15-01-07 About 65 mm barrels of crude oil could not be accounted for by the Nigerian National Petroleum Corporation (NNPC), between 1999 and 2004, an audit report of the oil industry has revealed.
The report compiled by the Hart Group -- a United Kingdom based audit firm for the Nigerian Extractive Industry Transparency Initiative (NEITI) -- said the missing crude oil was due to shortfalls in the amount of crude oil sent to refineries within the period under review.

The report was first submitted to the government in April, but President Olusegun Obasanjo directed NEITI to review it. This was carried out and a fresh report submitted in December.
The report said: "There were differences between the amounts reported within NNPC for the volume of crude sent for refining with the discrepancies between the oil terminals recorded as sent to the refineries and what the refineries recorded as received from the terminals."

A chart in the report shows that in 1999, about 66 mm barrels of crude oil was sent by the Crude Oil Marketing Department (COMD) of the NNPC but the nations' refineries received 99 mm barrels within the year which shows a difference of 33 mm barrels unaccounted for.
Also, in 2000, 36 mm barrels was sent to the refineries by the record given by the COMD but within the same year, the Pipeline Products Marketing Company (PPMC), also a subsidiary of the NNPC, reported to have received about 46 mm barrels in the same year indicating a difference of 10 mm barrels. However, the discrepancies shows a shortfall of 22 mm barrels of crude oil as follows: -3 mm, -2 mm, -6 mm and -11 mm for the years 2001, 2002, 2003, 2004 respectively.

The report said NNPC could not explain how the refineries in 1999 and 2000 received more than what was sent from the oil terminals. The audit firm also revealed that although the sale of crude oil was structured in line with international best practices, a lot still needed to be done to make the process transparent. This was because the process was not documented properly so there were open ways for interested bidders to depart from the stated procedures.
"Also, there was no defined process for determining who should lift government crude oil. Since 1999, the list has remained the same but with four names added to it. The report stated that the COMD did not even have a complete list of crude oil contract holders".

When contacted for comments, the General Manager, Group Public Affairs Division, NNPC, Dr Levi Ajuonuma, said the audit was not referring to the period of the present administration of Engineer Funsho Kupolokun. According to him, the scam took place during the period of the former management of Gaius Obaseki, saying, "we were not there at that time. It was Obaseki's time. I can't say anything on that. It is not our regime".
On their parts the civil society has commended government for initiating the NEITI audit, saying the NEITI audit of the oil and gas industry is the first of its kind which should be encouraged by well meaning Nigerians particularly the civil society.

Rev. David Ugolor, National Coordinator, Publish What You Pay, Nigeria said that the report identified a number of institutional weaknesses associated with the industry.
“We call on the NNPC and its subsidiaries -- the DPR, NAPIMS and PPMC as well as the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Service (FIRS), to come out with policy responses on how to implement the key recommendations of the NEITI audit report".
"Secondly, we call on all presidential candidates for the 2007 elections to tell Nigerians how they are going to ensure transparency and accountability in the oil and gas industry and what they intend to do about the NEITI legislation".

"Thirdly, we call on oil companies operating in Nigeria to embrace the principles of the NEITI by taking proactive steps to enshrine transparency and accountability in all their activities in the oil and gas industry".
"Lastly, since the NEITI audit report is an important milestone in theannals of the nation's hydrocarbon industry, there is the need to institutionalise NEITI in Nigeria. In this regard, we call on the National Assembly to expeditiously consider passing of the NEITI Bill currently before the Senate when they resume from recess so that it can become an Act of Parliament before the end of the present administration", said Rev. Ugolor.