Minister of Petroleum, Dizeani Allison Madueke
With several committees and panels set up to probe Nigeria’s oil and gas sector,Ejiofor Alikewrites that at no time in the history of the industry were there such probes as in 2012
No sector of the Nigeria’s economy attracted so much public attention and also courted controversy in 2012 as the oil and gas industry, especially the downstream sector.
The Federal Government was however responsible for this controversy with its attempt to remove the petroleum subsidy and deregulate the downstream sector on January 1, 2012.
This decision led to a one-week national protest by the organised labour and other civil-society coalitions, which paralysed the economic activities of the country.
When the dust settled, public searchlight was beamed on the industry, propelling President Goodluck Jonathan to promise an investigation into the rot in the oil industry, including the fuel subsidy administration.
But miffed by reports that the government had spent over N1trillion in payment of petrol subsidy in 2011, for which N286billion was appropriated in the 2011 budget, the House of Representatives set up an Adhoc Committee headed by Hon. Farouk Lawan to probe the payment of fuel subsidy.
Farouk Lawan Committee
Precisely on January 8, the House of Representatives at an emergency session set up an ad hoc committee to probe the management of the fuel subsidy scheme.
This came after the nationwide protests against the federal government’s January 1 decision to remove subsidy on petrol.
The removal of subsidy had led to a hike in the price of petrol from N65 per litre to nearly N150 per litre.
An eight-member ad hoc committee led by Hon. Farouk Lawan was named to probe the subsidy regime between 2009 and 2011 to try to uncover suspected cabal suspected to be feeding fat on subsidy at the detriment of the masses.
Among stakeholders invited by the committee were the Nigerian Customs Service (NCS), Petroleum Products Price Regulatory Agency (PPPRA), Nigerian National Petroleum Corporation (NNPC), the Ministries of Finance and Petroleum Resources, and all the relevant agencies of government.
Others include 93 oil marketers and importers, the Nigerian Navy, the auditors appointed by the finance ministry to audit and verify subsidy claims, Federal Road Safety Commission, the professional bodies in the downstream oil sector, foreign oil traders, the Nigerian Labour Congress, Trade Union Congress, the managing directors of the Port Harcourt, Warri and Kaduna Refineries, Revenue Mobilisation, Allocation and Fiscal Commission, NIETI, and private individuals.
The committee took testimonies from 130 witnesses and received in evidence 3, 000 volumes of documents from January 16 to February 9.
The Lawan Committee uncovered how in 2011 the country paid subsidy on 59 million litres of petrol per day when in fact, the daily consumption was about 35 million litres.
The Lawan committee submitted its report to the House on April 19, after sitting for three months and the House adopted the report on April 24 for onward transmission to the executive for implementation.
However, the allegation by the Chairman of Zenon Oil and Gas Limited, Mr. Femi Otedola, that Lawan demanded a bribe of $620,000 from him to give his company a clean bill of health tainted the report of the committee.
Aig-Imoukhuede’s Technical Committee
Following the apparent suspicion of the executive arm of the government of the intention of the House of Representatives, coupled with the loss of credibility of the report as a result of the bribery allegation, the executive dumped the report.
Consequently, the Federal Ministry of Finance set up another committee in May 2012, one month after Lawan’s Committee submitted its report, to scrutinise the fuel subsidy payments to marketers during the 2011 financial year.
The committee was headed by the Managing Director and Chief Executive Officer of Access Bank Plc and member of the Economic Management Team (EMT), Mr. Aigboje Aig-Imoukhuede, with representatives of the Central Bank of Nigeria (CBN), Budget Office of the Federation, Debt Management Office, PPPRA, Independent Petroleum Marketers Association of Nigeria (IPMAN), Major Marketers Association of Nigeria (MOMAN), and Office of the Accountant General of the Federation as members.
The Managing Director and Chief Executive Officer of Stanbic IBTC Plc, Mrs. Sola David-Borha, served as secretary to the committee.
The committee employed the services of CBN examiners and other financial experts and consultants, including Lloyd’s List Intelligence.
In the report of the technical committee, which was submitted in July to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, scores of marketers and importers were alleged to have committed 17 infractions that cost the country N422,542,937,668.59 in overpayments.
Presidential Verification Committee
However, protests by the marketers that they were not invited by the technical committee to defend the allegations levelled against them prompted the intervention of President Goodluck Jonathan, who set up a Presidential Committee on Verification and Reconciliation of Subsidy Payments also in July.
This new committee, which was also headed by Aig-Imoukhuede, was mandated to verify and reconcile the report of the technical committee, also headed by Aig-Imoukhuede, which was set up by the Federal Ministry of Finance.
After the presidential committee subjected the N422 billion to reconciliation and verification, N18 billion was found to have been duplicated, while N21 billion was cleared from the report of the technical committee, bringing down the overpayments to N382,018,250,982.52, with 25 companies indicted.
Enlargement of Mandate of Presidential Committee
In the report submitted to President Jonathan on July 24, the 15-man presidential committee had made several recommendations aimed at addressing concerns about the operations of the petroleum import subsidy scheme.
