Only NNPC can explain why $1.2bn was deducted from federation account – NDMPRA

The Nigeria Downstream and Midstream Petroleum Regulatory Authority (NDMPRA) says only Nigerian National Petroleum Company (NNPC) Limited can explain why the whooping sum of $1.2 billion was deducted from the Federation Account in 2019.

The Ogbugo Ukoha-led management of NDMPRA said this while responding to the query from the office of the Auditor General which asked the agency to recover the said money from the NNPC or face sanction before the House of Representatives Public Accounts Committee (PAC).

The NDMPRA replaced the Department of Petroleum Resources (DPR) since the Petroleum Industry Act (PIA) came into force in 2021

In it’s annual report on the Federal Government of Nigeria consolidated financial statements of the year ended 31st December 2019 submitted to the National Assembly on the 18th of August 2019, the Auditor General for the Federation reported the deduction of $1,278,364,595.49 by the NNPC from oil and gas royalty assessed by the DPR.

The report said: “Audit observed from the review of 2019 Joint Venture Ledger and other related records that the sum of US$1,278,364,595.49 was deducted by Nigeria National Petroleum Corporation (NNPC) from the Oil and Gas Royalty assessed by the Department of Petroleum Resources (DPR) for 2019”

The Auditor General gave a breakdown if the deduction as Distribution of Mid/Downstream Cost $992,693,875.57; Repayment Agreement (RA) – Oil Royalty $215,664,380.91; Modified Carry Agreement (MCA) –Oil Royalty $59,075,576.79 and Modified Carry Agreement (MCA) – Gas Royalty – $10,930,762.22.

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It said: ‘the deductions emanated from the assessments based on the Joint Venture arrangement that NNPC has with other Operators in 2019, and No justifiable reasons were provided for the deductions of the above amount from proceeds of assessments before remittance into the Federation Account.’

The Auditor-General also said in their response, the Management of the Department of Petroleum Resources (DPR) now NDMPRA stated that it “may have little or nothing to do in this regard because the deductions of the amount in question were made in accordance with the directive from the Federation Accounts and Allocation Committee (FAAC), and it is difficult to recover the amount from NNPC.”

The Auditor-General said the Director/CEO of DPR (NDMPRA) should be directed to provide reasons why the sum of US$1,278,364,595.49 was deducted by NNPC from Federation Account revenue proceeds, recover the said amount from the NNPC, deduct the 4% cost of collection due on the amount and forward evidence of remittance into the Federation Account to the Public Account Committees of the National Assembly.

Failure to do this, it said the agency should be sanctioned for failure to collect and account for Government Revenue in paragraphs 3112 (i) of the Financial Regulations.

However, when NDMPRA appeared before the Public Accounts Committee of the House of Representatives, it said the money deducted by the NNPC were for priority projects of the Federal Government.

According to NMDPRA, the money which was supposed to go into an account belonging to it and controlled by the Accountant General of the Federation never came into the account.