KPMG indicts revenue agencies over unremitted N8.8tr

Audit report by the a renowned accounting firm , Klynveld Peat Marwick Goerdele ( KPMG) has indicted federal government revenue generating firms for non- remittance of over N8trillion to the coffers of government.

This revelation as made by Gombe State Governor, Ibrahim Dankwabo, on behalf of the National Economic Council ( NEC ) in Abuja, on Thursday while briefing State House Correspondents after the NEC meeting presided over by Vice President Yemi Osinbajo.

Dankwabo who said the audit covered the period of 2010 to 2015, added that it will be extended to cover up to 2017.

According to him: ” KPMG presented the report of the technical audit of the revenue generating agencies (RGAs ) concluding that a total sum of N526 billion and USD$21 billion was under-paid to the Federation Account.”

Dankwabo said the disclosure has forced NEC’s Ad-hoc Committee chaired by Gombe State Governor with members including Governors of Edo, Kaduna, Akwa Ibom, Lagos and the Finance Minister to recommend the refund of the amounts under-paid”

NEC said it has adopted the presentations and reports of the KPMG and the recommendations of its Ad-hoc Committee including a resolution to identify instances where there appears to have been criminal infringements and forward such to the Attorney-General of the Federation and the Legal Committee of the National Economic Council for further action.

Following the revelations, the Council said it has also resolved ” to pursue strengthening of the NNPC governance structure to prevent further recurrence of such gross under-remittance by the NNPC and other RGAs”

The bulk of the unremitted funds , BusinessDay gathered, was from the operation of the Nigeria National Petroleum Corporation ( NNPC )

Federal government had Wednesday directed the Department of Petroleum Resources ( DPR) to close down all filing stations within 10 kilometers of Nigeria border to halt smuggling of petroleum products

Chairman of Nigeria Governors Forum ( NGF) and Governor of Zamfara state Abdulaziz Yari disclosed after meeting with Vice President Yemi Osinbajo at the Presidential Villa, Abuja, that the reason for the closure was to block leakages in revenue accruable to the government and check smuggling of petroleum products across Nigeria’s borders

According to him, ” We raised three issues, one of which was on the issue of royalties.
” Each and every barrel taken out of the country there is either 17 or 24 percent of it as royalty and there is 17 or 20 percent as tax”
The Governors had expressed concern following reports by the Department of Petroleum Resources (DPR), which revealed that the NNPC has not remitting any payment of royalty.

DPR had revealed that NNPC transmit directly from its account to the federation account which is not allowed by the law.

“According to the law that established the DPR, section 196 of the Act, said all the royalty should be paid to DPR and then transmit to the federation account, which is not”

“So, we discussed today and we have sort those ones out.

“The NNPC will not transmit to federation account with clear distinction that this amount is for royalty and X amount is for taxes, and X amount is profits from the sales. So we achieved that.”

The Governors also noted that the NNPC is making payment on behalf of Nigeria on Cash-call contributions, as well as payment of cash call arrears of Nigeria’s contribution.

” But, our main concern is that in 2015, they said about $16.8 billion which is outstanding was not paid by the last administration and they negotiated it down to $5.1 billion according to them. What we said specifically is that they should bring to us how much they have paid from 2015 to date and what is outstanding.

” And we directed they to stop payment until the claims are proven and then we can give further directives. That too was achieved.

“On the issue of cost recovery otherwise called subsidy, the issue of subsidy resurfaced again after the efforts of Mr. President. Before now the oil was $40 per barrel and now it is about $78 a barrel, so therefore they are depending largely on importation.

” So therefore, the cost is higher than what they are selling at the filling station and they need more money. When there was no cost recovery, the NNPC clearly gave us the number of 33 and 35 million liters per day as the consumption of Nigeria.

” But now that with the new regime of cost recovery, NNPC is claiming daily consumption of 60 and 65 million liters per day?

Yari said government has rejected this claims

According to him: ” Many of our international partners are saying that even if we are feeding Nigeria, Cameroon, Ghana and Niger, we cannot consume more than 35 million liters per day.

” So, we are wondering where the 60 million liters is coming from. So, we are trying to sort that one out, that one is not yet resolved”

” We are now taking a very hard decision, that because NNPC said the reason why they were lifting 60 million per day is because our borders are porous.

” So, we have taken the decision that any filling station that is 10 kilometers on the border side should be closed by DPR.

He disclosed that government will now need to do recertification according to the needs.
” Secondly, we have directed the minister of Finance in collaboration with the DPR and the NNPC introduce tracking devices on every truck in other to monitor where they are discharging the fuel.
” This is because we are suspicious of the number, we cannot confirm the difference from 30 million liters per day consumption to 60 and 65 million lite w per day consumption. So these are our decisions on the NNPC” he said

” One of the resolutions of NEC today is to extend the audit to June 2017. So the audit will continue for the remaining agencies. It is NNOC, NPDC, DPR, Customs, Federal Internal Revenue Services, NPA, Maritime Authorities, all the revenue generating agencies and the details of the infringement are contained in the report. Because it is voluminous report there are a lot of items that are there”

NEC also took the decision to set up a sub-committee which will be an arm of the legal committee of NEC that will will into details of these kinds of infringements and make sure that those issues that are criminal and require prosecution will be handled by office of the Attorney General of the Federation.

The issue of subsidy was also discussion at the NEC meeting but was later referred back to the sub-committee on remittances
” We are doing the nitty, gritty with NNPC in terms of remittances. Don’t forget that the reason we got it right in 2016 on the NNPC side is because the oil prices were too low.
“It was easy for everyone to get fuel into the country and then make its profit. So, when the price started jacking up then the marketers started adjusting back because they need to have a template of cost recovery and how they are going to make up the difference from the pump price to the landing cost of what they are importing”

” Our problem is the volume, the quantity of consumption which is not acceptable. Working with the governors so many decisions were taken but by next month, we are going to adopt that position either for the governors to take responsibility for the subsidy in their states based on the consumption or we look at other ways.”
” For instance, if you say we paid N800 billion subsidy, you will ask who are we paying the subsidy to? And if you look at infrastructure development and capital programme of the federal government, it is about N1.1 trillion, almost 70 percent of what you are spending developing the economy.
“If there is no infrastructure development then you cannot talk about development of the economy. N800 billion is a huge amount that we must look at it, who is benefiting from it. So we are coming up with a strategy, we are going to meet in the month of May and June. By next meeting, we will definitely come up with a position of the government at both level of volume of what is being brought into the country and what the state and federal government collaborate to check.” he said.

 

Tony Ailemen, Abuja

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Author: Tony Ailemen, Abuja