When figures can’t add up Our Reporter March 1, 2014 1 Comment » When figures can’t add up ■ Sanusi Vs NNPC By Isaac Anumihe Last week’s sack of the Central Bank of Nigeria Governor (CBN), Mallam Sanusi Lamido Sanusi by President Goodluck Jonathan may have opened a new chapter in the history the nation’s banking industry. First, it was the first time that a serving CBN governor would be forced to leave before the expiration of his tenure due to prolonged face-off with the executive, given that past governors of the apex bank had very cordial relationship even under the various military administrations. Although presidential spokesman, Reuben Abati had cited financial recklessness as basis for his suspension, observers believe that the CBN boss may have burnt his goodwill with ASO Rock with his open letter to President Jonathan early this year where he alleged non-remittance of $49.8 billion by Nigerian National Petroleum Corporation (NNPC). The CBN governor had said that for all crude oil sales within the period, the NNPC paid only 24 per cent proceeds into the Federation Account, and could not account for the remaining 76 per cent, totalling N8 trillion. The letter did not spark off any controversy until former president, Chief Olusegun Obasanjo, wrote a controversial one indicting President Goodluck Jonathan. The letter, titled: “Before it is too late”, quoted Sanusi’s letter, which was supposed to have been written to the President Jonathan under cover. The worry at the Villa was that the CBN governor had advertently leaked his letter to ex-president Obasanjo and indeed the Nigerian public. It was based on this that the Presidency decided to revisit what it considered his “many sins” which they felt had been covered up over the past five years. Reacting to his sack last week, Sanusi, who returned from an official engagement outside the country, said he would seek legal interpretation of the power of President Jonathan to suspend him. However, observers believe that Sanusi’s letter to the president was significant for several reasons. In the first instance, they believe that its timing coincided with the “letter bomb” written by former president Olusegun Obasanjo to President Jonathan. Secondly, they argue that the amount involved was startlingly huge that it can destabilize any economy Three, it came when investors were planning for 2014 budgets and where to invest in for the year. According to Sanusi in his letter to the president: “Our analysis of the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude, valued at $65,332,350,514.57. “Out of this amount, NNPC repatriated only $15,528,410,098.77, representing 24 per cent of the value. This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.804billion of the value of oil lifted in the same period,” he argued. He recalled the previous occasion in which he had expressed concern about what appeared to be shortfalls in remittances to the Federation Account in spite of the strong recovery in the price of oil. He insisted that the NNPC ought to have accounted fully for all proceeds that were diverted from its accounts with the CBN and the Federation Account. Although, the whistle-blowing effort of the CBN was hailed by analysts, what was condemnable was the inaccuracies in the letter to the extent that it impacted negatively on the economy. Sanusi, who said he never intended the letter to be made public, however, reversed himself on the amount of money missing. According to him, what was missing was $12.6 billion and not $49.8 billion, as he earlier stated. He said that on the non-remittance of $49.8 billion by Nigerian National Petroleum Corporation (NNPC), which he alleged in his letter to President Goodluck Jonathan, the outstanding issue now is the $28 billion domestic crude. “From our records, we have received $16 billion for the shortfall, and we are told that shortfall has always been part of the discussion between the Ministry of Finance, the Petroleum Ministry and the NNPC. This is where we are,” he said. According to him, the letter to the president was not meant for public consumption, but to alert the president of an anomaly in the system but unfortunately, it found its way to the press. Sanusi also explained that CBN, in its record, shows that $65 billion had been paid by NNPC and about $15 billion retained to the Federation Account. “So, after the letter, it was discovered that out of the $65 billion that NNPC shared, $24 billion did not belong to the NNPC. It was the crude that was paid by other companies as tax and royalties and shipment to NPDC, which explains half of the $15 billion. “This is the first time that I am speaking on the matter. I will like to give a little context to this discussion. First of all, it is important to remember that the CBN never issued a public statement, or made a press statement on this matter. The CBN wrote a letter to Mr. President, which unfortunately found its way to the press. And that letter was addressed to the president and for an invitation to begin investigation, and not the end of an audit or investigation. Now, what was the context, we have been concerned along with our Finance Minister about the decline in excess crude despite the fact that oil prices were high. We are concerned at what we saw as a gap between what we have in our records as the value of crude shipped by the NNPC and the amount it has remitted as equity to the Federation Account. “And what we had in our records was $65 billion paid by the NNPC and about $15 billion retained to federation account. Now after the letter, the president sent for this to know what happened and we have the following; that out of the $65 billion that NNPC shared, $24 billion did not belong the NNPC. It was crude that was paid by other companies as tax and royalties and shipment to NPDC and so, that explains half of the $15 billion.” he said. It is said the capacity of the bank to perform its role effectively is strengthened or undermined by the extent to which the nation is able to increase foreign exchange earnings and savings from these earnings, thus boosting the Excess Crude Savings Account, raising reserve levels, providing currency stability and moderating interest