The office of the Auditor General for the Federation, AuGF has raised the alarm over the continued refusal by the management of the Nigeria Liquidified Natural Gas (NLNG) of access to terminals by Pre-shipment Inspection Agents (PIAs) and Monitoring and Evaluation Agents (MEAs).

The terminals were under NLNG’s control. The inspectors were to carry out inspection and monitoring activities of export from those terminals between 2016 and 2020 as required by law.

This was contained in the Auditor General for the Federation’s performance audit report on pre-shipment inspection and monitoring of crude oil and gas exports by the Federal Ministry of Finance, Budget and National Planning for the period January 2016 to December 2020 with reference 747/99/CONF/VOL.II/75.

The report dated 29th June, 2022 signed by Adolphus Aghughu, the former Auditor General for the Federation has been submitted to the Clerk to the National Assembly for prompt Investigation by the Public Accounts Committees of the both Chambers

According to Section 1 of the Pre-Shipment Inspection of Export Act stipulates that “As from the commencement of this Act, no goods to which this Act applies shall be exported from Nigeria unless an inspecting agent appointed pursuant to section 12 of this Act has issued in respect of the goods Clean Certificate of Inspection to overseas buyers of the goods”

Section 18(1) of Pre-Shipment Inspection of Export Act also states that “Any person who, at any time after the commencement of this Act, knowingly export goods liable to preshipment inspection under this Act otherwise than in compliance with the provisions of this Act is guilty of an offence under this Act.”

The report stated that: “audit team noted during review of Inspection and Monitoring Agents’ annual reports for 2016 — 2020, that Nigeria Liquefied Natural Gas Limited (NLNG) has continually refused PIAs and MEAs access to the Terminals under its control to carry out inspection and monitoring activities as required by the Act.

“Also, the operators of Puffin (Floating Production Storage and Off take (FPSO)) Terminal located on Ajeoil field and Zaffiro Terminal being operated by Mobil/NNPC, located outside Nigeria in the Equatorial Guinea under the inspection of Trobell International Nig. Ltd and Robinson international Energy Limited could not be accessed for inspection.”

On the non-usage of Metering equipment at Export Terminal, the report said: “Section 52(1) of Petroleum (Drilling & Production) Regulations of 1969 stipulate that ‘the licensee or lessee shall, with volume and gravity correction to sixty-degree Fahrenheit and by a method or methods approved by the Director of Petroleum Resources in writing, measure or weigh — (a) all crude oil won and saved and casing head petroleum spirit recovered from relevant area; and (b) all-natural gas sold.

“Measuring equipment meant to guarantee accuracy of quantity and sample collection for quality testing is either not available or used at terminals because DPR as a regulatory authority has not provided and enforced its usage were available. The manual method of arriving at quantity and sample collection is prone to error and can lead to inaccurate records.

“Also, section 52(2) of the Regulation stipulates that ‘he Director of Petroleum Resources or an officer authorised by him shall have the right to be present whenever any such measurement or weighing take place

“Interviews conducted with the Managing Directors and staff of PIAs and MEA revealed that Okono terminal does not have metering equipment since 2012. It also revealed that Ebok and Forcados terminals do not use the available metering equipment to measure quantity during Fiscalisaton and Defiscalisation exercise.

“Due to absence of measuring equipment at these terminals, it has resulted in delay lifting/sailing by the vessel, high rate of error resulting from manual metering, increased fatigue for monitors through tedious manual process of determining export quantity. Also, no independent verification of loading into vessel by DPR who rather adopt and relied on the figures arrived at by the Agents.

“The quantity of crude oil and gas presented to the audit team were without data from exports of and Gas made by NLNG, Puffin and Zaffiro Terminals from 2016 to 2020, since they were not accessible for inspection and monitoring. This will lead to continuous loss of Oil and Gas revenue to government.”

The report quoted the response from the Federal Ministry of Finance, Budget and National Planning to the audit query to have said that “NLNG is relying on some guarantees/assurance in the existing law that established NLNG which they posited made it difficult for the company to comply with the Pre-Shipment Inspection Act No. 10 of 1996.

“The Ministry in order to redress the situation, convened a meeting between the officials of Nigeria Liquefied Natural Gas (NLNG), the Pre-Shipment Agent (PIA) Monitonng and Evaluation Agent (MEA) on Gas exports and representatives of the Ministry on the 13″ October, 2021 and the issues presented, are being addressed by the Ministry.

“However, It was revealed from the meeting, that the framework which guides investment portfolio of NLNG which is referred to as “investment Protection Law of 1989″ cum MOU was signed with investors and the Federal Government of Nigeria, Precludes NLNG’s revenue from taxes, which they claimed to had been affirmed by FMFB&NP, CBN and the Attorney General of the Federation with an additional clause to maintain status-quo. The interface is on-going.

“Meanwhile, Aje Oil field is not located outside Nigeria in the Equatorial Guinea as reported by the Auditor-General for the Federation’s Team but is located off shore Western Nigeria and Trobeil int’l Nigeria Limited has been accessing it by air via Lagos.

“Puffin is not a terminal but it is a name of a storage vessel positioned on top of Aje terminal under Trobell Int’l Nigeria Limited while Zaffiro terminal is the one located off shore Equatorial Guinea and under Robinson Int’l Energy Limited and the PIA had reported officially of its inability to access the terminal”.

On the non-usage of metering equipment at Export Terminal, the report quote the Ministry as saying that “all terminal operators own the equipment needed at the terminal to measure quantity and quality of crude oil exports.

“While as a check on the exporters, the Pre-shipment Inspection Agents (PIAs) and Monitoring & Evaluation Agents (MEAs) who are appointed by the Federal Government, do have different types of relevant equipment to confirm the quality and quantity of the crude oil exports in their independent laboratories.

“Okono terminal is the only terminal that lacks metering equipment. However, the absence of metering equipment does not preclude determination of the quantity of crude-oil exported. It is calculated manually, but the process of manual calculation is a bit clumsy and laborious. In order to facilitate the process therefore, there it need to have modern metering equipment at the terminal, meanwhile Qua-lboe and Forcados have metering equipment.”