How they bleed Nigeria!

Must Read

Despite Rumours Of Internal Crisis, APC Still Winning: Oshiomhole

  Adams Oshiomhole, national chairman of the All Progressives Congress (APC), says the party is winning elections, despite rumours of...

African Artist Goes Viral After Painting Kobe Bryant With Basketball Hoop (Video)

A Senegalese painter, Bou Bou has gone viral for his stunning portrait of basketball legend Kobe Bryant. Bou Bou made...

Insurgency In Nigeria Is Surprising – Buhari

President Muhammadu Buhari says the type of insecurity that has taken over some parts of the country is "surprising'...

Gov. Lalong Orders Arrest Of Fulani Leaders Over Plateau Killings

Simon Lalong, governor of Plateau state, has ordered the arrest of Fulani leaders and community heads following recent attacks...

Cries Of Those Killed Unjustly Giving Us Sleepless Nights: Reps

  The house of representatives says the cries of the people that have lost their lives due to the ravaging...
Information Nigeriahttp://www.informationnigeria.org
Information Nigeria is Nigeria's No.1 Information Portal.

faruk_lawanHouse report reveals rot in subsidy, oil sector

Says 35 firms collected allocation without registration

Panel asks NNPC, PPPRA, marketers to refund N1.1tr

Queries national oil corporation’s solvency

Indicts Offices of Budget, Accountant-General

Blacklists three audit firms

Wants PPPRA’s ex-scribe prosecuted

Seeks two ministers of petroleum resources

Proposes N557b subsidy for 2012

IT was a policy designed to bring succour to poor Nigerians. But it turned out to be the drain-pipe on the treasury and a source of ill-gotten wealth for both Nigerians and foreigners.

The fuel subsidy saga reverberated yesterday in Abuja as the House of Representatives’ Ad-hoc Committee, which investigated the petroleum products’ subsidy, presented its report to the whole House.

The damning report unmasked the key actors in the sleaze in the nation’s oil sector.

From its first page to the last, the lawmakers in their 61-point recommendations, displayed the roll-call of institutions, private enterprises that ran a well-organised corruption regime, where both state officials and their private cohorts denied Nigerians the benefits of the subsidy policy, diverted public funds, over-invoiced fuel imports, and collected rebate for them.

Sadly enough, some of the industry regulators overpaid themselves under the subsidy regime. In this regard, the Nigerian National Petroleum Corporation (NNPC) and Petroleum Products Pricing Regulatory Agency (PPPRA), were named the chief culprits in the looting spree where fuel marketers acted for themselves and also as conduit pipes for state officials to defraud the government.

The panel, therefore, recommended that the NNPC, PPPRA, and other companies, which failed to appear before it, should refund N1.067 trillion to the Federal Government for reaping where they did not sow.

Presenting the report on the floor of the House yesterday, the committee said, as at present constituted, Nigerians would never get value for money from the NNPC and therefore proposed that it be unbundled.

The salient aspects of the report included its recommendation of the refund of N1.067 trillion to the federal purse. The NNPC’s share of this money is N310,414,963,613 for kerosene subsidy. It gave the breakdown simply as:

• NNPC (above PPPRA recommendation) -N285,098,000,000.00;

• NNPC (self-discount) – N108,648,000,000;

• Marketers (total violations of Petroleum Support Funds (PSF) – N8,664,352,554;

• Companies that refused to appear before the panel – N41,936,140,005.31; and

• PPPRA’s excess payment to self –  N312,279,000,000 bring the total money stolen by the agencies and others to N1,067,040,466,171.31.

The presentation of the report by Lawan Farouk-led committee may have reduced the apprehension among the citizenry that some powerful forces were set to scuttle it .

Revelations that the committee members were divided on the issue caused fresh concerns in the polity.

There were speculations that the panel had recommended the prosecution of several officials of the Ministry of Petroleum Resources, NNPC, Department of Petroleum Resources (DPR), Petroleum Products Marketing Company (PPMC) and PPPRA for their role in ripping the country off through the fuel subsidy scheme. The fears heightened on Tuesday when the committee did not present the report as earlier announced.

However, The Guardian learnt that the ad-hoc committee’s members were divided on the reach to which the prosecutorial sweep should be applied. While some members believe only managers in oil agencies should face prosecution, others say this should go the whole length to include the Minister of Petroleum Resources.

