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Understanding Ukura’s Shocking Alarm

If the AuGF is indeed unaware of these details, then, Nigeria’s redemption is far from being over. It would simply call for a thoroughbred auditor for the federation whose report could be useful to development

-Achilleus-Chud Uchegbu


It is now obvious that a new twist has been introduced to government-public discourse. That twist comes with all the dangers associated with it. I am talking about the dangerous trend of announcing, by officials of state, huge monetary figures as unaccounted for or missing. The latest came from the Auditor General of the Federation (AuGF), Mr. Samuel Ukura. On Monday March 14, Ukura hit a headline. On that day, he presented an audit report of ministries, departments and agencies of government to the National Assembly through its clerk, Alhaji Salisu Maikaswa.

In the report, Ukura concluded that the Nigerian National Petroleum Corporation (NNPC) did not remit some N3,234577,666,791.35 (N3.235 Trillion) to the Federation Account for the period ended December 2014.

His report also stated that Nigeria Liquefied Natural Gas (NLNG) hid away $235,685,861 in an escrow account and refused to remit same, earned from the sale of gas, to the federation account. It is interesting that Ukura’s report also noted that “relevant documents were not made available for verification”.

There were other claims made in the audit report including that “N36,432,423,968.73 was released to the Office of the National Security Adviser (NSA) for the rehabilitation and construction of dams:, that “N2,894,531250.00 was spent for the procurement of hand sanitizers for schools and critical public places”, that “N31,324,952,239.87 was payment of subsidy on fertilizer and youth employment in agricultural programmes”, that “N2,395,851,978.00 was payment for group Life Assurance Premium for Armed Forces budget in 2013, but not backed”, that “N500,000,000 was made as payment for agricultural programmes”, among other claims.

Ukura’s noted in the report that “these were variances with the purpose of the fund. No evidence of these lines of expenditure in the 2014 Appropriation Act”.

As a consequence, NNPC was quick to respond to Ukura’s claims. In its comments, NNPC stated that “NNPC wishes to state in strong terms that the AuGF’s declaration is wrong”.

It also warned: “It should be noted that although this period is before the new NNPC management was appointed in August 2015, the management still deems it fit and important to correct any misinformation about the activities of the corporation as this will adversely affect its current and future and operational plans if not corrected”.

NNPC, in a statement signed by its Group Executive Director/Chief Financial Officer (Finance & Accounts), Isiaka Abdulrazaq, also explained what may have been Ukura’s misunderstanding of figures. It explained that “the best practice and established due process is that after any audit report there should be an exit meeting between the auditor and the auditee where any outstanding issues are finally explained before the issuance of audit report. There was no such meeting and NNPC did not receive any draft report from the AuGF’s office for comment”.

Question is, why did Ukura violate this due process requirement? Was he unaware of this demand on his profession? Why did he not want his figures questioned? These are pertinent questions that Ukura must provide answers to. That is a serious breach which is capable of setting up Nigerians against themselves. The loss of N3.235 Trillion, in an economy like Nigeria’s, at a time when the federal budget for the 2014 fiscal year was N4.96 Trillion, could trigger violent nationwide protest. Is Ukura unaware of this possibility?

In arguing that Ukura may not have understood the process of accounting in the oil sector (and it will be a huge shame if he really does not understand), NNPC explained that it is allocated 445,000 barrels per day for processing into petroleum products for distribution to the nation. “Any unprocessed crude is sold and the proceeds used to pay for importation of petroleum products. The proceed from the sale of these products are remitted to the federation account after deducting the cost associated with the supply and distribution”. This probably means that Ukura does not know the differentials in net earnings and gross earnings.

NNPC suggests that from whatever it earned, subsidies amounting to N2.34 Trillion was paid out between January 2012 to December 2014 with an additional N7.96 billion still being processed. It also stated that “losses from crude oil and petroleum products as a result of vandalism on its network of pipelines for the period of January 2012 to December 2014 were N202.68 billion”. This is different from a cost of N358.88 billion incurred between January 2012 and December 2014 as “petroleum products strategic holding cost and pipelines repairs and maintenance cost”.

So, NNPC tells Ukura: “Consequently, the figure owed to the federation account as at January 2015 Federation Account Allocation Committee (FAAC) meeting report was N326,142,137,205.79 (which is still being reconciled) … and not the N3.23 trillion alleged by the AuGF”. To arrive at its figure, NNPC disclosed that approved subsidy paid in 2012 was N893,746,516,631.06; for 2013 it was N792,961,142,799.52 and N652,178,892,312.22 for 2014 while N7,960,155,749.17 is still part of “2014 subsidy under reconciliation. Added to these is N202,679,844,674.65 incurred in crude and product losses from 2012 to 2014 and a further N358,878,977,418.89 incurred in pipeline repairs and maintenance cost from 2012 to 2014.

It also stated that: “All the stakeholder in FAAC meeting are familiar with the N326.14 billion and it is already in public domain since then to date. As regard to the N1.374 trillion claims against the federation, this is currently being re-viewed by the FMF (Federal Ministry of Finance) appointed forensic auditors at the instance of the Honourable Minister of Finance”.

Instructively, NNPC harped on Ukura’s naivety when it said: “it is clear that the AuGF failed to reflect all the figures as they should be, not minding that there is a clear process of conducting FAAC meeting where all federation revenues are presented, discussed and approved. These are series of meeting before and after FAAC meeting to reconcile and resolve any issue as the need may arise”.

This dismissive comment puts a huge question on Ukura’s professional integrity and his suitability for the office of AuGF. If in doubt, hear NNPC explain issues involved in the $235m proceeds from sale of natural gas.

It said first that “with respect to the $235million proceeds from the sale of natural gas allegedly transferred to some undisclosed escrow account, it should be noted that NNPC does not have any secret escrow accounts”. It simply says that the AuGF is not a thorough accounting official of state as his audit report may have been padded with emotions and innuendoes that would sure mislead an unsuspecting inquisitor.

Secondly, NNPC reminded Ukura that “the alleged $235m represents proceeds from the sale of gas feed stock to Nigeria Liquefied Natural Gas (NLNG) that was used to repay part of the Modified Carry Agreement (MCA) loans, applicable royalty to DPR and tax to FIRS”. It explained further that the MCA loan was contracted to specifically fund the development of upstream oil and gas projects whose transactions are regularly reported to FAAC as part of the reconciliation of the revenues to NNPC, FIRS and DPR.

From what has been explained, it shows clearly, that the AuGF does not even know, or understand, that an MCA loan exist and that along with “other alternative funding arrangements are annually appropriated by the National Assembly” and are “fully disclosed to FAAC on a monthly basis”.

If the AuGF is indeed unaware of these details, then, Nigeria’s redemption is far from being over. It would simply call for a thoroughbred auditor for the federation whose report could be useful to development. However, Ukura’s allegation deserved to be thoroughly investigated. If found to be true, all those involved in the management of the nation’s earnings at NNPC during the period ought to face the law. If also found to be false, it will be expected that Ukura is relieved of his appointment with immediate effect and also prosecuted in accordance with the laws on false alarm and incitement to violence.

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