This Yam, This Goat, This Country: PwC and
NNPC – Part 1
“Friends and countrymen; I beseech you by the
mercies of God that ye do whatsoever it is within
thine powers to prevent a frolic between the
yam and the goat. For, as surely as the rising
and setting of the sun, such an enterprise
yieldeth only corruption, nay a sad ending for
the yam” – Goodluck The Jonathan, First of
His Name
Finally, we get a chance to see what PwC, the
auditors, saw when they looked into the black
hole that is NNPC. The full report is here (200
pages). It is not pretty.
I am not an oil and gas expert and much of the
industry and how it works confuses me. But the
PwC report is written in English so let’s try to
parse it.
Remember The King?
A quick recap of what started all of this – King
Mohammed Sanusi II, in his former life as SLS,
the Central Bank Governor, told the nation that,
based on what he had calculated, NNPC sold $
67bn worth of crude in the period from January
2012 to July 2013. He then said that as custodian
of the nation’s purse, he had only received $
47bn of this amount. In other words, up to $
20bn of the money was not accounted for.
Contrary to popular perception, SLS never did
say the money had been stolen and he certainly
didn’t name any names in his 300 page report
submitted to the National Assembly. His main
issue at the time was that, as CBN Governor, his
job was to manage the exchange rate and the
nation’s reserves. If there was $20bn out there in
the wild, then his job was being made a lot
harder than it needed to be.
He identified 3 ways in which the country was
losing money as follows
1. Strategic Partnership Agreements – In
2011, as part of the efforts to promote local
content, Shell sold its shares in 5 oil fields where
NNPC was the majority shareholder. Shell had
been the operator of these oil wells but NNPC
awarded the operator rights to its subsidiary
NPDC i.e. it allowed Shell to sell its shares but
not the rights to operate them as it previously
did.
NPDC then signed an ‘agreement’ worth almost
$7bn with Seven Energy (3 fields) and Atlantic
Energy (2 fields) for them to operate the fields.
These companies of course had no clue how to
operate the oil fields – Atlantic was registered as
a company the day before it signed the
agreement – so they sub-contracted the work to
other companies. Seven Energy’s contract
entitled it to 10% of the profits from the 3 fields
while Atlantic was entitled to 30% of profits in its
2 fields.
SLS complaint was that these 2 companies were
pointless and were just collecting money – that
should have accrued to Nigeria – for doing
nothing. Why didn’t NPDC just sub-contract the
work by itself? The 2 companies also did not pay
any taxes or royalties whatsoever to Nigeria.
2. Kerosene Subsidies – This one is fairly
straightforward to understand. SLS did an
analysis of kerosene prices in all 36 states of the
federation in his report and found that prices
ranged from N170 to N270 per litre.
Importers bring in kerosene and sell it to
government at N140/litre. The government then
sells it to local retailers at N40/litre with the
understanding that they sell it to the ‘common
man’ at N50/litre i.e government subsidises it by
N100/litre. The retailers take the kerosene and
sell it for what they like as stated above.
There is no sweeter corruption than this one.
According to SLS, Nigeria was spending $100m
per month on this pointless exercise. Not a
single Nigerian anywhere bought kerosene for
the ‘official’ N50/litre.
3. Swaps – Even with all the money going into
NNPC, like a true apa, it is always broke. Due to
the semi-dead refineries we have, NNPC of
course has to import refined products (petrol
and kerosene) but it often doesn’t have the
money to pay importers in cash. So what it does
it tell importers to import the refined products,
then calculates the value of that product in crude
oil and pays the importers with crude oil. This is
how human beings traded before money was
invented – by barter.

FTC

Continuation: The problem here is that SLS said he had no idea how the amount of crude to be swapped for refined products was calculated. All he was able to find was that at one point, NNPC was ‘swapping’ 200,000 barrels of crude per day. That is a lot of crude. Did Nigeria get that much value in refined products? Who knows? Enter PwC The first thing to note is that PwC was asked to investigate all money due to the federation from crude sales to see what had been remitted and what, if any, was outstanding. It did NOT investigate the swaps or the Strategic Partnership Agreements as those were not part of its remit. So what did it find? That the total revenues for the period in question were $69bn and not $ 67bn as stated by SLS. It had also remitted $ 50.8bn and not $47bn as initially thought. So, there was still a gap of roughly $20bn to be explained as before. Somehow NNPC managed to overpay $740m to the federation account if we accept its own numbers. As we shall see; NNPC cannot count, it cannot buy, it cannot sell. Based on this, we can conclude that ‘no money is missing’ and close the case. Afterall, the numbers have been made to add up one way or the other – the $20bn that we thought was missing has been accounted for wan kain, as the outgoing President is wont to say. But who or what gives NNPC the right to withhold nearly 30% of the money it receives on behalf of Nigeria and then spend it as it wishes? Here we have a goat locked in a room alone with a yam and no one to supervise what’s going on. PwC’s opinion is that this practice of withholding money and then spending as it sees fit is highly dubious and that the NNPC act needs a legal opinion to determine whether it has the right to do this. What stops NNPC (the goat) from withholding 50% of revenues (the yam) and then telling us later that it spent it on one thing or the other? Based on this, nothing. Kerosene Subsidy From the chart above, we can see that the biggest expense in the accounting of the ‘missing’ $20bn is the petrol and kerosene subsidy at $8.7bn. Of this amount, NNPC claimed to have spent $3.38bn on kerosene subsidy. Yet, whether or not subsidy should have been paid was doubtful in the first place. Here’s the gist of what happened Continue reading @aguntasolo.com/

Kindly continue reading at that link...You will understand how this people has completely killed our Generation...I enjoined you all to read with an open mind, You can repost the whole article so it can get to Front page; Cc Omenka, barcanista, passingshot,Cleverly, Cc:lalasticlala, Wisdomflakes

I will read first ...

PassingShot:
I will read first ...

Thanks and kindly repost it too..This story is too good to be hidden because it will surely enlighten all Nigerians