2.1. Summary Findings
Based on the work conducted by our team from the commencement of this mandate up until 29 January 2015, our conclusions are as follows;
Based on the work conducted by our team from the commencement of this mandate up until 29 January 2015, our conclusions are as follows;
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Total gross revenues generated from FGN crude oil liftings was $69.34bn and NOT
$67 billion as earlier stated by the Reconciliation Committee for the period from January
2012 to July 2013.
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Total cash remitted into the Federation accounts in relation to crude oil liftings was
$50.81bn and NOT $47bn as earlier stated by the Reconciliation Committee for the period
from January 2012 to July 2013.
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NNPC has provided information on the difference leading to a potential excess remittance of
$0.74 billion (without considering expected remittances from NPDC). Other indirect costs of
$2.81billion which were not part of the submission to the Senate Committee hearing have
been defrayed to arrive at this position.
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The resulting potential excess remittance indicates that the Corporation operates an
unsustainable model. Forty six percent (46%) of proceeds of domestic crude oil revenues for
the review period was spent on operations and subsidies. The Corporation is unable to sustain
monthly remittances to the Federation Account Allocation Committee (FAAC), and also meet
its operational costs entirely from the proceeds of domestic crude oil revenues, and have had
to incur third party liabilities to bridge the funding gap. Furthermore, the review period
recorded international crude oil prices averaging $122.5 per barrel (Average Platts prices for
2012). As at the time of concluding this report, international crude oil prices average about
$46.07 per barrel2, which is about sixty two percent (62%) reduction when compared to the
crude oil prices for the review period. If the NNPC overhead costs and subsidies are
maintained (assuming crude oil production volumes are maintained), the corporation may
have to exhaust all the proceeds of domestic crude oil sales, and may still require third party
liabilities to meet costs of operations and subsidies, and may not be able to make any
remittances to FAAC.
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We therefore recommend that the NNPC model of operation must be urgently
reviewed and restructured, as the current model which has been in operation
since the creation corporation cannot be sustained.
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The report reflects the fact that $3.38 billion was spent on DPK subsidy for the review period.
We also confirmed using third party vessel tracking platforms that all vessels carrying NNPC
cargoes arrived in Nigeria within the periods disclosed by PPPRA.
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A major consideration centers on the ownership of oil and gas assets controlled by NPDC.
Subject to additional information being provided, we estimate that the NNPC and NPDC
should refund to the Federation Account a minimum of $1.48billion as summarised in the
next page.
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A determination is required as to whether all or a portion of 'other costs not directly
attributable to crude oil operations can be defrayed by NNPC.
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