Latest NEITI Report: Nigeria Loses Billions Of Dollars To Oil Thieves.

Local and foreign players in the nation’s oil industry perpetrated massive fraud running into billions of dollars between 2006 and 2008, the Nigeria Extractive Industry Transparency Initiative, NEITI, has revealed in a report just published.

NEITI, a government-funded watchdog, says that the industry regulator, the Nigerian National Petroleum Corporation, NNPC, received $3.789bn in dividends from Nigeria LNG, a liquefied natural gas venture, over the 2006-2008 period but did not remit same into the Federation Account, Reuters has reported.

Foreign oil majors underpaid the federal government royalties to the tune of $2.33bn arising from subjective interpretation of volume, pricing and grading variables.

According to the report, $540 million was missing from $1.675 billion in signature bonuses, which are advance payments to develop fields which a standard producer country demands, in addition to the 3.1 million barrels of oil missing from NNPC declarations about its joint ventures compared with the figures released by NNPC's international partners.

It points out that foreign firms also seemed to have underpaid petroleum profit tax by over $1 billion, and recommended a review of the tax returns of Chevron and Exxon Mobil.

A similar report prepared by audit firm KPMG in 2010 notes that NNPC prepares invoices for domestic crude in US dollars but pays the government in naira and that exchange rates used by NNPC were lower than those published by the CBN, causing a loss of N86.2 billion ($550 million) to the treasury from 2007 to 2009.

Reacting to the report, NEITI’s head of communications Mr. Orji Ogbonnaya Orji said, "Right now, no one can tell you exactly how much of our crude is extracted from our soil…We depend on records from the oil companies. That clearly has to change.”

"Some of the issues that were revealed were shocking," the head of the House of Representatives fuel subsidy probe, Hon. Farouk Lawan, said. He added that government officials had understated NNPC payments by billions of naira.

“Daily consumption of petrol is 35 million litres, yet importers were being paid for 59 million litres a day. That means subsidy is being paid on 24 million litres but is not being consumed by Nigerians," he said. "Either those products were not brought in or they were brought in and diverted or ... smuggled out; most likely a combination."

But petroleum minister Diezani Alison-Madueke said the government had taken steps to stem the challenges in the industry.

The government, she said, was "mindful of the challenges still within the sector ... financial leakages and other deep-rooted inefficiencies," and "there is undoubtedly a need for change".

"Several panels and committees have been set up to reform the petroleum industry and, over the years, many of these efforts have been stalled," Alison-Madueke said.

The minister has raised three panels to look into the problems in the oil industry following the January showdown by workers over the sharp increase in the pump price of petrol.

One of the committees is headed by former EFCC boss Nuhu Ribadu, who was recently given 60 days to wrap up his work.