NDMPRA wants Reps to probe NNPC over $1.2bn deduction from Federation Account

By Christiana Ekpa 

The Nigeria Downstream and Midstream Petroleum Regulatory Authority (formerly known as Department of Petroleum Resources) has asked the House of Representatives to demand explanation from the NNPC Limited why it deducted about 1.2 billion dollars from the Federation Account in 2019.

The position of the management of the NDMPRA is contained in it’s response 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.

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 Tlthe 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.

It said further that “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 that in their response, the Management of the DPR as it was then said “the Department 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 the Director/CEO of DPR 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 the management appeared before the Public Accounts Committee of the House at the weekend, it said the money deducted by the NNPC were for priority projects of the Federal Government, adding that only the NNPC will be in a position to explain the deduction.