The Coordinating Minister and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has prescribed an independent forensic audit as the only way to satisfactorily resolve controversy over billions of dollars which the Nigerian National Petroleum Corporation (NNPC) allegedly failed to remit to the Federation Account. She made the recommendation today at the Open Hearing of the Senate Finance Committee on the issue.

Okonjo-Iweala recalled that it was the painstaking work of the Finance Ministry that last December reconciled the initial $49.8 billion which Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi gave as unaccounted funds to the $10.8 billion which was accepted by all parties as the basis for further discussion.

She noted that the CBN Governor has since come up with the figure of $20 billion as funds unaccounted for by the NNPC while the corporation, on its part, has vigorously challenged this and said that it has accounted for virtually all the funds.

“Our judgment is that a proper examination of these documents requires technical expertise beyond the capacity of the reconciliation team, etc, and therefore we believe we should have an independent forensic audit, managed independently of these submissions,” she stated.

Below is the summary of the Finance Minister’s submission before the Senate Committee:

•We thank the Distinguished Chairman and members of the Senate Committee on Finance for the work they are doing, and on their understanding with respect to the earlier postponement;

•Recall that the original issue was that $49.8 billion was unaccounted for, triggered by the CBN’s letter to Mr. President;

•As critical stakeholders in this matter, the Ministry of Finance convened a reconciliation meeting of the parties in December 2013 because we also want to see that all revenues owed are remitted to the Treasury;

•The outcome of this meeting was that the parties were able to reconcile most of the money thought to have been unaccounted for. These represented crude oil liftings on behalf of relevant Agencies, like the FIRS, DPR, NPDC, 3rd Party, etc., which had been duly paid into the accounts of government as PPT, royalty, etc. The amount that was still unaccounted for was now $10.8 billion, as indicated in the communiqué issued at the end of those meetings;

•It should be emphasised that the issue of unremitted funds by NNPC is not new, it has been an ongoing issue at every FAAC meeting chaired by Ministry of Finance, as evidenced by reports from the monthly meetings. As of December 2013, the cumulative unreconciled figure of shortfalls from NNPC payments stood at N1.792 trillion about $11 billion;

•Let us now focus on the original $10.8 billion which was the shortfall we had as at July 2013. Another reconciliation meeting was held, at which NNPC presented data of how they utilized the balance of $10.8 billion, namely, amount withheld for subsidy ($8.766 billion); holding cost of strategic reserve ($0.4599 billion); crude oil and product losses ($0.761 billion); pipeline management cost ($0.905 billion), for a total of $10.89 billion;

•The data presented were all certified by PPPRA as being accepted. We asked to see the backup documentation to enable verification. Our judgment is that a proper examination of these documents requires technical expertise beyond the capacity of the reconciliation team, etc, and therefore we believe we should have an independent forensic audit, managed independently of these submissions;

•Now going to the issue of the new figure of $20 billion, let me remind the committee that the NPDC and 3rd party arrangements featured in the original reconciliation effort in the cascade presented by NNPC;

•However, at the reconvened meeting of this (Senate) Committee hearing last week, the CBN had re-presented these two aspects as the crux of the new $20 billion amount unaccounted for. These new figures include amounts deemed to be due to the Federation Account as proceeds from NPDC operations of oil fields previously owned by Shell Petroleum Development Company (SPDC), and unremitted amounts captured as third party financing;

•In looking at these elements, the reconciliation committee concluded that the issues are largely legal and require careful legal interpretation, which would need to be given more detailed attention by legal experts. For example, what is the legal status of NPDC and who owns the revenues earned by this entity? Is it the Federation Account or NNPC? The NNPC and CBN have both indicated they will give expert legal opinion on these issues.

•Photo shows Okonjo-Iweala.