AuGF Charges CBN to Recover $1bn from 32 Firms for Alleged Breach of Oil Export Rules

*Calls for installation of modern crude measurement equipment

Emmanuel Addeh in Abuja

The Office of the Auditor General of the Federation (OAuGF) has recommended that the Central Bank of Nigeria (CBN) should recover over $1 billion from 32 oil firms, allegedly arising from the breach of the rules surrounding the completion of the Nigeria Export Proceeds form (NXP) .
Essentially, the NXP form gives authorised export dealers information on the goods for export, including the exporter’s bank, Nigeria Customs Services (NCS), Pre-shipment Inspection Agents (PIA), among others.

It is a mandatory statutory document to be completed by all exporters for shipment of goods outside Nigeria.
In its: “Performance Audit Report on Pre-shipment Inspection and Monitoring of Crude Oil and Gas Exports by Ministry of Finance”, the Auditor General stressed that if ignored, the degeneration of the situation could give rise to either non-repatriation or delay in repatriation of export proceeds.

The report said that the Federal Ministry of Finance, Budget and National Planning had not fulfilled its mandate in ensuring the effective implementation of pre-shipment inspection of export of crude oil and gas.

If well implemented,  this, the Auditor General said, is supposed to guarantee quality, quantity and price of Nigerian exports that conform to international standards and provide revenue assurance for Nigerians.

“CBN should fully enforce the automation of Form ‘NXP’ on its Trade Monitoring System (TMS) and set up modalities to ensure the recovery of $1,020,969,281.12, being value of export without completion of the required NXP Forms from 2016-2020,” the report said.
To check the non-completion of NXP forms by exporters of crude oil and gas, the AuGF called on the Trade and Exchange Department of CBN to ensure adequate monitoring of Deposit Money Bank (DMB) of exporters.

While specifically listing 32 oil and gas firms as culprits, it tasked the TMS to ensure that the DMBs provide it with reports on exporters’ compliance or otherwise within 90 days’ rule on repatriation of export proceeds.

At the time of the audit which was prepared by the erstwhile AuGF, Adolphus Aghughu, the auditor general stated that the situation had continued because the oil and gas industry regulator wasn’t sanctioning defaulters as provided by section 19(a) of the guidelines.

The document also highlighted the absence of relevant government agencies at both shore and ship side, for the purpose of ascertaining quality and quantity of crude oil and gas exports, describing it as a dereliction of duty as provided in the relevant Act and reinforced in the guidelines.

“These agencies are supposed to regulate activities at terminals and protect the interest of government among other stakeholders but relinquish their duties to service providers. The aftermath of their inconsistencies will result in loss of revenue to government,” it stated.

On the alleged non-usage of metering equipment at some export terminals, it stated that the equipment meant to guarantee accuracy of quantity and sample collection for quality testing is either not available or sometimes used at terminals because the regulatory authority has not provided and enforced its usage where available.

“The manual method of arriving at quantity and sample collection is prone to error and could lead to inaccurate records as well as loss of revenue to government,” the AuGF explained.

In view of the findings and conclusions, it urged the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which has recently subsumed the Department of Petroleum Resources (DPR) to deny any exporter that defaults in filling the form NXP export permit, as prescribed by the export guidelines.

Although the NUPRC argued in its response to the AuGF that the absence of reliable metering devices was not an industry-wide challenge, the report recommended that the regulator should as as a matter of urgency, ensure the provision of functional modern metering equipment everywhere they are needed.
It specifically mentioned Okono, Ebok and Forcados terminals, but added that all other equipment at export terminals across the country with manual or obsolete metering equipment should be replaced while there should be efficient and effective enforcement.