How DPR withdrew $759.4m from signature bonus account

April 7, 2021
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Official document from Office of the Auditor General of the Federation has revealed how a total sum of $759,387,755.10 was withdrawn from the Department of Petroleum Resources (DPR’s) Signature Bonus Account domiciled with JP Morgan Chase Bank.

Signature bonus is a single, non-recoverable lump sum payment by the Licensee to Government upon the granting of a Petroleum Exploration Licence or Petroleum Production Licence.

The latest OAuGF 2018 annual report indicated that the sum,  withdrawn in bits, was paid into different accounts in tranches between July 2014 and May 2015.

Checks by Nigerian Tribune showed that an initial sum of $469,387,755.10 was withdrawn from the said account between April 10th and April 30th 2015 and paid to an account called, “CBN autonomous FEM account Garki, Abuja Nigeria,” rather than being  paid into the Federation Account.

A total of $290 million was again withdrawn from same Signature Bonus Account domiciled with JP Morgan Chase Bank in three tranches-July 7, 2014 – $100 million; February 19, 2015 – $40 million and May 8, 2015 – $150 million, via Standard Chartered Bank to First Bank Nigeria, in favour of Petroleum Technology Development Fund (PTDF) with the description, “being funds released to PTDF for execution of critical projects.”

The sum which was expected to be paid directly into the Federation Accounts in line with stipulated provisions of the law was disbursed into the accounts with no explanations.

Interestingly, the department claims it has no control over withdrawal from the Signature Bonus Account, though it accounts for such withdrawals in its cash book.

Revenue non-remittances, resultant effects on development

However, this development is  not only peculiar to the Department as in times past, different probes and panels  committees uncovered that the country’s petroleum industry is shrouded in secrecy, opaque revenue retention practices, corruption and mismanagement.

Majorly, the mismanagement of the nation’s petroleum wealth has been traced to the Nigerian National Petroleum Corporation (NNPC) as well as Ministries, Departments and Agencies (MDAs) responsible for regulation, development and revenue collections in the sector.

Agencies and parastatals responsible for revenue collections have over the years created several loopholes through which revenues are diverted away from the Federation Account.

For instance, Nigerian Extractive Industries Transparency Initiative (NEITI), in its 2015 audit report of the sector, had accused the Nigerian National Petroleum Corporation (NNPC) of not remitting into the federation account, an approximated $1.08billion paid into the Corporation’s depository account with JP Morgan Chase by the NLNG as dividend accrued.

It is note worthy to stress that because the oil sector remains the bedrock of Nigeria’s economy, monies paid into the federation account, 85 per cent of which comes from the sector, is on monthly basis distributed by the Federation Accounts Allocation Committee (FAAC) to the three tiers of governments.

By implication, inappropriate remittances will no doubt affect the quality of allocation to states and Local Government Areas (LGAs).

The resultant effect of this is snail paced developments seen across all sectors of the economy-education, health, infrastructure among others, while the country keeps expanding its debt profile.

Aside, the unremitted $759 million by DPR within this period-2014 and 2015 would have provided government with enough funds for infrastructure development and better health care delivery.

In terms of infrastructural development, recall that the President Muhammadu Buhari-led Federal Government (FG) in 2017 clinched a N100 billion SUKUK bond in an effort to bridge the nation’s infrastructure gap, notwithstanding the debt burden this would create.

Using the dollar exchange rate of N200 as of 2015, the total value would have been over N152 billion which could have conveniently delivered the 25 road projects the SUKUK N100 billion loan is expected to fund.

On the other hand, considering the country’s  economic realities, the sum,  using the current exchange rate of N381 per dollar would have also funded the over 100 National Primary Health Care Development Agency’s (NPHCDA) planned  projects which are expected to gulp about N21.3 billion as contained in the 2021 approved budget.

At N381/dollar, the Federation account would have been credited with nothing less than N289.2 billion the approximated naira value of the unremitted DPR’s $759.4 million.

