The Federal Government has lost approximately $518 million to oil swap and Offshore Processing Agreements (OPA) in 2013 due to inefficiencies by the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries, the Economic Confidential can authoritatively report.

The Economic and Financial Crimes Commission (EFCC) would soon be involved in investigating and prosecuting major culprits for appropriate sanctions over the revenue losses.

The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Mr. Waziri Adio made the disclosures in an interview with the Economic Confidential, the intelligence magazine. He said the Federation lost $211.88m to crude for product SWAP, and $306.16m of OPA, totaling $518m.

Mr. Adio who spoke on the backdrop of the just released 2013 Oil and Gas Industry Audit report noted that the Corporation and its subsidiaries also withheld some of the monies that are due to government.

“For instance they withheld $3.8bn and N358bn respectively. Now let us break it down this way. If you remember NNPC divested some of its interests in Shell Joint venture about 8 Oil Mining Leases(OMLs) to Nigeria Petroleum Development Company(NPDC), $1.29bn from NLNG; N354bn from unpaid domestic crude debt; N3.98bn from subsidy over-recovery in 2012 and N2.17bn from cash-call refunds,” he said.

Furthermore, he said the report discovered $4.7bn from theft and vandalism in 3 JVs—Shell, Agip and Chevron; and N20bn from not observing 90-day credit time value of money at 12%.

The issues captured, according to him, still need further elaboration. “Now NNPC Divested 55% in 8 assets (OMLs) in Shell JV: OMLs 4, 26, 30, 34, 38, 40, 41, and 42. They were valued by by DPR at $1.8bn, but according to Price Waterhouse Coopers(PWC), they should have been valued at $3.4bn, given that Shell got $2.72bn for its 45% interest in those same assets. This then mean that Shell’s 45% valued at 47% higher than Federation’s 55%. Let us look at it another way. Given the disparity between $3.4bn and $1.8bn, assets valued at 47% loss or discount. But even with discount or loss, NPDC paid only $100m, leaving an outstanding of $1.7bn. This means that NPDC paid only 5.6% of the discounted value of $1.8bn, and 3% of actual value of $3.4bn and yet enjoyed all the benefits, as oil from those assets lifted on behalf of NPDC and not the Federation”, he said.

Speaking on the four assets under the Nigeria Agip Oil Company(NAOC) JV similarly divested. OMLs: 60, 61, 62, and 63, Adio noted that no valuation was done on those 4 OMLs; neither consideration paid, and yet oil was lifted on behalf of NPDC, not the Federation.

He said despite the fact that 12 OMLs in the Shell and Agip JVs divested to NPDC, and not fully paid for or not paid for at all, NAPIMS paid cash-calls on some of these OMLs, namely, $536m paid as cash call on the 4 OMLs from Agip JV, $389m refunded to NAPIMS, but refund not remitted to Federation, apart from an outstanding of $147.8m not paid at all.

“There are also Cash-calls also paid on some the divested OMLs from the Shell JV, which include $35.12m refunded to NAPIMS, but refund not remitted to Federation. Records from NAPIMS showed request for refund of $414,000 and N249, 272, 000 on OML 25 apart from request for refund of $2.17bn on OML 42. You can’t imagine that these requested refunds were not made as at close of audits”, he said.

Asked to explain the status of the Nigerian Liquefied Natural Gas (NLNG) dividends, the NEITI boss said NLNG paid $1.28bn to NNPC, and NNPC acknowledged receipts, but money not remitted to the Federation. Again between 2005 and 2103, NLNG paid $12.9bn to NNPC, NNPC acknowledge receipts, but not remitted to Federation.

“If you consider losses to under-assessment/under-payments, you will discover $599.8m was lost due to contested pricing methodology. Out of this amount $432.5m was lost to under-assessment for royalties, and $168.3m was lost to under-assessment for Petroleum Profit Tax (PPT)”.

“From the report we discovered that N1.3 trillion was processed as petroleum subsidies for 2013. This you can see is 34% higher than the N970b appropriated for fuel subsidies in 2013. A careful look at the figures reveal that it is 26% of the N4.98 trillion of 2013 federal budget; 30% higher than total budget for education, health, water, and SUREP in 2013 budget”, he said.

Adio further disclosed that NEITI is engaging the EFCC for further investigations and sanctions on the culprits. He said: “The NEITI Act criminalizes some behavior and even put sanctions either in terms of fines and jails terms or both but did not give us powers to prosecute. That is why we are engaging the EFCC. The Acting Chairman of EFCC has pledged to set up a joint investigative team from both sides to come together and look at possible infractions.”