29 May 2012

Nigeria: NNPC's Can of Worms

Photo: Elaine Gilligan/Friends of the Earth
Shell barrel in Port Harcourt.

IN January this year, Nigerians from all walks of life, came out to protest the removal of fuel subsidy the refusal of the government to prosecute those it called cabals in the nation's oil sector.

Soon after the protest which paralyzed activities in both the public and private sectors, the House of Representatives swung into action that resulted in the constitution of Mr. Faruk Lawan-led adhoc committee on fuel subsidy to look into the subsidy regime.

The long awaited report finally came out with shocking revelations of dirty deals and unmasking the ever-biggest fraud in Nigerian history running into trillions of naira being expended and embezzled by some Nigerians.

It would be recalled that the House of Representatives Fuel Subsidy Probe Panel, Wednesday, submitted its report, and indicted 69 oil firms for flawed transactions and indebtedness to the tune of N229.706 billion.

In the report the Committee seeks for a 'complete overhaul' of the Nigerian National Petroleum Corporation (NNPC) leadership and the refund of more than N1 trillion of fuel subsidies among far-reaching recommendations.

The report also indicted the corporation's management and board, as well as those of the Petroleum Product Pricing and Regulatory Agency (PPPRA), and recommends the prosecution of those found wanting for violations that cost the nation trillions of naira.

The Farouk Lawan-led committee report also said the NNPC must be made to refund to the federal purse N705 billion; PPPRA N312 billion; fraudulent marketers who drew funding without importation, N8.7 billion; while companies that refused to appear during the investigations are to repay N41.9 billion.

'The committee believes that if the Petroleum Subsidy Fund had been properly managed, the sum of N1.07 trillion would have been available to the three tiers of government,' the report said.

The abuses that led to the loss of that amount were laid at the doorsteps of the NNPC and the PPPRA, the two government institutions that have been repeatedly accused and indicted for corrupt activities.

The committee also unveiled two oil subsidy recovery sources by the Nigerian National Petroleum Corporation as well as contradictory accounts from the NNPC, PPPRA and Central Bank of Nigeria (CBN) on the actual amount that accrued during the period under review.

'NNPC had two sources of recovery of its subsidy viz (1) direct deductions from domestic crude receipts accruable to the federation and (2) payment by CBN through deduction from distributable revenues as per the Federation Account Component Statement.

'NNPC in its submission claimed to have earned N586bn as subsidy from the supply of 7,576,726,157 litres of PMS in 2011.

However, by PPPRA's presentation, NNPC was paid a subsidy of N667.553bn for supplying 5,470,007111 litres of PMS.

'By CBN's presentation, NNPC was paid the sum of N844.944bn as subsidy in 2011.

In addition to CBN's payment of N844.944bn as represented on the Federation Account Component Statement, NNPC made a direct deduction of N847.942bn as subsidy in 2011, bringing all claims by NNPC on subsidy in 2011 to N1, 692.886trn.

'PPRA in its presentation to the House of Representatives had hinted that the noticeable upsurge in subsidy payment in 2011 was due not only to increase in subsidy per litre but also to the computed arrears due NNPC for HHK discharges.

'This was established from NNPC submissions to be N284.580bn.

This payment of subsidy arrears on HHK was an illegality, having been proscribed by a presidential directive in 2009.

NNPC was stopped from further collecting subsidy on HHK.

"The corporation abided by the presidential directive but unilaterally reversed the situation without any counter-directive or order from the President.

It further recommended that the office of the Accountant General of the Federation under the now governor of Gombe State, Dankwambo should refund N213.678 billion excess payments made by it, above the Petroleum Products Pricing Regulating Agency (PPPRA)'s proof of payments in 2009.

The office of the AGF should explain over payment of NNPC subsidy receipts to the tune of N146.746billion (2009), N421.197billion (2010) and N1, 025,353billion (2011).'

Among the companies of notable Nigerians that were indicted is the Aviation Minister, Stella Oduah's oil firm, SPG along with 68 others, stolen over N241 billion of the fuel subsidy fund.

Other Nigerians indicted include Ahmadu Ali, Mike Adenuga and former minister for Internal Affairs, Captain Ihenacho.

The Farouk Lawan committee, according to its report, also approached the EFCC and ICPC with the allegation that 15 oil marketers received $402.610b as FOREX in 2010 and last year, but refused to import petroleum products.

The panel said another set of 18 oil companies who benefited from the Fuel Subsidy Scheme but refused to appear before it will refund N41.936 billion.

In the report are graphic details of the mismanagement of fuel subsidy and a recommendation that N1.070 trillion be refunded.

Other transactions the anti-graft agencies should investigate, according to the panel, include: 'payment of N999 million to unnamed entities 128 times to the tune of N127.872 billion.

The report said: 'The 72 companies listed under the financial forensics are hereby recommended for further investigation by relevant anti-corruption agencies, with a view to establishing their culpability and recovering the sums indicated against their names totaling N230, 184,605,691.00.'

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