More knocks came for the NNPC when the panel doubted its solvency and urged the House to look into the matter because of the huge debt claims against the corporation.

The panel, which indicted officials in the Federal Ministry of Finance, Office of the Director-General Budget, and the Office of the Accountant-General of the Federation involved in the extra- budgetary expenditure under the PSF scheme (2009-2011), said they should be sanctioned in accordance with the Civil Service Rules and the Code of Conduct Bureau.

It said: “The payment of N999,000,000 in 128 times within 24 hours (12th and 13th January, 2009) by the Office of the Accountant-General of the Federation should be further investigated by relevant anti-corruption agencies.” The report said that the unbundling of the NNPC could be achieved through the passage of the Petroleum Industry Bill (PIB).

“The committee recommends that the NNPC should be unbundled to make its operations more efficient and transparent and this we believe can also be achieved through the passage of a well-drafted and comprehensive Petroleum Industry Bill (PIB).   The committee, therefore, urges the speedy drafting and submission of the bill to the National Assembly.”

The committee also asked the government to blacklist three audit firms for three years over their roles in the fuel subsidy scam.

And in a move to douse the avalanche of criticisms and ostensibly to curry credibility to the report, the Speaker of the House of Representatives, Aminu Waziri Tambuwal, declared that the clause by clause consideration of the report would be relayed on Tuesday next week live on national television.

Tambuwal directed the Albert Sam-Tsokwa-led Committee on Business and Rules to liaise with the ad-hoc panel to make copies of the report available to members today for their perusal.

His words: “Chairman, Rules and Business, please liaise to ensure that each member gets the report latest tomorrow (Thursday) morning.

“Members should please study the report and come back for consideration on Tuesday next week. And any television channel interested in covering the report live will be given that privilege to do so,” he added.

In the words of the panel, “the NNPC should refund to the Federation Account the sum of N310,414,963,613 paid to it illegally as subsidy for kerosene contrary to the presidential directive of July 29, 2009 withdrawing subsidy on the product.

“That the House directs the auditing of the NNPC to determine its solvency. This is as a result of plethora of claims of indebtedness and demands for payments by NNPC’s debtors, which if not well handled, will not only affect the entire economy of Nigeria but also the supply and distribution of petroleum products.

“The House should direct the NNPC to stop any form of deductions not captured in Appropriation Act before remittance to the Federation Account, and the corporation should submit its transactions to the operational guidelines of the subsidy scheme.”

It added that the NNPC retail, Independent Petroleum Marketers Association of Nigeria (IPMAN) and Major Oil Marketers Association of Nigeria (NOMAN) should be the outlets for the distribution of kerosene to ensure availability and affordability of the product to Nigerians.

The lawmakers said the NNPC should also refund to the Federation Account the sum of N285.098 billion being over- deduction as against PPPRA approvals for 2011, adding that the relevant anti-corruption agency should further investigate the corporation over deductions for 2009 and 2010.

Furthermore, the panel said as postulated earlier in “this report, data provided by NNPC and the Central Bank of Nigeria (CBN) tends to suggest that for 2009, 2010 and 2011, NNPC deducted subsidy payments from two different accounts. It is the recommendation of this committee that relevant anti-corruption agencies conduct thorough investigation into this matter and where it is established that double withdrawals were made, the extra amounts should be paid to the treasury and those involved prosecuted.

“The management and board of the NNPC should be completely overhauled. Under the PSF scheme, importers, especially the NNPC, should be mandated to patronise Nigerian flagged vessels provided they produce the standard safety and sea-worthiness certificates in tune with international best practices.

According to Farouk, “given the large and complex nature of the Ministry of Petroleum Resources, the committee recommends that two ministers should be appointed to take charge of the upstream and downstream.”

He said the current template being used by PPPRA in computing and paying PSF “in fill off in-built prices” for wastages and inefficiencies, citing lightening exercise, demurrage as areas that could be plugged to save the nation’s scarce resources. “We therefore recommend the revision of the template.

“Henceforth, the PPPRA margin of error on the payment template for ascertaining allowable volumes on imported products should be no more than +/-5 per cent as against the current +/-10 per cent.

“The PPPRA should provide the Nigerian Navy and NIMASA advance copies of allocation and vessel arrival notification documents to enable the Navy monitor, track and interdict vessels seeking to avoid Naval certification.

