Audit Report Indicts NUPRC, Customs For Non-remittance Into Federation Account

Audit report indicts NUPRC, Customs for non-remittance into federation account

By Judith Moses, Abuja

A report from the Office of the Auditor-General of the Federation (OAuGF) has indicted the Nigeria Customs Service (NCS) and Upstream Petroleum Regulatory Commission (NUPRC) for non-remittance of billions of naira into the federation account.

The audit report for the 2020 financial year submitted to the National Assembly in November last year, but obtained at the weekend by our correspondent, did not show how N328.71billion collected as levies by the NCS between January 2016 and December 2020 was shared by the three tiers of government.

The report said N151.121 billion deducted by the Nigeria National Petroleum Company Limited (NNPCL) on behalf of NUPRC (formerly Department of Petroleum Resources) as royalty for 2020 was not captured in the federation account.

According to the report, the NCS remitted only CET levies during the period under review but failed to do the same for many other federal levies like rice levy,100 percent cigarette levy, 30 percent textile levy, 30 percent wine and spirit levy, 30 percent sanitary wares levy as well as wheat flour and grain levy.

The report reads in part: “The N328,706,765,904.74 was the revenue collected by NCS in respect of the levies 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 non-remittance to poor internal control system at the NCS. It said the Heads of the Accounts Department of the Service and Federation Account Revenue Unit should have ensured complete remittance of the levies to federation account.

The OAuGF report which asked that the NCS Comptroller-General should be requested to explain why the levies were not remitted, accused the service of debiting the federation account with an unsubstantiated N13.91 billion not related to the FAAC remittances without any document.

It accused the NCS management of operating a weak internal control system, improper record keeping and poor follow-through process on records of the federation account revenue at the Central Bank of Nigeria(CBN).

But the NCS management, in its response to the audit query, said the debit transaction in the federation account was as a result of double entries of the CBN during their system upgrade.

It added that its monthly reconciliation with CBN and OAGF reveals that the entries were correct.

The report also alleged that the NCS did not remit N10.6 billion being part of the revenue collected from import duties, CET levies and Value Added Tax(VAT) between January 2016 and December 2020 and another N1.704b being part of federation account levies (other than CET levies) collected during the same period.

On NUPRC’s infraction, the OAuGF said: “The sum of N151.121 billion was deducted by the NNPC from the oil royalty assessed by the DPR now Nigerian Upstream Petroleum Regulatory Commission 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 FAAC, adding that the deductions were made before remittance to NUPRC.

In its management’s 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 four percent cost of revenue collection to NUPRC for money deducted at source by the NNPC for government priority projects.”

The report advised that the Chief Executive Officer of the agency should be requested to account for the said N151.1 billion that was deducted at source by the NNPC.

It put the outstanding royalties payable by the NNPC to NUPRC concerning Production Sharing Contracts (PSC), repayment agreement (RA) and modified carry arrangement (MCA) lifting as of December 31, 2020, at $437.51 million.

The report clarified that out of the amount, NUPRC received $417.73 million, leaving a balance of $19.8 million as royalties from two operators as of December 31, 2020, without any justifiable reason.