The political pundits who predicted cans of worms opening right after President Jonathan's historical loss at the March 28 general election may just have been rewarded.

Written by Irabor Justin Ikhide

On Monday, President Jonathan approved the release of the forensic audit of the NNPC by the audit firm PriceWaterHouceCoopers, and this report has indicted the management of the oil company for several suspicious transactions.

The report opens with an establishment of the history of the allegations, beginning with the (in)famous whistleblowing of the then CBN governor (now Emir of Kano), HRH Sanusi.

While NNPC's initial reaction was to deny the report as numerical adjustments were made to the petroleum fund under review the oil commission on February 13, 2014 finally capitulated, explaining the $20billion shortfall.

NNPC's Explanation
Between January 2012 to July 2013, NNPC generated $67bn in revenue from crude oil liftings and remitted only $47bn.

It explained this short fall as coming from cost of maintaining the strategic reserve ($.46bn), crude oil and product losses ($.76bn), maintenance and management costs from maintaining pipelines ($.91bn), third party financing ($2bn), NPDC ($6bn), payment of subsidy on DPK, PMS in the fourth quarter of 2011 ($9.97bn.)

PwC however has discovered that the total gross revenue was $69.34bn and not $67bn as stated by the Reconciliation Committee set up in response to Sanusi's accusation.

Total cash remitted, also, was not $47bn, rather it was %50.81bn.

NNPC has submitted a supplementary explanation for this 'potential excess remittance' and it has been absorbed by PwC.

As published in an earlier report, the potential excess remitance ($0.74bn) makes NNPC's current operational model an unsustainable one. (I reported this in February here)

Suffice it to say that the NNPC operational model implies that 46% of domestic crude revenues is expended servicing operations and subsidies. As a result, the NNPC is unable to sustain monthly remitance to the Federation Account and take care of its operational costs entirely from revenue from domestic crude.

This has led to the situation where the Corporation incurs third party liabilities to meet up.

With that said, the NNPC has to refund $1.48bn to the Federal government (the calculation is shown in the table below)



The entire PwC report indicts top heads at the NNPC, and it is interesting that president Goodluck Jonathan ordered the immediate release of the document, where he has been known to delay and soft-pedal when corruption is involved.

The general speculation is the president Jonathan has nothing to lose any more, and with that mindset he is no longer averse to the exposure of events that he would ordinarily have kept under wrap. He may have just agreed with this school of thought with his saying that his administration "has nothing to hide" in this matter.

I read and tried to summarize the PwC report, but it is already as abridged as it gets, and I can only discuss this further with Nigerian Bulletin readers in delicately niched chunks.

One major (and unfortunate) detraction from the report, however, is PwC's disclaimer: that they do not submit their report as an accurate audit of the NNPC, as they did not have all the data at their disposal to ensure a thorough audit. It almost totally makes reading the report pointless.

For a copy of the report, click here