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House Panel Wants NNPC, Marketers to Refund N1tr

19 Apr 2012

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Chairman of the House of Representatives ad-hoc Committee on Fuel Subsidy Regime Monitoring, Farouk Lawan 

By Onwuka Nzeshi

After weeks of suspense and speculations, the House of Representatives Ad Hoc Committee on Monitoring Fuel Subsidy Regime Wednesday submitted its report and recommended that some participants in the subsidy scheme should refund N1.070 trillion to the treasury for violating the programme.

The report came down heavily on petroleum marketing companies and industry regulators, accusing them of complicity in the perceived fraud, systemic lapses and illegalities inherent in the administration of the subsidy regime.

It indicted the Nigerian National Petroleum Corporation (NNPC) for allegedly feasting on the Federation Account to bloat the subsidy figures; the marketers of claiming subsidy on products not supplied and accused the Petroleum Products Pricing and Regulatory Agency (PPPRA) of  laying the foundation for the fraud by allocating volumes of products each quarter to  marketers  who did not even meet the guidelines for participation in the subsidy scheme.

Highlights  of the report indicated that the NNPC  is expected to refund N310 billion in respect of excess  subsidy claims on kerosene; N285 billion for subsidy claims collected above official  recommendations and another N108 billion  discount on the oil behemoth grant itself.

Similarly, a number of petroleum product marketers have been asked to refund N8.664 billion for violating the Petroleum Support Fund (PSF); companies that refused to appear before the panel are to refund a total of N41.93 billion, while the PPPRA  has been asked to pay back N312 billion which it allegedly paid itself in excess of its due.

The Ad Hoc Committee said that contrary to the earlier official figures of subsidy payment given by the Accountant General of the Federation (AGF) and the Central Bank of Nigeria (CBN), it was established that subsidy payments of N2.587 trillion was made as at December 31, 2011.

The report also disclosed that the N2.587 subsidy payment amounted to more than 900 per cent over and above the N245 billion appropriated for subsidy in 2011.

"We found out that the subsidy regime as operated between the period under review (2009-2011) was fraught with endemic corruption and entrenched inefficiency. Much of the amount claimed to have been paid as subsidy was actually not for petroleum products consumed in the country. Government officials made nonsense of the Petroleum Support Fund (PSF) guidelines due mainly to sleaze and in some cases incompetence. It is therefore apparent that the insistence by top government officials that subsidy figures were for products consumed was a clear attempt to mislead the Nigerian people.

“Our investigation further revealed that certain marketers collected subsidy of over N230.184 billion on PMS volume of 3,262,960,225 litres that from the records made available to us were not supplied. Apart from proliferation and non-designation of bank accounts for subsidy payment, PPPRA and the OAGF were unable to manage in a transparent manner the two accounts they chose to disclose. There were indications that PPPRA paid N158 billion to itself in 2009 and N157 billion in 2010. When confronted, the OAGF was unable to submit details of the bulk payments arrogated to PPPRA and the account from which the bulk sums were disbursed to the supposed beneficiaries,” the report said.

The Ad Hoc Committee however, proposed that N806,766 billion be set aside for payment of subsidy on petrol and kerosene in the 2012 fiscal year.

In the course of the investigations, the Ad Hoc Committee said it was able to establish that contrary to statutory requirements and other guidelines under the Petroleum Support Fund (PSF) Scheme mandating agencies in the industry to keep reliable information data base, there seemed to be a deliberate understanding among the agencies not to flout this rule.

"This lack of record keeping contributed in no small measure to the decadence and rots the Committee found in the administration of the PSF. This is evident also in the budget preparatory process by MDAs where adequate data is not made available to the National Assembly. The Committee had to resort to forensic analysis and examination of varied and external sources (including the Lloyds List Intelligence) to verify simple transactions. In this regard, the PPPRA is strongly urged to publish henceforth, the PSF accounts on quarterly basis to ensure transparency and openness of the subsidy Scheme.

“The Committee believes that if the PSF scheme was properly managed, this sum of N1.070 trillion would have been available to the three tiers of Government for budget enhancement,” the report said.

The committee recommended  that certain  transactions executed under the subsidy scheme  be further investigated by the relevant anti-corruption agencies and determine their level of culpability with a view to making further recoveries.

