Auditing giant PriceWaterhouseCoppers (PwC) has said $1.48 billion is missing from the treasury —no thanks to the Nigerian National Petroleum Corporation (NNPC).

Addressing reporters on the highlights of the PwC report as requested by President Jonathan, the Auditor General of the Federation, Mr. Ukura Samuel, said the PwC report centred on NNPC Costs; Ownership of NPDC revenues and Kerosine (DPK) subsidy.

Samuel stated that “based on the information available to PwC, and from analysis, the firm submitted that NNPC and NPDC should refund to the Federation Accounts a minimum of $1.48 billion.”

The Auditor General before presenting the PwC audit highlights categorically stated that President Goodluck Jonathan “cannot direct” him to release the highlights or complete details of any report but can “request” for the release of the highlights. His office, he said, is mandated by law to submit its report to the National Assembly and not to the Presidency.

With regards to NNPC cost, from where the $20 billion was alleged to have gone missing, the PwC report berated NNPC’s operations which it described as “an unsustainable model”.

The report noted that 46 per cent of proceeds of domestic crude oil revenues for the review period was spent on operations and subsidies while the corporation is unable to sustain monthly remittances to the Federation Account Allocation Committee (FAAC) and meet its operational costs entirely from the proceeds of domestic crude oil revenues and have had to incur third party liabilities to bridge the funding gap.

NNPC provided transaction documents representing additional cost of $2.81 billion related to the review period, citing the NNPC Act LFN No 33 of 1977 that allows for such deductions.

However, PwC was at a loss “whether such deductions should be made by NNPC as a first line charge before remitting the net proceeds of domestic crude to the federation accounts.”

Based on this, PwC recommended that “the NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the NNPC cannot be sustained.”

In the case of the ownership of the Nigerian Petroleum Development Company (NPDC), PwC stated that NPDC generated $5.11 billion (net of royalties and petroleum profit tax paid), relied on the legal opinion provided to Senate Committee by the Attorney General on the subject of the transfers of NNPC’s 55 per cent portion of oil leases (OMLs) involved in the Shell (SPDC) divestments which impacted crude oil revenues in the period.

The PwC report noted that “the Attorney General’s opinion indicated that these transfers were within the authority of the minister of petroleum resources to make.”

The report added that “NNPC’s 55 per cent portions of oil lease (OMLs) involved in the Shell divestments related to the eight OMLs were transferred to NPDC for an aggregate amount of US$1.85 billion. So far, only the amount of the US$100 million had been remitted. PwC also added that they had expected a transfer basis higher than the US$1.85 billion earlier mentioned.”

PwC reported that “NPDC had done a self assessment of PPT and Royalty and had unpaid self assessed PPT and Royalty to the tune of $0.47 billion related to the review period”. PwC added that it did not obtain any information that suggested that NPDC has been assessed for PPT and Royalty for the review period.

Based on these, PwC recommended that NPDC should remit dividend to the NNPC and ultimately to the federation account based on NPDC’s dividend policy and declared dividend for the review period.

For kerosine subsidy, PwC determined that $3.38 billion relating to DPK subsidy cost was incurred by the NNPC for the review period. PWC confirmed that there was indeed a presidential directive issued on the 15th of June 2009 instructing that subsidy on DPK be stopped and that there was a correspondence between PPPRA and the CBN governor to the effect that “PPPRA had ceased granting subsidy on kerosine since the Presidential directive of 15 June 2009, but kerosine subsidy was appropriated for in the 2012 and 2013 FGN budgets.

However, because the presidential directive was not gazetted and there has been no other legal instrument cancelling the subsidy on DPK, the subsidy has remained in effect.

Therefore, PwC recommended that an official directive be written to support the legality of the kerosine subsidy costs to be followed by adequate budgeting and appropriation for the costs.

Based on PwC’s audit it was revealed that total gross revenues generated from FGN crude oil liftings was $69.34 billion and not $67 billion as earlier stated by the senate reconciliation committee for the period from January 2012 to July 2013 and within this $69.34 billion, $28.22 billion was the value of domestic crude oil allocated to NNPC.

Also, total amount spent as subsidy for PMS amounted to $5.32 billion, $3.38 billion was spent on subsidy for DPK (not appropriated), $1.19 billion was spent as other third party financing arrangement and equity crude oil processing costs.

Total cost directly attributable to domestic crude oil amounted to $1.46 billion while other costs incurred by the NNPC not directly attributable to domestic crude oil was put at $2.81 billion. Revenue attributable to NPDC as submitted by the former NPDC managing director to the senate is $5.11 billion.

PwC stated that this amount needs to be incorporated into the financial statements of NPDC from where dividend should be declared to the federation accounts.

In addition, signature bonus, PPT and Royalty yet to be paid by NPDC is $2.22 billion. Total cash remitted into the federation accounts in relation to crude oil lifting was $50.81 billion and not $47 billion as earlier stated by the senate reconciliation committee for the period from January 2012 to July 2013.