House Probes Petroleum Subsidy Regime, Oil Spills, Abandoned Wells in Niger Delta   

Udora Orizu

The House of Representatives at plenary yesterday resolved to set up an Ad-hoc Committee to investigate the Petroleum Products Subsidy regime on Nigeria from 2017 to 2021.

The resolution of the lawmakers was sequel to the adoption of a motion sponsored by Hon. Sergius Ose Ogun.

Earlier, a member Hon. Osita Chidoka had appealed to the Speaker, Hon. Femi Gbajabiamila that the prayer of the motion was in tandem with the ongoing probe by the adhoc committee investigating assets and liabilities of the Nigerian National Petroleum Company (NNPC), hence should be stepped down or directed to that already existing ad hoc committee. However, some other lawmakers countered his assertion, saying the motion was entirely different from the one head made reference to.

Moving the motion, the sponsor, Ogun noted that Section 32 of the Petroleum Industry Act, 2021, saddles the Petroleum Midstream and Downstream Regulatory Authority with the task of regulating and monitoring technical and commercial midstream and downstream petroleum operations in Nigeria.

He said as of 2002, the NNPC’s purchase of crude oil at international market prices stood at 445,000 barrels per day in order to enable it provide petroleum products for local consumption.

He also said the House was aware that due to the decline in the production capacity of the refineries, the NNPC found it more convenient to export domestic crude in exchange for petroleum products on trade by barter basis described as Direct Sales Direct Purchase (DSDP) arrangement.

He expressed concerns that the consumption rate of petrol was between 40 to 45 million litres per day, alleging that the NNPC uses 65 to100 million litres per day to determine subsidy as discoverable from NNPC’s monthly reports to the Federal Allocation Committee (FAAC).

Ogun said, “Also aware that component costs in the petroleum products subsidy value chain claimed by the NNPC Limited is highly over-bloated while the transfer pump price per litre used by the NNPC Limited in relation to PPMC is underquoted as N123-N128 instead of N162-N165 and this fraudulent under-reporting of N37-N39 per litre translates into over N70 billion a month or N840 billion a year.

“Also worried that the subsidy regime has been unscrupulously used by the NNPC and other critical stakeholders to subvert the nation’s crude oil revenue to the tune of over $10 billion, with records showing that as at 2021, over $7 billion in over 120 million barrels have been so diverted.

“Disturbed that there exists evidence that subsidy amounts are being duplicated, thus subsidy is charged against petroleum products sales in the books of NNPC as well as against crude oil revenue in the books of NAPIMS to the tune of over N2 trillion action.”

Adopting the motion, Gbajabiamila said the ad hoc committee whose members would be announced at plenary today, would be given eight weeks to carry out the assignment and report back to the House for further legislative action.

Meanwhile, The House of Representatives at the plenary, Wednesday mandated its Committees on Petroleum Resources (Upstream) and Environment to investigate the actual cause of the oil leaks at OML 18, OML 29 and OML 63, and the status of idle, abandoned wells in Niger Delta, in order to avert hostilities in the region.

Members of the Committees are also to determine the magnitude, scope, and effect of the leaks on affected hast communities, examine the scope and liability for required relief and compensation, inquire the nature and details of the JV agreement between Aiteo and NNPC to determine veracity of ownership of percentage stake and financial obligations and as well confirm the claim by Aiteo of engagement of a foreign company to stop the leak, the cost of doing so and the financial claim made by Aiteo to NAPIMS in this regard.

They are to further verify the numbers of idle and isolated wells currently existing on Aiteo, Eroton and other indigenous and international oil companies oil fields across Nigeria, the condition of these wells and the status of their management and abandonment in compliance with statutory provisions and international best practice.

The resolutions followed the adoption of a motion of urgent national importance sponsored by Hon. Ibrahim Isiaka.

Moving the motion, Isiaka expressed concerns over the confirmation by the National Oil Spill Detection Agency (NOSDRA) on June 25, 2022 of an ongoing oil leak for one week.

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