Meanwhile, the Federal Government had recently approved a sum of $1.5 billion for rehabilitation of the Port Harcourt refinery where $1billion is raised through borrowing from the African Export-Import Bank Afreximbank.

Perhaps, with over 50 per cent of the required sum needed to rehabilitate the refinery at hand, government would have only outsourced the remaining balance, thus reducing its debt profile.

How DPR withdrew $759.4mDPR’s operations

DPR, an agency under the Ministry of Petroleum Resources is saddled with the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the Oil and Gas Industry.

It also generates revenue for the government through licenses, royalties and penalties among others which are expected to be paid into the Federation Account.

But, the agency has in the past weeks and months, been on the radar for alleged lack of transparency.

For instance, the Senate’s Joint Committee on Finance and National Planning in August 2020 had queried the agency for only remitting N44.5 billion into the Consolidated Revenue Fund in 2019 out of N2.4 trillion generated.

Also in February 2021, Senate Committee on Ethics, Privileges and Public Petitions faulted the Department’s alleged payment of N1.8 billion to a private firm, Riverman Technologies Limited, for jobs not satisfactorily executed.

Similarly within same month, the department was under fire for not being able to account for a volume of 329,420,319 barrels of oil valued at over $20 billion between 2005 and 2012.

These are few of many queries the agency had received in the past on misappropriation.

The law and experts’ reaction

In line with Provision of Section 162 (1) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), revenue generating agencies and parastatals of government are expected to pay all revenues into the FG coffers.

But considering beneficiaries of the said withdrawals and controversies this has generated, a look at Section 1 of the PTDF Act No. 25 of 1973, states that the main source of funding of the PTDF is through signature bonuses.

Section 1(b) of the Act states “there is hereby established a Fund into which shall be paid moneys comprising all sums payable to or received by the Ministry charged with responsibilities for matters relating to petroleum development in terms of agreement made by the Government and company in relation to petroleum oil prospecting or mining concessions”.

“But in reality, the money after collection by the Department of Petroleum Resources (DPR), is paid into an account with the Central Bank of Nigeria (CBN) called PTDF Reserve Account and is under the control of the Accountant-General of the Federation,” says Kalu Otisi, in an analysis on PTDF’s Source of Funding and Budgetary Control.

This was further clarified in the 2012-2016 Fiscal Allocation and Statutory Disbursement for PTDF report released by the Nigerian Extractive Industries Transparency Initiative (NEITI) in 2019, which states that DPR is saddled with the responsibility of collecting dues on signature bonus and royalties accruing from oil well blocks.

Reacting to this, Wumi Iledare, Professor Emeritus in Petroleum Economics and former President, Nigeria Association for Energy Economics, averred that the unexplained withdrawals could be statutory funding for the Fund.

“It is some percentage of bonuses paid when bidding for oil blocks. This existed even before the existence of PTDF. Perhaps not as political as it is today then,” he added.

Oyinda Adedokun, Oil and Gas policy analyst, stressed that whatever the DPR Act says does not supercede the constitution which states that all revenue should be swept into the federation account.

On his part, Mr Bala Zakka, an Oil and Gas analyst, said there may be hidden clauses in the constitution or Act that give approval for such transfers.

DPR reacts

When contacted, Mr Paul Osu, Department of Petroleum Resources (DPR) spokesperson, argued that the Department had in February 2021, appeared at a public hearing and “we were cleared of all allegations regarding this issue.”

Osu reaffirmed that the signature bonus is managed by Office of the Accountant-General of the Federation and not the Department as widely speculated.

He said DPR’s role regarding the account is mainly administrative which ensures inflow of revenue into the account.

“DPR does not own or control any signature bonus account. Such account is managed by the office of the Accountant General of the Federation.

“Our role is the administrative process that ensures inflows into the account as the petroleum regulatory agency of Nigeria.  So the issue of transfer of funds does not arise,” says Osu

The Accountant-General office spokesperson, Henshaw Agubike, when contacted, declined comments as he claimed to be indisposed.

  • This story was produced under the NAREP Oil and Gas 2021 fellowship of the Premium Times Centre for Investigative Journalism.

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