Two key recommendations were the need for 100 per cent verification of shore tank certificates and a forensic examination of oil marketing and trading (OM&T) companies PMS sales proceeds.
Consequently, President Jonathan directed the committee to undertake the verification of the shore tank and sales proceeds’ records of 114 oil marketing and trading companies, and to also engage the services of professional auditors to assist in field examinations of OM&T records and operations.
In its new report submitted to President Jonathan in November, the committee indicted 50 oil marketing and trading companies (OM&T) whose transactions were categorised as not legitimate.
In its report on PMS Shore Tank Discharges and Sales Proceeds for 2011, the committee categorised the transactions examined into those it considered legitimate and those, which required investigation and recovery by the law enforcement agencies.
The report noted that of 857 transactions valued at 1,112,836,823,380.43 which were examined by the committee, 661 transactions valued at N880,644,248,166.23 were verified as legitimate, while 196 transactions valued at N232,192,575,214.20 were not verified as legitimate.
The 197 transactions not verified as legitimate involved 50 oil marketing and trading companies, while the 661 transactions verified as legitimate covered 71 companies.
Special Task Force on Governance and Controls
During the year under review, the Federal Government through the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke also set up a Special Task Force on Governance and Controls in the Nigerian National Petroleum Corporation (NNPC) and other parastatals within the ministry.
This was part of the efforts of President Jonathan’s administration to clean up the Augean stables in the NNPC as well as in its subsidiaries, which came into limelight after the subsidy protests.
The special task force, headed by Dotun Sulaiman, was mandated to review all management controls within NNPC and its subsidiaries; design a new corporate governance code that would ensure full transparency, good governance and global best practices in the NNPC.
The task force was also asked to design a blueprint for separating policy from operations in the corporation and its subsidiaries; set key performance indices for the corporation and its subsidiaries, and design a blueprint for eliminating all rent-seeking opportunities and arbitrage in the NNPC operations.
Sulaiman and his team were also mandated to design a roadmap for transition to the Petroleum Industry Bill (PIB).
Petroleum Revenue Special Task Force
Mrs. Alison-Madueke also inaugurated a 16-member Petroleum Revenue Special Task Force, headed by Mallam Nuhu Ribadu, a globally respected anti-corruption crusader and pioneer chairman of the Economic and Financial Crimes Commission (EFCC).
By the terms of reference of the task force, Ribadu and his 16-member team were mandated to work with consultants and experts to determine and verify all upstream and downstream petroleum revenue taxes and royalties due and payable to the federal government.
This was seen as part of the efforts of President Jonathan to fight corruption, and ensure the enthronement of probity and accountability in the oil industry.
National Refineries’ Special Task Force
During the year under review, the Federal Government also approved the composition of a National Refineries Special Task Force (NRSTF), headed by a renowned frontline economist and former Minister of Finance, Dr. Kalu Idika Kalu.
The Federal Government said the setting up of the task force was an indication of its commitment to transform and change in the oil and gas sector.
According to government, the task force will ensure self-sufficiency of petroleum products in Nigeria “within a strong framework in the shortest possible time”.
By its terms of reference, the task force conducted a high-level assessment of the country’s four refineries in Port Harcourt, Warri and Kaduna.
It also reviewed all past reports and assessments to produce a diagnostic report within 60 days.
Nigeria. It is expected to produce a report, complete with timelines and milestones within the next 60 working days.
Senator Udoma Udo Udoma Task Force
Earlier in January 2012, the Federal Government had inaugurated a Special Task Force to fast-track the passage of the Petroleum Industry Bill (PIB) into an Act of the National Assembly.
Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke who inaugurated the task force said the move was to ensure a speedy passage of the bill.
Senator Udoma Udo Udoma headed the task force as Chairman. Other members of the eight-man body are Sen. Tunde Ogbeha, Sen. Emmanuel Agboti, Sen. M. T. Liman, Hon. Chibudom Nwuche, Hon. Abdullahi Gumel, Hon. Habeeb Fashinro; and the President, Trade Union Congress, Mr. Peter Esele.
The minister said the inauguration of the committee had opened a new chapter for the Nigerian Petroleum Industry as it turned a page for new beginnings.
The special taskforce was saddled with the responsibility of speeding up the process of re-drafting the PIB for President Jonathan to present to the National Assembly.
Osten Olorunsola Committee
The minister also inaugurated a technical committee made up of experienced industry experts to assist the special taskforce on PIB. The committee was chaired by the Director of the Department of Petroleum Resources (DPR), Mr. Osten Olorunsola.
Other members of the technical committee are Chief Sena Anthony, Alh Umar Abba Gana, Mr George Osahon, Mallam I.D.Waziri, Mr Victor Briggs, Dr Francis Adigwe, Mr Victor Oyenkpa and Mr Seyi Bickersteth.
According to the minister, two separate bills were forwarded to the National Assembly in the past but the latest taskforce has been mandated to draft a standard bill that the seventh National Assembly would deliberate on and pass it into law.