Audit Report Indicts NUPRC, Customs Over Non-Remittance Into FAAC

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News Investigators/ The Auditor General report has indicted the Upstream Petroleum Regulatory Commission (NUPRC) and the Nigeria Customs Service for non-remittance of several billions of naira into the federation accounts in the 2020 financial year.

The 2020 Auditor General’s report obtained by The Nation revealed that while the NUPRC deducted monies from the Federations Account, the Nigeria Customs Service failed to remit several billions of taxes into the Federations Accounts for sharing among the three tiers of government.

According to the report: “The sum of N151.121billion was deducted by Nigeria National Petroleum Corporation (NNPC) from the oil royalty assessed by the Department of Petroleum Resources (DPR) now Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for 2020. The deductions by NNPC were purportedly for handling government priority projects, strategic holding costs, crude oil, and product losses among others”.

It said there was no evidence to show details of the priority projects and approval by the Federation Account Allocation Committee (FAAC), adding that the deductions were made before remittance to DPR (now NUPRC).

In its management response, the agency said: “The NNPC makes deductions for Government priority projects at source before remittance of royalty to NUPRC with the latter having no control over this. Thus, NNPC is in a better position to provide the necessary approvals to justify these deductions.

“The office of the Accountant General of the Federation has been duly written on the payment of 4% Cost of Revenue Collection to NUPRC for money deducted at source by NNPC for Government priority projects”.

The Auditor General said the Chief Executive Officer of the agency should be requested to account for the said N151.121 billion that was deducted by NNPC from Federation Account revenue proceeds.

The report put outstanding royalties payable by the Nigerian National Petroleum Corporation (NNPC) to the Department of Petroleum Resources (DPR) now the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) concerning Production Sharing Contracts (PSC), Repayment Agreement (RA) and Modified Carry Arrangement (MCA) lifting as at 31S’December, 2020 at US$437,505,612.21.

In addition, it said that out of the amount, the NUPRC received US$417,731,114.06 leaving an outstanding balance of US$19,774,498.15 as outstanding royalties from two (2) operators as of 31% of December 2020 without any justifiable reason.

It also reported that from the review of highlights of 2020 annual crude oil royalty and Gas, Gas flare payment and concession rentals reconciliation minutes of meeting between DPR (now NUPRC) and NPDC, it was discovered that US$2,021,411,877.47 from outstanding Royalty from Crude Oil and Gas sales and Gas flare, were reported as set off of Nigerian Petroleum Development Company’s (NPDC) claims against the Federation per inter-agency reconciliation for 2020.

In addition, it said that the sum of N13,313,565,786.49 in respect of Gas sales Royalty (Domestics) was reported as a set-off of NPDC’s claim against the Federation as per inter-agency reconciliation for the period under review, but there were no documents to substantiates such claims, adding that the unjustifiable set off drastically reduced the balance of the outstanding liabilities due to be paid by NPDC.

The report said that the Nigeria Customs Service (NCS) collected different Federation Account Levies including CET Levies, Rice Levy, 100% Cigarette Levy, 30% Textile Levy, 30% Levy on Wine and Spirit, 30% Levy on Sanitary Wares, Wheat Flour Levy and Wheat Grain Levy, but only remitted CET levies to the federation’s accounts shared at the FAAC by the three tiers of government.

It said: “The sum of N328,706,765,904.74 was the revenue collected by NCS in respect of the levies in and were not part of Federation Account Levies shared at Federation Account Allocation Committee (FAAC) from January 2016 to December 2020, adding that there were no documents presented to substantiate non-remittance of the said amount into the Federation Account.

The OAuGF attributed the anomalies to weaknesses in the internal control system at the NCS around the collection and remittance of revenue, particularly by the Heads of the Accounts Department and Federation Account Revenue Unit who should have ensured the complete remittance of all Federation Account Revenue to the appropriate quarters.

It said this led to the loss of government revenue and unauthorized utilization of Federation Account revenue and levies while asking that the Comptroller General should be requested to account for the said money.

The report also said the service debited the Federations Account with an unsubstantiated N13.905 billion not related to the FAAC remittances without any document presented to substantiate the debits.

It accuses the NCS management of operating a weak internal control system around proper record maintenance and follow-through process on records of Federation Account Revenue at CBN, particularly at the Management level and accounts section which should maintain all relevant books and documents and ensure parity between NCS documents and CBN statements.

But the Customs management, in its response to the audit query said the debit transaction in the Federation Account was a result of double entries made by the Central Bank of Nigeria (CBN) during their regular system upgrade, adding that the monthly reconciliation with CBN and OAGF reveals that the entries are correct.

It also alleged that the NCS did not remit the sum of N10.559 billion being part of revenue collected from Import Duties, CET Levies and NCS VAT between January 2016 and December 2020, while failing to present documents to substantiate non-remittance of the amount into the Federation Account.

It also said that the Customs did not remit the sum of N1.704 part of Federation Account Levies (other than CET Levies) collected between January 2016 and December 2020, to the Federation Account, while failing to substantiate under remittance.
[The Nation]

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