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Farouk Lawan: Why Subsidy Probe Didn’t Go Beyond 2009

21 Apr 2012

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Hon. Farouk Lawan

•We’ll conduct independent investigation, says EFCC


By Ike Abonyi and Onwuka Nzeshi in Abuja

The Chairman of the House of Represent-atives Ad hoc Comm-ittee on Monitoring Fuel Subsidy Regime, Hon. Farouk Lawan, has explained why the oil subsidy probe did not go beyond 2009.


He said the need to put the searchlight on the sudden escalation in subsidy payments, the proliferation of companies involved in the scheme between 2009 and 2011 and the recent public anxiety on the issue of subsidy helped inform the committee’s decision to limit its scope to between 2009 and 2011.


In the meantime, the Economic and Financial Crimes Commission (EFCC) said it would conduct its own investigation on the oil subsidy scheme.


EFCC’s spokesman, Wilson Uwujaren, told THISDAY last night that the commission hoped the House committee report would help it in its investigation.


But Uwujaren said he could not give further information on the matter for now.
Some stakeholders in the oil sector had more or less denounced the House committee’s report, querying why it didn’t extend its focus by probing the entire subsidy regime from 1999 to date.


But speaking in an interview with THISDAY, Lawan said the main issue that came to the fore in the debate that followed the withdrawal of fuel subsidy on January 1, 2012 by President Goodluck Jona-than was the huge amount of money that government officials had pronounced as the amount of money spent as subsidy in 2011.


He said: “If you recall, the figure quoted at that time was about N1.3 trillion and that figure was quoted as a way of raising an alarm that the amount of money was too much and as such that subsidy needed to be withdrawn because the country could no longer continue to bear that huge cost.  So we could have simply focused on 2011, but we sat down and decided that we needed to establish a trend and so let’s go back and examine the periods 2009, 2010 and 2011.


“Specifically, three things informed that decision namely the need to establish a trend; the escalation in subsidy payments and the proliferation of the companies involved in subsidy claims between 2009 and 2011.  By 2008, the amount of money paid as subsidy was in the range of a little over N200 billion but between 2009 and 2011 the figure simply escalated.


“Similarly, prior to this 2006, only the NNPC and a few other companies were involved in the subsidy scheme. By 2008, the number was not more than 20 but between 2009 and 2011, the figure rose to 140 companies.  So we felt that we should put our searchlight on these developments and we also felt that we needed to limit it to three years because by accounting practice, usually if you are investigating any account system you try to cover a period of three years.


“If we had decided  to go back to 2008, 2007 and may be 2006, it would take us more time and given the  public anxiety  on the issue of subsidy we were not sure Nigerians would be patient enough to wait for a longer period”.


Lawan said the committee had kept faith with the mandate given it by the House to investigate the subsidy regime and monitor its implementation, stating that the committee had done a painstaking job.


Apart from the various revelations in the report of the committee on the key actors involved in the sleaze in the oil sector, he said the committee was able to establish the level of consumption.


“In the course of the hearing we were told that for planning purposes, 35 million litres per day of PMS was used by PPPRA and other government officials but that they were paying subsidy on 59 million litres per day. Now when we worked it out, we discovered that in 2011, 31.5 million litres per day should have actually been the level of consumption.


“What we have now recommended for 2012 is 33 million litres per day to make a marginal increase of 1.5 million litres per day. We have also recommended that we should have strategic reserve of at least three months. So for the first quarter, the import should be 40 million litres per day, representing seven million litres per day that would serve as strategic reserve so that in the period of scarcity, we can have something to fall back on.”


Lawan denied that the report of the committee was doctored, saying the report that was said to have leaked carried 69 companies but “our report is talking about 71. It appears that some people have made up their minds that the report was doctored”.

Tags: Nigeria, Featured, News, Wilson Uwujaren, EFCC, Farouk Lawan

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