THUMBS UP: As Senate Orders NNPC to Refund N216bn Illegal Subsidy  



The Senate last week ordered the Nigerian National Petroleum Corporation (NNPC) to refund the N216billion it paid itself for fuel subsidy in 2017.

Whereas there was no request for subsidy in the 2018 budget, the Senate noted that the Corporation was still paying itself subsidy for premium motor spirit under the guise of ‘operating cost’.

Condemning the action as illegal, the upper legislative chamber called for sanction of officials of the NNPC involved in the illegal payment of fuel subsidy in 2017, put at N216.9 billion.

The Bukola Saraki-led Senate also urged the Office of the Auditor-General of the Federation to carry out a full audit of the NNPC’s account over the last five years.

The Senate Public Accounts Committee made these recommendations in its report on the investigation into the illegal subsidy payments, which was adopted by the Senate at last Thursday plenary, where it was recalled that the federal government spent N3.8 trillion on subsidy payment between 2010 and 2016.

To ensure that the illegal payments do not continue, the Senate directed the Committee on Appropriation as well as Public Accounts to liaise with the Executive to submit the appropriation for subsidy to be included in the 2018 budget still under consideration by the National Assembly.

Other recommendations of the panel adopted at last week included the need for the federal government to pay oil marketers the outstanding subsidy arrears owed them prior to 2017 as well as giving local refineries maximum attention to enable them function in optimal capacity.

Listing its findings in the report, the committee said, “the NNPC is the sole importer of petrol and almost all the major marketers have stopped importing fuel, because of the negative difference in the landing cost and the pump price”.

“The landing cost of the PMS per litre varies based on international prices and exchange rate. The average landing cost (inclusive of all charges) within the period of the investigation is about N171, while the approved selling pump price is N145, giving a negative difference (under-recovery) of the sum of N26,” said the report.

“The differential (under-recovery of the sum of N26) born by the NNPC as a loss in 2017 amounted to the sum of N216 billion and the NNPC paid itself the differential (subsidy) but described it as ‘operational cost. There was no appropriation by the National Assembly for the payment of the differential between the landing cost of PMS and the selling pump price, otherwise known as subsidy, in 2017,” the panel added.

The panel also added that since 1999, there had been appropriation for the payment of subsidy.

The defunct subsidy regime became a scam after N286 billion was appropriated for subsidy payments in 2011 but over N1.2 trillion was paid to the NNPC and the private marketers.

Following the public outcry against the wide gap between the budget and the actual payment, the federal government and the National Assembly had set up probe panels that uncovered massive corruption in the management of the subsidy regime.

Many marketers were referred to the Economic and Financial Crimes Commission (EFCC) for prosecution, while the Aig-Imoukuede committee set up by the federal government submitted that it lacked the technical capacity to probe the huge subsidy claims by the NNPC.

However, the new petrol price regime that took effect on May 11, 2016 effectively ended the subsidy regime as it increased the official price from N86.50 to N145 per litre, which allowed the marketers to recover costs and break even.

For these actions taken by the Senate to stop the Corporation from returning to the corruption-ridden era when subsidy payments were used to siphon public funds, the upper legislative chamber deserves a thumbs up.