Federal Government to audit accounts of major oil companies

The Federal Government, on Tuesday, selected a United Kingdom consultancy group, the Hart Group, to do a five-year audit of payments to the government by the Nigerian National Petroleum Corporation, the Pipelines and Products Marketing Company, and other oil companies, particularly the oil majors.

The UK firm is to carry out financial, process and physical audit of the NNPC, PPMC and oil companies to ascertain their claims on payment of oil revenue, including royalties and taxes, among others.

Among the major oil companies whose accounts would be audited are: ChevronTexaco Petroleum Company; Shell Petroleum Development Company; ExxonMobil Corporation of Nigeria; Nigerian Agip Oil Company; Elf Petroleum Company; ConocoPhilips Petroleum Company; and Addax Petroleum Company, as well as some indigenous companies operating in off shore oil acreage.

The contract worth $3.2million was signed on Thursday in Abuja by the government and the firm.

The Chairman of the Nigeria Extractive Industry Transparency Initiative, Mrs. Oby Ezekwesili and the Group Managing Director of the NNPC, Mr. Funsho Kupolokun, signed for the Federal Government, while the Managing Director of Hart Group, Mr. Chris Nurse, signed for the company.

Addressing newsmen on the signing of the agreement, Ezekwesili said that 100 foreign and local companies sent in bids for the audit contract.

She said that the Hart Group was chosen for quoting the least amount of $3.2 million.

She said the audit was important because oil revenue accounted for 85 per cent of the government’s total revenue and 90 per cent of its foreign exchange earning.

“Following an intensive international competition, the National Stakeholders Working Group has selected a consortium led by UK based Hart Group to conduct the financial, process and physical audit pursuant to the Nigeria Extractive Industries Transparency Initiative,” Ezekwesili said.

According to her, the firm will provide an independent audit, in accordance with international auditing standards, of all payments made to the Federal Government, and all revenues earned, from the oil and gas sector for the past five years.

Sheexplained that the Hart Group would also assess whether those payments were recorded in the Central Bank of Nigeria.

She stated that the report would identify any discrepancies encountered while its findings would be made public.

“A Process Audit will be undertaken for the purpose of examining the most critical management systems, processes and practices in the sector, such as the way Nigeria markets its crude oil, purchases refined products, oversees and participates in the capital and operating expenditures of the joint ventures and how it allocated acreage and manages licensing.

“A Physical Audit will examine how the Federal Government monitors the production of oil from the well head to flow stations to fiscalisation, and test the integrity of the measuring and monitoring systems.

“The Physical Audit will also look at the problems of crude theft and illegal bunkering and assess the major systemic weaknesses that permit these losses and propose ways to remedy these losses,” said Ezekwesili, who is also the Head of Budget Monitoring and Price Intelligence Unit.

The Group Managing Director of NNPC on his part explained that there were discrepancies in the figures that both the Corporation and PPMC had on the proceeds from oil companies.

“The audit would help to establish the authentic figure in oil proceeds and revenue from oil companies. The audit would also help us to improve on what we are doing in terms of processing and procedures,” he stated.

The Hart Group is a consulting organisation with a large network of local and international associates and a 16-year track record of work mainly in underground resources sectors.

Information obtained from the Hart Group website on Tuesday said the company was founded in 1988 and has “an extensive international network of professional organisations and individuals.”

Although the group said its core competencies include social and economic consultancy as well as financial business services, there was no clear indication that it is an audit firm.