The Federal Ministry of Finance and the Nigerian National Petroleum Company Limited (NNPCL) on Thursday came under scrutiny over their failure to resolve a number of financial queries contained in the 2021-2023 Oil and Gas Sector Audit Reports of the Nigeria Extractive Industries Transparency Initiative (NEITI).
The development followed the appearance of Raymond Omachi, the permanent secretary, Federal Ministry of Finance, before the Senate Committee on Public Accounts, where he attributed the ministry’s inability to adequately respond to some of the queries to the failure of relevant agencies, particularly the NNPCL and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to provide the required financial records.
Among the issues raised by NEITI was the $3 billion pre-export financing loan obtained in 2012 to settle subsidy payments.
According to NEITI, the recovery of the loan from monthly Federation revenue proceeds under the Pre-Export Financing and Project Eagle agreements remained unclear.
Another major query concerned $722.6 million in dividends and interest paid by the Nigeria Liquefied Natural Gas Limited (NLNG) to the NNPC in 2021.
NEITI observed that the amount, which it said was earned on behalf of the Federation, was neither remitted to the Federation nor properly accounted for.
The audit report also questioned the expenditure of about N200 billion on Nigeria’s refineries, noting that none of the refineries was operational in 2021.
Similarly, the ministry was unable to provide satisfactory explanations for the $221.283 million overhead costs incurred by the National Petroleum Investment Management Services (NAPIMS) in 2021.
Responding to the queries, Omachi said the Finance Ministry was not directly involved in all the transactions under review and depended on the affected agencies for the records required to reconcile the accounts.
He said, ‘We don’t have direct involvement in all the issues raised and required provision of financial records from the affected agencies, particularly NNPCL, NUPRC etc, is not there.’
The Permanent Secretary disclosed that the ministry had engaged Arthur Andersen LLP to conduct a forensic audit of the transactions and assist in reconciling the disputed figures.
‘In resolving the financial issues, we have engaged a reputable external audit firm, Arthur Andersen LLP to carry out forensic audit on all the transactions for required reconciliation,’ he said.
However, the disclosure failed to satisfy the committee, which questioned the ministry on the timeline for completing the forensic audit, particularly after the committee had already granted extensions from six months to one year.
The committee, chaired by Senator Ibrahim Dankwabo (Gombe North), subsequently directed the ministry to ensure that the affected agencies appear alongside it to address the outstanding queries.
Omachi, while appealing to the committee to compel the agencies to attend, said the Finance Ministry was willing to appear before the committee alongside the NNPCL and NUPRC.
He said, ‘I know you have enormous powers that you can use to compel these agencies to appear before us. We are having challenges bringing them to the table so that we can resolve these issues.
‘We in the Federal Ministry of Finance are ready to come and sit with them here, so that you can hear directly from them and obtain the necessary explanations and clarifications.’
The development effectively shifted the focus of the committee’s interrogation from the Finance Ministry alone to the wider accountability chain involving the agencies responsible for petroleum-sector revenues and transactions.
Dankwabo therefore directed the Permanent Secretary to review the ministry’s internal report and facilitate a joint meeting with the NNPCL, NUPRC and any other relevant agency.
The committee chairman stressed that the outstanding issues had implications beyond Nigeria’s domestic accountability system, given the international scrutiny of the country’s extractive industry revenues.
He said, ‘I will like you to review the internal report and arrange a meeting involving the Ministry of Finance, the NUPRC, NNPC and any other agency whose participation is necessary to resolve the issues we have raised.
‘As you are aware, these issues are being followed by the international community. They are not matters confined to Nigeria; they are in the public domain and are being monitored by people across the world.
‘Therefore, if there are records or issues that need to be clarified and properly put in order, we should do so in the interest of our country. All of us have no other country except Nigeria.’
The committee’s intervention came against the backdrop of recurring concerns over the reconciliation of petroleum-sector revenues, dividends, financing arrangements and expenditures highlighted in successive NEITI audit reports.
The latest confrontation also exposed a potential accountability gap between the Ministry of Finance and the agencies directly responsible for managing petroleum-sector transactions, with the ministry insisting that it could not provide answers to queries for which it had not received the underlying records.
The committee is expected to reconvene the affected agencies with the Finance Ministry to obtain direct explanations and determine responsibility for the outstanding financial discrepancies.