rates with limited risks to inflation and financial stability. But, according to Group Managing Director of NNPC, Mr. Andrew Yakubu, “proceeds from Equity Crude are paid by NNPC into the Federation Account, which is held by the Central Bank of Nigeria. Proceeds from Royalty Oil are paid to Department of Petroleum Resources (DPR) whose designated account is managed by the same CBN. “Similarly, the proceeds from Tax Oil or Petroleum Profit Tax lifted by NNPC are paid directly into the Federal Inland Revenue Service account also managed by the CBN. “In the same vein, Third Party Finance and Trial Marketing volume are paid into designated Escrow accounts, while NPDC equity proceeds are remitted to NPDC account. It should now be clear to all that NNPC, by statutory requirement, is responsible for direct remittances of only one stream of lifting, namely Equity Crude,” he said. “Furthermore, the proceeds from the total NNPC lifting comprising Federation Equity, Royalty Oil, Tax Oil, Volume for Third Party Finance, NPDC equity and volume for Trial Marketing period amounted to US$67.12 billion as against the $65.33 billion that the CBN stated. “At this point, we wish to categorically state that all the proceeds amounting to $67.12 billion have been remitted as statutorily required. NNPC remitted its portion, which is $18.48 billion into the Federation Account being the total proceeds from Equity Crude and gas sales. This represents 27.5 per cent of total proceeds of $67.12 billion as against the 24 per cent declared by CBN. “On the issue of US$49.8 billion or 76 per cent of total national lifting and the alleged unremitted funds, we would like to clarify that this represents the proceeds from Royalty and Petroleum Profit Tax lifting. These, as I stated earlier, are remitted to the Department of Petroleum Resources (DPR) and the Federal Inland Revenue Service (FIRS) which are statutorily empowered to collect and remit same into the Federation Account”, the MD further explained. Concerning the audit of NNPC’s operations, which the PricewatershouseCoopers (PwC) is auditing, Yakubu said: “It was ordered by the Minister of Petroleum Resources some months ago and they are about rounding off the audit exercise; it is normal. Last year, we had a similar one and we are supposed to go through an audit on a regular basis. That is ongoing and will soon be concluded and handed over to the minister. “The CBN letter claims that for the period 1st January 2012 to 31st July 2013, total national crude oil lifting was 1.287 billion barrels. Our records show that the total national crude lifting for the same period was actually higher at 1.330 billion barrels. Furthermore, total NNPC lifting during the same period was again higher at 618.552 million barrels as against the 594.024 million barrels stated by CBN,” the GMD said. On the issue of US$49.8 billion or 76 per cent of total national lifting and the alleged unremitted funds, he clarified that this represents the proceeds from Royalty and Petroleum Profit Tax lifting, noting that they are remitted to the Department of Petroleum Resources (DPR) and the Federal Inland Revenue Service (FIRS) which are statutorily empowered to collect and remit same into the Federation Account. Referring to the allegation that NNPC owes the Federal Government another N22 billion in unpaid levies to the National Export Supervisory Scheme (NESS), the GMD noted that the levies under the NESS are paid to third party inspectors based on services rendered to the Federal Government and payment to NESS is update as per value of work done. For, according to him: “So far, NNPC has paid a total of $114.78 million from inception of NESS in 2009 up to October 2013 as against the total budget of $117.08 million for the same period and the payments have been reconciled with the CBN, who are again the custodians of the NESS account that is operated on a draw-down basis by the CBN. “It is NNPC’s position always that in carrying out our statutory duties we will continue to maintain the highest level of transparency and accountability. Please be assured that NNPC remains available at all times to provide clarifications on these issues or any other matter relating to our responsibility to the Federation and the Nigerian people.” Meanwhile, the Co-ordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala has promised that the Federal Government would get to the bottom of the matter. She admitted that there are some misconceptions and misunderstanding about the $49.8 billion. But the presidency saw Sanusi’s whistle-blowing attempt as a betrayal, wondering the sincerity of the letter. If he was sincere, how come he released it to the former president? Again, who released the letter to the public? On account of this, Jonathan was reported to have queried the CBN boss. In his reply, Sanusi had said that his letter was a public document, which was domiciled in the presidency, Ministry of Finance, CBN, NNPC and all the relevant agencies of government. So, he argued that any of the agencies must have released it to the public. So, on January 7, 2014, Jonathan was reported to have called Sanusi on phone, asking him to resign. A long altercation between the President and Sanusi ensued and Sanusi was reported to have told the president point-blank that he would not resign. According to Sanusi, the CBN Act protects him till June 3, 2014 when his tenure would elapse. And to this effect, no power would make him resign. After the hot altercation, the CBN governor had called all his key staff together and informed them of the exchange of words between him and the president and restated that he would not resign. Later, he was reported to have left his office for some time without handing over to the most senior deputy governor. However, when Jonathan realised that the law protects Sanusi in office, the president had devised other means of edging him out of office by instigating the National Assembly to investigate his reckless spending of public funds. Industry watchers say that Sanusi’s suspension did not come as a surprise, following his long travail as CBN governor. sunnewsonline/new/cover/figures-cant-add/
Posted on: Sat, 01 Mar 2014 06:30:42 +0000