According to Engineer Sani, the downstream oil sector is in a complete mess and nothing is working as far as oil measurement is concerned.  He said “there is no standard way of doing things, and we don’t have meters of what comes into the country as import while in the upstream sector, all the facilities are world-class but the measurement is not accurately reported, suggesting massive fraud by the international oil firms made up of Shell, Chevron, Agip, Total and a host of others in the upstream.

He regretted that even government agencies such as the Federal Inland Revenue Service (FIRS) and the Office of the Accountant General of the Federation (OAGF) and the Central Bank of Nigeria had no records which can match both the massive importation of products and even crude oil that goes out of the country through these oil majors.

The team, which had representatives of the OAGF, FIRS and Telemetry visited Brass Terminal of the Nigeria Agip Oil Company (NAOC), Shell’s Bonga FPSO off-shore terminal, Atlas Cove Jetty in Lagos and Chevron’s Escravos Terminal.

Other places visited by the team include Oando’s facilities in Lagos, Nigeria Liquefied Natural Gas [NLNG] in Bonny Island, Port Harcourt Refinery, Port Harcourt Depot and the Jetty.    

He said government is even the least informed as far as oil records in the country are concerned, adding that all the Joint Venture Agreements [JVAs] run by the Nigeria National Petroleum Corporation [NNPC] are poorly and corruptly recorded and that it is only what the JV partners declare that goes to government coffers as there were no regulatory checks on these oil majors.  He said unless the sources of crude oil output are measured, the country will continue to lose billions of Naira a day as the current loss per day is put at $1.2 billion dollars.

Engineer Sani blamed regulators in the oil sector such as NNPC and the Department of Petroleum Resources (DPR) for not performing their statutory duties by enforcing regulations that will compel the oil companies to measure their production wells.

He said what is provided to the government as oil proceeds do not match the physical output in the sector, and that the country will continue to go with this system if it is left in the hands of the multi-national oil firms.

Sani said the revenue agencies such as Central Bank of Nigeria [CBN], FIRS and OAGF are at the receiving end because they rely on the data given by other agencies, saying the DPR and the National Petroleum Investment and management Services (NAPIMS) lack the experienced manpower and have poor equipment.

He said from the revelations so far, even with the passage of the Petroleum Industry Bill, if necessary equipment is not in place, the problems will remain. He urged government to ensure that no matter how much it will cost, accurate measurement is ensured in the oil sector.

Making the public Presentation of the 2005 NEITI audit report of the Oil and Gas Sector during the Stakeholders’ Roundtable recently in Abuja, Chairman of NEITI’s National Stakeholders’ Working Group (NSW) Professor Assisi Asobie said the report showed that there was $800 million of unresolved differences between what oil companies said they paid in taxes, royalties and signature bonuses and what government said it received.

Of this amount, he said, $560 million was identified as shortfalls in taxes and royalties owed to the government while $300 million was payment discrepancies relating to signature bonuses, payments of dividends, interest and loan repayments.

An estimated $4.7 billion is owed to the government by the Nigeria National Petroleum Corporation for payments of domestic crude, making it the single largest figure identified in the report. According to Asobie, the 2005 audit was “quintessentially a pro-poor audit, directed at helping the federation of Nigeria secure full value from its petroleum industry and thereby be in a stronger position to provide for the welfare of the people.”

Engr. Sani said the survey carried out is a follow up to the NEITI audit and will help the country attain an accurate measurement system.