The transactions include the  payment of N999 million to unnamed entities 128 times to the tune of N127.872 billion; companies who collected Forex to the tune of $402.610 billion but  whose utilisation of the said funds were found  questionable; while  72 companies listed under the financial forensics were  recommended for further investigation by the relevant anti-corruption agencies with a view to establishing their culpability and recovering the sums indicated against their names totalling N230,184,605,691

Also recommended for further scrutiny are the  over recoveries of N2.766 billion and N5.27 billion which were not accounted for by the office of the AGF as well as the cases of double deductions by the NNPC for subsidy payments in 2009, 2010 and 2011.

The committee also recommended that NNPC should be unbundled to make its operations more efficient and transparent.

According to the report, this could be achieved through the passage of a well drafted and comprehensive Petroleum Industry Bill (PIB).

Above all, the committee recommended that all those in the management and board of the NNPC directly involved in the infractions identified for the years 2009-2011 should be investigated and prosecuted for abuse of office by the relevant anti-corruption agencies.

Tags: News, Nigeria, Featured, NNPC

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  • As a Nigerian citizen,I wish to commend the work done by the House Ad-Hoc Committee on Fuel Subsidy.There can be no more glaring evidence that the nation's oil ministry along with its agencies and the NNPC are overdue for a massive overhaul now without further delay.This is necessary in order to avert a possible repeat of the type of mass protests last January when fuel subsidy was removed. We operate a democratic system of government,and when the public has spoken very clearly about their displeasure with the services of any ministry or agencies,then it is the duty of government to correct the situation very urgently.The public is not happy with the oil ministry and their parastatals.The facts speak for themselves. Thank you very much and May God bless the Federal Republic of Nigeria!!!

    From: Michale

    Posted: 2 years ago

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  • Another hocus pocus. Name the marketers just as NNPC and PPRP was mentioned.

    From: KK

    Posted: 2 years ago

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  • these group of persons or officials should be prosecuted and vacate their various offices immediately. James Ibori who is now in jail actually performed because he faciliated rural electrication to my village and many communities, he built schools, bridges and others but the magnitude of his embezzelment earned him the notorius agony he is experiencing today. So every personson involved must face the music. Ribadu/Lawan dont tarnish your images,. this should be followed to the last

    From: ese elijah

    Posted: 2 years ago

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  • My heart bleeds for Nigeria...why are some of us so wicked and pathologically greedy?...God help us!!

    From: Honza

    Posted: 2 years ago

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  • This is a big shame, some individuals involved in this crime ought to be executed and their companies nationalized, it is pure fraud and economic sabotage that has led to militancy in Niger Delta, armed robbery across Nigeria and Boko Haramic senseless genocide due to bad government and bad followership.

    Who will bail Nigeria?

    From: francis

    Posted: 2 years ago

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  • Nigeria is stronger than the TITANIC. With all these lootings and stealing, yet the country is still together. With all the physical, mental, psychological, intellectual, moral, social and financial efforts put into this constructive investigation, I believe that Nigerian govt can now see that corruption is endemic and ubiquitous in every strata of the govt. This finding is for only one parastatal. If we have to do same across all Ministries, States, Councils/LGA, govt agencies, other parastatals etc what can we guess to be the result. The efforts of our HEROES past seems to be in vain with this unbelievable lootings by corrupt, mean, selfish and myopic people in the helm of affairs of Nigeria.

    From: OLU

    Posted: 2 years ago

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  • TO nip corruption in the bud in nigeria, the "big men" needs to be going REAL jail. That is only the solution

    From: Monday Soro

    Posted: 2 years ago

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  • Nigeria has so many enemies, those milking our resources into their
    pockets, and those distroying lives and properties with weapons. Where do we run to?

    From: Iffy

    Posted: 2 years ago

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  • Nigeria we hail thee, it is unfortuate tahat the masses of Nigeria has to surfer for the greed and inhuman action of a few. The committe should be mandated to look into all other government subsidies and allocation, i assure you we would all be shocked, check allocation to defence ministries, presidency, and all other big names.

    From: Bashar yak

    Posted: 2 years ago

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