Why Senate is Tracing $18b NLNG Dividends

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Nigerian Senate
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Why Senate is Tracing $18b NLNG Dividends

The Senate is tracing the $18 billion released from the government investment in the Nigeria Liquefied Natural Gas (NLNG) Limited, to ensure that appropriate revenue is remitted, a senator said on Monday.

There are reports of alleged under-declaration and under-remittance of the NLNG dividends, which the Chairman of the Senate Committee on Finance, Senator Olamilekan Adeola, said was being investigated.

Adeola said it had become important to ascertain the records and unearth how the dividends were deducted; for what purposes and whether such deductions were justifiable.

He also clarified that since the 2021 Budget might record N5 trillion deficit, it was important to beam the searchlight on investment and  revenue-generating agencies to ensure that the nation earns more cash.

He said it is unfortunate that all revenue generating agencies are projected to contribute N2 trillion to 2021 Budget which is over N12 trillion.

There had been issues over NLNG dividends in the last 20 years spanning the administrations of ex-President Olusegun Obasanjo, the late President Umaru Yar’Adua, ex-President Goodluck Jonathan and President Muhammadu Buhari.

According to some documents available to our correspondent, the $15,822,713,000. 00 dividends came from the NLNG between 2000 and 2014.

The funds have risen to over $18 billion   as at 2019.

But the funds were neither paid into the Consolidated Revenue Fund of the Federation nor any traceable account of the Federal Government.

It was gathered that the funds were kept in NLNG Dividends Account over the years.

The Nigeria Extractive Industries Transparency Initiative’s (NEITI’s) audit in 2017 revealed that until 2015, NNPC failed to remit the interests and dividends from NLNG to the Federation Account

About $7.85 billion out of the dividends was allegedly withdrawn in 2011 under the guise of funding Brass LNG Project.

About $1.15 billion was said to have been spent by NNPC leaving a balance of $6.7 billion to be accounted for.

Although the $7.85 billion was to be sequestered for Brass LNG Project, it was allegedly spent in one swoop.

Brass project was to be funded over a period of five years as follows: Year One ($1.18b); Year Two($1.57b); Year Three($1.96b); Year Four($1.96b) and Year Five($1.18b). Total is $7.85billion.

The estimated cost of the Brass LNG project is about $16 billion of which NNPC equity contribution (49%) is $7.85 billion.

The project is being promoted by NNPC (49%), AGIP (17%), Total (17%) and ConocoPhillips (17%). It is expected that gas will be supplied from the NNPC/Agip JV (4.7TCF), NNPC/Total JV (3.6TCF) and NNPC/Chevron JV (3.3TCF).

Senator Adeola said yesterday: “We are tracing the $1 billion in the public interest. We cannot continue to borrow to finance our budget deficit when we have appreciable sources of revenue.

“We want to know what exactly our revenue generating agencies are contributing to our annual budget and NLNG is one of our revenue agencies.

“For instance, our budget projection for 2021 is about N12 trillion with a deficit of N5 trillion. Yet, our revenue generating agencies can only contribute N2 trillion to our budget. It is worrisome that some of these revenue generating agencies still draw their budgets from the government.

“It means, we have to borrow to finance the deficit. The Senate has decided to follow the money, we want to know what exactly has happened to our NLNG dividends.

“The Federal Government has 49% equity in NLNG, we want to know exactly what has happened to all the dividends.

“With the $18 billion NLNG dividends declared to this committee, we discovered variation in what was declared and what was remitted into the government account.

“When we invited the Accountant-General of the Federation, he claimed that he was not even aware of the dividends. We asked him to write the Nigerian National Petroleum Corporation (NNPC) and the NLNG to know the exact dividends the nation has earned; deductions made and accruals remitted.”

Adeola added: “When we get feedback from the AGF, the Senate will then do a follow up to verify all claims. We are out to see that we derive value from our investment in NLNG. We want our budget also to be self-financing.”

Besides the Senate, NEITI had in 2017 raised similar posers on NLNG dividends.

In  its March 2017 Policy Brief, NEITI said it was important for NNPC to explain what had become of the $15.8billion dividends( now over $18billion).

It said the ”recovery of these funds will significantly enhance government’s fiscal position in the short term.”

The Policy Brief said in part: “However, NEITI’s audits have revealed that until 2015, NNPC failed to remit the interests and dividends from NLNG to the Federation Account.  In those years (2000-2014) NLNG paid a total of $15.8 billion to NNPC, which NNPC acknowledged receiving but failed to remit to the Federation Account.

The dividends from Nigeria’s investment in the NLNG are undoubtedly covered by clear constitutional provisions which prescribe that all revenue received by the Federation must be paid into the Consolidated Revenue Fund of the Federation.

Section 80 (1) of the 1999 Constitution states: “All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation”

Also, Section 162 (1) of the 1999 Constitution states thus:

“The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja”

“These sections of the Constitution are especially important because NNPC once stated that it had spent part of the NLNG dividends on gas projects. NNPC maintained that this was done in line with approvals from the Federal Government. The NNPC has also stated that it thought that the shareholdings were owned by the Federal Government and not the Federation.

“However, it is doubtful if this alibi on lack of clarity on ownership can hold up to scrutiny. The NNPC is the joint venture partner with international oil companies on behalf of the Federation in all oil mining projects. NNPC also does all lifting for crude oil for the Federation. Can it now be said that revenue accruing from such lifting belongs to the Federal Government alone, because the NNPC is an agency of the Federal Government? Analogously, the NNPC holds shares in NLNG on behalf of the Federation and cannot possibly claim that such shareholding is for the Federal Government alone. It is also doubtful that even revenue belonging to the Federal Government can be expended without appropriation.

“The issue of lack of clarity seems to have been settled in 2015 when President Muhammadu Buhari directed that the NLNG dividends for that year be paid into the Federation Account. However, it is important for the NLNG dividends due between 2000 and 2014 be paid to the Federation Account. Although the NNPC claims that the NLNG account is one of the most transparent accounts, it is doubtful if the entire $15.8 billion due from 2000 to 2014 is still intact.

“It will be important to investigate if any part of the NLNG has been spent, whether such expenditure followed due process, and to ascertain if the expenditure was for specified purposes.”

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