“The Executive Secretary of PPPRA 2009- February, 2011 should be investigated and punished for the official recklessness he exhibited in the implementation of the board’s decision to reverse the qualification for participation in the scheme. The allocations/approvals to import products given to 35 companies before their formal registration with PPPRA testify to this.       “Companies that lack the required competence and expertise to import petroleum products and even those who did not meet up with the agreed standards were also awarded large chunks of the allocation, an act that culminated in huge loss of resources to the nation. Many companies under his watch who had neither depots nor through-put agreement were allowed to participate in the scheme contrary to the revised eligibility guidelines.

“The practice whereby PPPRA as a regulator in the petroleum downstream sector being supervised by the Ministry of Petroleum Resources whose minister is the chairman of the board of NNPC (a major importer/participant in the PSF scheme) negates the principles of checks and balances and international best practices.

“The committee therefore recommends that the regulatory capacity of PPPRA be strengthened and the National Assembly should commence the process of amending the Act to make the agency autonomous.”

The committee said the PPPRA should, within two weeks of the adoption of this report, conduct a performance assessment of all companies involved in the PSF scheme and publish such reports, adding that its view that if any petroleum product is deserving of subsidy, HHK should be given priority.

The panel said the sum of N557.70 billion should be provided for as subsidy in the 2012 Appropriation Act, with the sum of N249.006 billion allocated as subsidy for kerosene.

Other recommendations of the panel are:

• The Federal Inland Revenue Service (FIRS) should follow up on the companies listed earlier to pay their taxes with due penalties in line with the provisions of the Companies Income Tax Act.

• The PSF guidelines should be revised to make tax compliance a mandatory pre-qualification requirement for all participants under the scheme.

• Marketers who obtained FOREX but did not import petroleum products should be referred to the relevant anti-corruption agencies with a view to verifying what they used the FOREX for.

• Payment for PMS with effect from the second quarter of 2012 should be based on certified truckouts at depots confirmed at the retail outlets and no longer on discharges from vessels into tank farms. Consumption should be defined in a way to exclude what is imported but only what is put in the tank.

• The markets of opportunity situated within Nigerian territorial waters, which are designated “offshore Cotonou” or “offshore Lome” to qualify for FOREX payment and to evade payment of appropriate levies, dues and taxes to the government should be discontinued forthwith.

• A Marine Transport System should be put in place that is safe, secure, reliable, cost effective and efficient to reduce the present high cost of doing business in Nigeria.

• Any importation without permit or where the difference is above approved quota should not be entitled to any amount on the template.

• It is strongly recommended that marketers without storage facilities and retail outlets should be excluded from participating in the PFS scheme as this will end the bazaar that constituted a serious drain on the nation’s economy and created room for abuses.

Others are that the services of accounting firm of Akintola Williams, Deloitte and Olusola Adekanola and Partners should be discontinued with immediate effect for professional incompetence on this particular assignment.

“In view of the above, the two firms should be blacklisted from being engaged by any Federal Ministry, Department and Agency (MDA) for a period of three years.

“This committee shall in its monitoring stage conduct extensive and thorough investigation into the operations of the PEF (MB) in other to ascertain the management of the bridging funds under the subsidy regime.

Penalties should be indicated for non-compliance and promptly imposed to ensure the smooth operation of the scheme.”

It said the Nigerian Ports Authority (NPA) should be encouraged within a time-frame to improve on the draught level of the Nigerian waters to encourage the berthing of all types of vessels so as to eliminate the present ship-to-ship (STS) transfers by importers of petroleum product.

Also, the panel proposed that:

• The National Assembly should enact an Act to criminalise extra- budgetary expenditure.

• CBN and the Federal Ministry of Finance should critically examine and review the policy guiding payment for importation of petroleum products to avoid the current fraudulent system that allows importers to bring in products from off-shore “Lome” or “Cotonou” to qualify for FOREX payments.

• The Committee notes that several alarms were raised by the CBN on the escalation of subsidy figures but these early warning signals were ignored by relevant agencies. The committee wishes to encourage whistle-blowing by regulatory agencies on threats to the economy with the hope that proactive measures could be taken.

• The committee recommends that the PPMC management be overhauled. In furtherance to the above recommendations of the committee, institutional mechanisms be urgently developed to ensure the monitoring of actual delivery of kerosene to the Nigerian masses.

