6 March 2017

Nigeria: Senate Investigates Widespread Fraud in Oil & Gas Industry

Photo: Premium Times
The Nigerian Senate

Abuja — The Joint Senate Committee on Petroleum (Downstream, Upstream) and Gas at the weekend said it had uncovered a large scale fraud of about N10 trillion allegedly perpetrated by officials of the Nigerian National Petroleum Corporation (NNPC) and its allies between 2006 and 2016.

The committee said during a press briefing in the nation's capital, Abuja, that the fraud was allegedly perpetrated by NNPC officials in connivance with some independent marketers and other key players in the petroleum industry.

The committee, therefore, said it had secured the strong support of President Muhammadu Buhari and the leadership of the Senate to carry out a holistic investigation of the fraud with a view to bringing perpetrators to book.

The committee argued that the whopping sum was huge enough to finance the country's budget for two consecutive fiscal years as it threatened that with the support of the federal government and the Senate leadership, which it had secured, culprits of the scam would not escape the long arms of the law.

Leading other committee chairmen to the briefing, Senator Kabiru Marafa, Chairman, Senate Committee on Petroleum (Downstream), said N5.2 trillion of the entire sum was traceable to NNPC which he said was collected by the corporation as subsidy from the federal government for the importation of petroleum products, notably between 2006 and 2016. It also said the amount excluded monies realisable from the 445,000 barrels of crude oil allocated to it annually for production in the nation's refineries for local consumption.

He said available records before the committee showed that during the period under investigation, NNPC imported fuel that was more than 40 per cent of the local consumption besides the perceived gross underutilisation of 445,000 barrels it allegedly received for local refining and local consumption on yearly basis.

"NNPC, being the custodian of crude oil resources of the nation, responsible for 51 per cent of petroleum products' importation into the country over the years aside the 445,000 crude allocation it gives itself on a yearly basis for sales for local refining, must account for the N5.2trillion,"he said, explaining: "Available records show that it has spent on subsidy on its own, 51 per cent of petroleum products importation between 2006 and 2016 aside the N3.8 trillion spent on similar subsidy for independent marketers and about $1.5 billion yet to be accounted for by other key players in the industry."

He also disclosed that the committee had discovered how oil marketers fraudulently evacuated petroleum products from storage leased by NNPC without any sense of accountability, pointing out that at least 100 million litres of petrol worth N14 billion had been stolen by two different oil companies without any sanction imposed on them by the NNPC.

It, therefore, ordered the NNPC to sanction the affected companies this week or face huge embarrassment following the expose.

"This committee has established the missing of 100 million litres of PMS from such storage arrangement. We expected NNPC to have taken action against the two companies that carried out the theft but since it has not, we hereby order it to do so immediately, precisely within this week, failure of which we shall make the whole details known to the public," he threatened.

Marafa also threatened that all the key players in the sector along with their collaborators who had taken the country for a ride during the period under review must be brought to book, explaining that the fraud was largely perpetrated during the administrations of former Presidents Olusegun Obasanjo, Umaru Musa Yar'Adua, Goodluck Jonathan and partly during the current administration of Buhari.

"President Buhari is highly supportive of this move by the Senate and we shall not fail in carrying out the needed holistic investigation on obvious sharp practices in the sector. Needed documents for the onerous task are already in our possession," he said.

Against this background, he said a three-day public hearing would soon be conducted by the committee as he listed those expected at the hearing to include: present and past executives of NNPC, independent marketers, heads of Licenced Inspection Agency, Nigeria Ports Authority (NPA), Federal Inland Revenue Service (FIRS), Nigeria Customs Service, and NIMASA, among others.

Marafa said that the whistle blower approach being adopted by the executive to unravel fraudulent practices of corrupt public officials would also be used to fish out those involved in the oil sector's massive fraud.

He said the committee would ensure that strict sanctions were imposed on players in the sector who might attempt to frustrate the investigation by failing to co-operate with the committee during its investigation.

Present at the briefing were the Chairman of Senate Committee on Petroleum (Upstream), Senator Tayo Alasoadura; and his counterpart in Gas Committee, Senator Bassey Akpan.

Nigeria

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