It has been a swath of revelations, since the House of Representatives’ adhoc committee on the alleged $17billion undeclared crude oil and gas revenue started the second phase of its investigative hearing to unravel how Nigeria’s crude oil was stolen along with revenues that were supposed to have accrued therefrom, between 2011 and 2014 – how the funds can be tracked and possibly returned. Waziri Adio, Abdulrazaq Namdas, Johnson Agbonayinma and Goodluck Jonathan The whole episode started last year when the Nigerian economy nose dived into recession and the country went aborrowing. Hon Ehiozuwa Johnson Agbonayinma, PDP, Egor/Ikpoba Okha, Federal Constituency from the blues came up with a motion, “Alleged stolen crude oil and gas from the Nigerian shores”. The motion came up on September 23, 2016. LOSSES 2011 – 385Million Barrels 2012 – 402Million Barrels 2013 – 363Million Barrels 2014 – 342Million Barrels Total- 1492Million Barrels While making his presentation, he argued that Nigeria has no reason to borrow one dime as “we’ve so much undeclared crude scatterd all over the world that can be redeemed to regrow our economy. We can’t have such huge amount of money trapped all over the world and still be a beggarly nation”. Agbonayinma told his colleagues that former President Goodluck Jonathan contracted an auditing firm to probe what went wrong and he gave a brief synopsis of the report. He gave the breakdown that the Nigeria National Petroleum Corporation, NNPC, and the Nigerian Maritime Administration and Safety Agency, NIMASA, and other agencies were indicted in the report. The company was contracted in 2013 by the administration of President Jonathan to proffer solutions to the challenges of crude oil theft. Agbonayinma, in the motion, recalled that Molecular Power System was engaged to provide technical data (records of crude oil and liquefied natural gas lifting in Nigeria as obtained from the NNPC, and landing certificates at global destinations) to verify possibilities of non declaration to the federal government by multinational companies. “The data gathering of shipment to the USA for the period 2011 to December 2014 through critical NNPC data and the Central Bank of Nigeria, CBN, pre-shipment inspection report shows undeclared crude oil shortfalls of 57,830,000 MT of Nigerian crude oil, translating to well over $12 billion to the USA, also over $3billion to China, and $839,522,600 to Norway,” he said. These were conclusively ascertained by buyers’ bill of lading, arrival dates, destination ports, quantity of crude oil and other documented information, Agbonayinma said. This is scandalous. The lawmaker further noted that the data gathered showed a liquefied natural gas shortfall of 727,460 metric tonnes, estimated at over $461 million, from shipments to seven countries. The revenue loss, Agbonayinma said, was traced to cargoes at each destination port of entry, and have been established as undeclared cargo. He added that the tracing was found in 51 countries where Nigerian crude oil has been exported, with the US being the largest receiver of crude oil. The report from the US and that of other countries, were made available to the former President, the office of the Attorney General of the Federation and the Economic and Financial Crimes Commission, EFCC, he said. “The machines that monitor loading into the vessels were bought, owned, calibrated and operated by the International Oil Companies (IOCs) without monitoring”. After listening to him, the Speaker, Yakubu Dogara, quickly set up an adhoc committee to dig deeper into Agbonayinma’s assertions. Hon Abdulrazaq Namdas was named the chairman of the committee. Once the committee commenced the investigative hearing, it became difficult to get the critical stakeholders who deliberately refused to appear or even submit vital documents until the lawmakers threatened to issue a Bench warrant. But since last Monday, when the second phase started, the attendance has been relatively reasonable. Day One: The members, while cross examining Rabiu Bello, NNPC’s Chief Operating Officer (COO), he admitted before the panelists that there were discripancies in the documents before the Adhoc Committee. In the process, the committee discovered that within four years, from the documents submitted by the stakeholders, about $15billion unremitted oil and gas revenue could not be adequately explained. The committee also discovered that the alleged missing funds were contained in the two separate documents submitted by the NNPC. Also in his presentation, Jack Ukitetu, CBN Director who represented the CBN Governor, Mr Godwin Emefiele, explained that the Accountant General of the Federation approves and determines the money that goes into the Excess Crude Account. Ukitetu, who explained that before 2006, the CBN collected the money on behalf of government’s agencies and remitted same into the Federal Reserve Account in New York, and charged 0.25 percent, however, noted that after 2006, the oil companies pay directly what is due to the government. On commissions being collected by the apex bank, the CBN representative told the lawmakers that the CBN collects 0.25 percent via forex allocation and does not charge FG one kobo as its deductions are made from central sales. He explained that the levels of sales are the buying, central and selling rates, but CBN does its deductions at central sales level. The CBN representative also disclosed that the crude oil account is maintained by JP Morgan, and admitted that in making the transfers, the money could be misdirected to another account by the financial institutions. He added that the apex bank has no statutory power of oversight to demand for details of the transactions made by NNPC. The committee at this point, asked him to bring the total commissions deducted by the apex bank from 2011-2014 within the next one week. He was also instructed to bring along all letters of credit issued by the CBN within the same period. Waziri Adio, Executive Secretary of Nigerian Extractive Industry Transparency Initiative, NEITI, in his submission, accused NNPC and CBN of misleading the Adhoc Committee but pleaded to withdraw the earlier documents submitted. He however pledged to submit “more damaging documents” on the alleged crude oil theft to the Adhoc Committee, that will help in unearthing the unremitted revenue which accrued from oil and gas sales but which were not remitted. Namdas had earlier threatened that the Ad-hoc Committee will not hesitate to submit its report to the House without the inputs of major Ministries, Departments and Agencies (MDAs) which fail to honour the invitation of the committee. To this end, he mandated the apex bank and NNPC to submit the audited report of the oil