• The PPMC should deploy modern state-of-the-art devices to protect its facilities and pipelines to eliminate wastages arising from vandalism. In the short-term however, PPMC should establish a surveillance system, which should incorporate community-protection and using part of the bridging funds on the PSF template to finance this .

• All extant circulars preventing the Nigeria Customs Service from carrying out its statutory functions be immediately withdrawn by the Central Bank of Nigeria and the Federal Ministry of Finance.

• The committee recommends that NNPC takes immediate action to pay the N46 billion owed the Nigeria Customs Service and the N66 billion owed the Nigeria Ports Authority.

• The failure of NPA to provide this committee the vital vessel data, particularly the IMO numbers, is an indication that either NPA has a very poor record-keeping system or that it was a deliberate ploy to cover up its collusion between its officials and importers. We recommend an investigation into the operations and activities of this authority.

• The port operations of the Nigeria Ports Authority be investigated with a view to determining the extent to which its officials are complicit in the classification of maritime areas for reception of Nigerian bound petroleum products as “offshore Cotonou” and “offshore Lome” in the face of evidence that these vessels never did lighter at those ports.

The rest of the report reads:

“From the findings of this Committee the consumption level for 2011 is estimated at 31.5 million litres per day. However, in 2012 marginal increment of 1.5 million litres a day is recommended in order to take care of unforeseen circumstances, bringing it to 33 million liters per day. And to maintain a strategic reserve, an additional average of seven (million liters per day (or 630 million litres per Quarter) for the first quarter of 2012 only is recommended. Thus, PPPRA is to use 40 million litres of PMS in the first quarter as its maximum ordering quantity should be 33 million litres per day. For kerosene, the Committee recommends a daily ordering quantity of 9 million litres.

“With regards to the 445,000 bpd allocation to NNPC to refine for local consumption, the Committee established that the allocation is sufficient to provide the nation with forty million liters per day for PMS and Ten million litres of HHK.

The above can be achieved conveniently through;

.•SWAP arrangement,

• Offshore processing,

•Outright sale of the 445,000bpd and or partial sale of the excess from the local refining capacity of 53 percent.

Therefore there is no reason for government to grant subsidy importation to any other marketer.

Even though we have quoted 40 million litres as a liberal figure, in the course of monitoring the implementation of the subsidy regime the actual daily consumption will then be determined.

In order to reduce and gradually eliminate lightening associated with inefficiency and cost , Government should invest in the provision of Single Point Mooring (SPM’s). This provision should be followed up by instituting Regulations to compel owners of jetties, depots and storage facilities to develop pipeline throughout to facilitate direct delivery of imported products by heavy vessels, in-shore Nigeria.

*There should be a deliberate policy by Government to encourage the utilization of gas in automobiles, domestic (Cooking) and industrial facilities.

*In the course of this investigation, a lot of efforts were made to establish cases of round tripping and diversion of products including the use of the data from Llyods List Intelligence resulting in the cases so far reported. However, given thje scale of connivance and collusion by government officials involved in the certification process, the committee believes that further investigation will reveal more cases. It is therefore recommended that all the data obtained in the course of this investigation, especially from the Llyods List of Intelligence be forwarded to the relevant anti-corruption agencies for a more detailed investigation.

*The present management of APEF(M)B should be overhauled and the board when constituted should comprise of  persons of impeccable integrity who should be knowledgeable in aspects of its mandate. This is without prejudice to the coming into force of the Petroleum Industry Act.

*PEF(M)B should establish a tracking system on all trucks from point of loading to point of discharge (retail outlets) and direct that all trucks involved with transportation of products should install approved tracking devices on them.

*It is hereby recommended that the regulatory capacity of DPR be strengthened. The National Assembly should commence the process of amending the Act to make the Agency autonomous.

“The DPR should take immediate steps to bring all facilities and depot owners into compliance with international best practices by ensuring the installation of modern metering gadgets and sealable and non-return valves, to eliminate the rampant cases of round tripping.

“The DPR should brace up to its role of regulation and compel the NNPC/PPMC to comply with all the regulations issued to ensure transparency and accountability.

“As a matter of urgency and in furtherance of our national security requirements, a national strategic reserve should be immediately enhanced so as to accommodate 90 days stop gap strategic reserve.

“We strongly recommend that relevant standing committees of the National Assembly should be more proactive in their oversight responsibilities to forestall future occurrences. “

- Advertisement -

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More Articles Like This

- Advertisement -