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PwC forensic report on oil revenues unveils Nigeria’s demons

By Loukia Gyftopoulou and Vincent Huck

PwC's forensic audit report over the allegedly missing $20bn from Nigeria's national oil company was made public raising serious questions on the accounting and reconciliation system for crude oil revenues in Nigeria.

The report was released earlier this week by former president Goodluck Jonathan, after his successor president-elect Muhammadu Buhari had pledged to investigate further the missing oil money allegations.

As reported by the IAB, the issue arose in 2013 when former governor of Nigeria's central bank, Lamido Sanusi, blew the whistle on the Nigerian National Petroleum Corporation (NNPC) missing oil revenues, an action that led to his suspension.
PwC was appointed by Nigeria's federal government to look into the matter in March 2014 and the report was submitted last February, just days before Africa's most populous country held its general election.

PwC's audit report supports many of Sanusi's allegations. The auditors found that the total gross revenues generated from the federal government of Nigeria crude oil liftings was $69.34bn from January 2012 to July 2013.

The total cash remitted into the government's accounts in relation to crude oil lifting was $50.81bn, leaving $18.53bn unaccounted for.

The report raised serious questions about the level of transparency and corporate structure of the national oil company.

"The NNPC model of operation must be urgently reviewed and restructured as the current model, which has been in operation since the creation of the corporation, cannot be sustained," the report read.

PwC's report revealed NNPC had a blank check to spend money without limit or control and the auditors found around $1.33bn in costs which the company couldn't substantiate with the appropriate documentation.

The report also didn't spare the Nigerian federal government stating: "The accounting and reconciliation system for crude oil revenues used by Government agencies appear to be inaccurate and weak. We noted significant discrepancies in data from different sources.

The lack of independent audit and reconciliation led to over reliance on data produced from NNPC."
PwC's findings also criticise the lack of independence within NNPC as "the business has conflicting interests of being a stand-alone self-funding entity and also the main source of revenue to the government's account".


Analysis:

These revelations might have the effect of a cold shower in Nigeria, as they come a few weeks after Africa's economic giant was internationally praised for its relatively peaceful general election where for the first time Nigerians have ousted an incumbent president through the ballot box.

More importantly they reveal the extent of work that lies ahead for the new government led by incoming president Buhari.

Surely, Nigerians will watch Buhari's every move and remember that not so long ago, in 1976, he was appointed Federal
Commissioner, now referred to as Minister, for Petroleum and Natural Resources. Around that time, the NNPC was formed and its first chairman from 1977 to 1978 was no other than Buhari himself.


Related link:


PwC forensic audit takes centre stage in Nigeria's general election

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