Saturday, November 10, 2012

Why Presidency discredited Ribadu report •Revenue Committee wants new EFCC to fight oil thieves


Indications emerged on Friday that the Presidency decided to dump the Nuhu Ribadu-led Petroleum Revenue Special Task Force report because it didn’t expect what was presented in its recommendations.
Besides, the government initially appointed Ribadu to head the task force with the belief that it would be an avenue to win the former boss of the Economic and Financial Crimes Commission over to its side.
The Presidency was, however, surprised that Ribadu maintained his uncompromising stand throughout the sitting of the panel.
An investigation by our correspondents showed that Aso Rock became uncomfortable with the whole process when Ribadu refused to ask for sitting allowance as it is the practice during such public assignments.
The thinking of the government at the time of the appointment, according to the investigation, was that Ribadu would use the appointment to worm himself into government’s confidence.
The government, it was also learnt, had thought that Ribadu would be embittered with his loss of the presidential election and would probably want to work with it.
A presidential source said, “The President thought that Ribadu needed to be rehabilitated and that he was going to do away with his rascality.
“Don’t forget that he had no job at that time. The government just commuted his dismissal from the Nigeria Police Force to retirement and we all know that he had yet to be paid his entitlements.
“The little money he had, he had wasted it on his presidential campaign. So, we thought that he would be a good fellow and won’t rock the boat.”
Meanwhile, the committee has recommended the creation of a special, properly-trained Oil and Gas Sector Financial Crimes Unit to maintain financial sanity in the industry.
The task force advised that the unit should be fashioned in the mode of the Economic and Financial Crimes Commission to deal with the widespread corruption in the nation’s oil sector.
The Ribadu committee stated that the technical knowhow of the EFCC could be effectively exploited to establish the proposed anti-corruption agency in the oil sector.
The task force was set up by the FG on Feb. 28, 2012, to seek ways of enhancing transparency and accountability in the oil sector.
Other recommendations that the committee urged the Goodluck Jonathan administration to implement in the interest of Nigerians include, “Passing an oil sector transparency law that requires all oil companies active in Nigeria to report all payments, costs and earnings for each licence or transaction and to publish all contracts and licences.
“Appoint a new Nigeria Extractive Industries Transparency Initiative Board, now long overdue. Members should be sector experts with a commitment to transparency, and civil society should appoint independent representatives.
“The government should establish an embedded and independent office of transformation for the sector with fixed terms…”
But the Senior Special Assistant to the President on Public Affairs, Dr. Doyin Okupe, said the government did not have any regrets over Ribadu’s appointment.
Okupe said in a text message to one of our correspondents on whether the government regretted its action, “No, not at all.”
He said from the outset, it was clear that the President had nothing to hide and that was the reason he picked people from the opposition to head the committee.
“This is evidenced by his bold action of appointing major opposition members like Ribadu and a former Attorney-General of an Action Congress of Nigeria-controlled state, Supo Shasore (SAN), and other distinguished Nigerians,” Okupe added.
The committee recommended the enactment of an oil sector transparency law that would make it mandatory for all oil companies operating in the country to show the requisite standard of transparency in their business transactions with government representatives.
It was also one of the recommendations of the committee that the board of NEITI be replaced with a new one comprising those knowledgeable in the sector, and with serious commitment to accountability and transparency.
The task force had a mandate to “verify all petroleum upstream and downstream revenues, including taxes and royalties due and payable to the Federal Government of Nigeria; take all necessary steps to collect all debts due and owing and to obtain agreements and enforce payment terms by all industry operators.”
The panel, which also looked into the state of finances of the Nigerian National Petroleum Corporation, stated that the NNPC and its 16 subsidiaries had a deficit of N298bn.  
According to the committee, a look at various reviews of the financial statements of the NNPC showed that the corporation had not been receiving the requisite capital needed to grow its assets and operational costs.
The committee faulted the reliance of the corporation on the FG “lines of credit” and deduction of oil revenue from the Federation Account, which it insisted, had no clear basis in the constitution.
It discovered an outstanding sum of N137.572bn due to the FG as proceeds from the sale of gas from the Bonga Oil Field by SNEPCO, which it said was obtained from the NNPC, NAPIMS Financial Statement for 2009.
It was also part of the discovery of the committee that the FG had lost an approximate sum of $29m in 10 years because of the sale of gas from the Bonga Oil Field at a lower price than what was obtainable in the international market in the past 10 years.
“The task force, aided by the consultants, identified a total of N137.572bn  ($946.878m) due to the federation from SNEPCO, representing the proceeds of gas sales from the Bonga Oil Field; according to the NNPC (NAPIMS) Financial Statements for the year ended 31 December, 2009.
“For Liquefied Natural Gas, the price observed at which the feedstock gas is sold to NLNG seems too generous, compared to prices obtainable on the international market. The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from the NLNG, over the 10-year period, amounts to approximately $29bn,” the report said. 
Further review conducted by Ribadu and his team of investigators showed that the NNPC was owed N27bn comprising what they termed current debt, total debt overdue, disputed debt and total debt overdue by major marketers of petroleum products by Dec. 2011.
Even as fuel scarcity rages in major cities across the country, the committee came out with the discovery that $2.7bn was outstanding as the amount for 365 days out of $3.6bn owed suppliers of petroleum products in the country.
In evaluating crude utilisation in the country, the committee put the total quantity of crude oil produced in Nigeria, but refined outside the country at between 50 and 80 per cent.
It was  further discovered that a  different exchange rate from the CBN rate was used at arriving at the naira equivalent in paying for crude oil in six out of 10 years reviewed by the panel.
This is said to have cost the country an estimated N86.6bn.
“The task force also compared the average price per barrel payable by the NNPC for domestic crude with the average weekly prices for Nigeria Bonny Light, Forcados, obtained from the Energy Information Administration.
“The review showed that over a 10-year period (2002-2011), the state may have been short-paid by an estimated sum of $5bn, although it was understood from discussions with NNPC officials that the pricing of domestic crude oil was based on international prices. Enquiries from the NNPC revealed that up until Oct. 2003, the NNPC was granted fixed price regimes, which explain the wide disparity in prices in the earlier years,” the report said.

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