MD, NNPC, Mr. Austin Oniwon
By Onwuka Nzeshi
International audit firm, KPMG, Thursday disclosed that the Federal Government lost $65 million on demurrage for fuel import cargoes due to perceived inefficiency of the Nigeria National Petroleum Corporation (NNPC).
The audit firm which recently released a report on the operations of the Nigerian oil and gas sector stated that between January 2007 and June 2010, a total of $200 million was paid as demurrage; one third of which was incurred due to inefficiency in the system.
Managing Partner of KPMG, Mr. Dimeji Salaudeen, made the disclosure before the Senate Joint Committee on Petroleum Resources (Down-stream), Appropriation and Finance investigating the administration of the fuel subsidy scheme.
Salaudeen alleged that there were malpractices in the administration of the fuel subsidy scheme. He also disclosed that in the course of the investigations, KPMG found evidence which suggested that subsidy was actually paid on unverifiable documents leading to an over payment of N25 billion.
According to him, 80 per cent of fuel import allocations were awarded to some ten favoured importers whose names he did not mention.
But the Group Managing Director of NNPC, Mr. Austin Oniwon, has disowned the KPMG report on the grounds that the audit firm did not consult it during the investigation leading to the said report.
Oniwon said NNPC was neither aware of the report nor did KPMG bring any of its findings to the attention of the oil corporation.
“NNPC is not aware of this report and we were not queried on any of these issues being raised here. We are hearing of it for the first time here,” he said.
Under cross-examination, the KPMG official said that the audit firm did engage the various stakeholders and targets of its investigations including the NNPC, the Petroleum Products Pricing Regulatory Agency (PPPRA) as well as the fuel import and marketing companies.
“We are part of a global firm and we do have standards which we applied in this assignment. We engaged the PPPRA and we engaged the NNPC as well. I believe that as part of the process, we engaged NNPC in the course of our work. I believe we have record of our engagement with the NNPC. We did try to engage the marketers through our partners. We sent out questionnaires to them but most of them did not respond so we had to rely largely on documents provided by the PPPRA,” Salaudeen said.
On the line of authority in the award of fuel import allocations, the KPMG official explained that the audit found no evidence of approval of these allocations from any higher authority beyond the office of the Executive Secretary of the Petroleum Products Pricing and Regulatory Agency (PPPRA).
Salaudeen said based on the investigations and its findings, KPMG had recommended a re-organisation of the PPPRA and a review of its pricing template which determines who gets what in the subsidy scheme.
Following these revelations, Chairman of the Joint Committee, Senator Magnus Abe ordered all past Executive Secretaries of the PPPRA to appear before the panel to respond to some of the issues raised relating to the operations of the agency under their watch. Also requested to appear before the committee are two markeing firms, Oando Plc and Folawiyo Oil Nigeria Limited.