and gas account showing the remitted funds into the Federation Account between 2011 and 2014. The Corporation was also mandated to submit Bill of Laden relating to the 974,721 barrels of crude oil lifted on 20th October 2011; 961,963 barrels lifted on the 10th October 2011; 974,935 barrels of crude oil lifted on the 9th July 2011 as well as 974,953 barrels of crude oil lifted on the 18th July 2011 but were not declared. The lawmakers also requested for report of the reconciliation conducted by NNPC and Federal Inland Revenue Service, FIRS, as well as the list of oil off-takers for 2013 and 2014. Similarly, the Corporation is expected to provide details of the companies that paid oil tax between 2011 and 2014, as well as the Letter of Credits (LCs) of all the monies paid into the Federation Account within the period under review. Day Two: On this day Reps queried $325.68m revenue diverted to IOCs’ accounts. The panelists queried the diversion of multi-million dollar revenue accrued from oil liftings into the accounts of some International IOCs by marketers. While giving update on the ongoing investigation, Namdas again disclosed that the committee had so far established a lot of facts regarding the corruption in the various transactions involving the NNPC and the IOCs. The lawmakers also assured the Petroleum Industry Governance Bill, when passed into law, will address the challenges of corruption and impunity being perpetuated in the oil and gas industry. According to him, most of the IOCs that participated in the oil lifting between 2011 and 2015 confirmed that payments were made through major operators while the FIRS explained that it relied on NNPC’s advise on the revenue accrued into the Petroleum Profit Tax (PPT) due to government. “We have been able to establish a lot and made reasonable progress. FIRS told us that whatever they do they get the advise of NNPC. But when you are talking to the IOCs, they will tell you that the FIRS has been coming to their offices to cross check documents. There are issues with companies who said they pay taxes but not in their names but in the names of their operators. Meanwhile, the receipt read their names. Sorry here are things we really need to clarify. We should be able to know who to hold responsible.” While reacting to the ongoing litigation between Federal Government and some IOCs, including Shell, Namdas noted that the Legislative arm of government was empowered by section 88 and 89 of the 1999 Constitution to summon and arrest anybody on any investigative matter. While responding to inquiry on the payment of the sum of $53 million into a certain account, Funmi Olafimihan, Shell’s representative could not confirm or deny the content of the document presented by the Ad-hoc Committee. To this end, the Ad-hoc Committee directed that Shell should provide this information within 24 hours. Speaking on behalf of UBA Bank, Abdulrazaq Shittu affirmed that the Bank made payments on taxes and royalties on behalf of their clients to the tune of $426.5 million in 2013. In her presentation, Joke Aliyu, NAOC representative, noted that company is constrained by the ongoing suit instituted by the Federal Government on the subject matter. In a swift reaction to her submission, Namdas, who emphasised the relevance of doctrine of Separation of Powers, noted that the Legislature has the power to probe any issues of national importance since there was no court order restricting the House from probing the subject matter. Namdas, who alleged that the IOCs are using Nigerians to subvert the system, observed that “Federal Government took you to court to recover shortfall to compel you to pay when you refused to pay; ours is to uncover corruption. Moreover ours is between 2011 and 2015, Federal Government’s was for 2013,” he stressed. While ruling, Namdas directed the IOCs and oil marketers to provide documents on all the LCs of all payments related to the crude oil lifted and evidence of taxes paid to FIRS and all other regulatory agencies within the period under review. Day Three: NEITI urges panelists to probe deeper into the loss of $15.9billion dividend from 49 percent equity in the the Nigerian Liquefied Natural Gas (NLNG) Ltd. The agency, in its presentation at the probe, said the money was received by NLNG but not found in the Federation Revenue Account. It was further stated in the presentation made by NEITI boss that “this is in addition to another $21bn confirmed crude oil sale but not remitted to the Federation Account by the NNPC between 2011 and 2014. He explained that the Committee needed to be more clinical as the $15.8bn lost to theft and vandalism was likely to be part of the $17bn being investigated. He said the losses might have been incurred with active connivance of Nigerian officials at the lifting platforms.. The breakdown showed losses incurred from federation lifting alone showed a total of 385 million barrels was lost in 2011, 402 million barrels in 2012, 363 million barrels in 2013 and 342 million barrels in 2014. He also regretted that Nigeria has no comprehensive mechanism at monitoring and evaluating actual oil lifted on the loading platforms. According to him, rather than three, Nigeria has two platforms that were not properly placed. As a result, officials have to rely on third party reports which may not reflect the true amount of crude lifted. “Nigeria is losing revenue to oil theft on industrial scale and at a time it is easy to see physical stealing of oil from a low flying helicopter. There are several things that must be looked into with a view of taking necessary action. “For instance, the NLNG got $15.9bn as dividends as Nigeria’s returns for its 49 percent equity in NLNG Ltd. Meanwhile this dividend was collected by the NLNG but was not found in the Federation Account. We need to ask questions about what happened to the money. “Also the implication of nonpassage of the PIB is that the country is losing about $600m annually as a result of things that ought to be in place but not yet in place,” he added. The members expressed shock when officials of the Nigerian Customs Service, NCS, disclosed that lack of capacity was responsible for offshore deployment of officials of the agency with no technical or specialised training to monitor and evaluate vessels lifting crude oil. The Service also claimed that its lack of ocean-going vessels to carry out the inspection was part of its constraints as it has to rely on vessels owned by IOC to access and assess lifting oil platforms. The Committee described the disclosure as regrettable, stating that the NCS has deliberately compromised it’s constitutional right. The investigative hearing continues on a date that is yet to be determined by the adhoc committee.