A Review of the Nigerian Energy Industry

Nigeria Lawmakers say Total got N2.7bn subsidy overpayment in 2011

02 February 2012, Sweetcrude, ABUJA – The Nigerian House of Representatives Ad-hoc Committee probing the managment of the nation’s oil subsidy payments said on Wednesday that Total Nigeria – one of the major oil marketers operating in the country – received excess subsidy claims of N2.7bn in 2011.

It is the latest in the series of descepancies issuing from the House probe, which earlier uncovered an excess daily fuel import of 24 million litres above the nation’s 35 million litres daily consumption.

Appearing before the committee, Total Nigeria managing director, Mr. Dominique Thiolon, admitted that his company got excess payment, but stated that the overpayment had been returned to the Petroleum Products Pricing and Regulatory Authority (PPPRA).

He had initially denied the possibility of an over-payment in its dealings with the PPPRA, but admitted when he was confronted with records indicating that Total Nigeria Plc received excess subsidy claims of N2.7bn in 2011.

He told the probe committee that Total received subsidy amounting to N16.1 billion for 211 million litres of petrol it supplied in 2011 but the panel produced a document showing the actual subsidy received by the multinational oil firm for the period was N18.8 billion, a difference of N2.7 billion.

The committee also confronted Total on the 2010 subsidy payments, arguing that the payment of N11 billion for 251 million litres of petrol for the year raised some questions.

The panel was of the view that the payments appeared to be inversely proportional to the quantity of petrol imported by the company.
Members of the panel queried why the company received more subsidy in a period it imported less petrol and got less subsidy when it imported more fuel into the country.

In response, Thiolon said the seeming discrepancy was normal as petrol was imported based on the prevailing price at the international market. According to him, the price of refined products changes on a daily basis like the price of crude oil.

Executive Secretary (FIRS), Mrs Ifueko Omoigui-Okauro also appeared before the probe panel, Wednesday, and efforts by the committee to ascertain, from her, the tax-paying status of the 128 companies involved in fuel importation did not yield results.

Omoigu-Okauro told the panel that she was not sure if some of the companies were “registered for tax purposes,” adding: “There is a possibility that some of the companies were not registered for tax purposes, but this is subject to confirmation.”

She said her agency was currently conducting an audit on the tax status of the companies and would provide a comprehensive report on completion.

The panel later ordered her to produce the company income tax details of the 128 companies from 2006 to date within two weeks.
Explaining the policy of zero tax on imported fuel, the FIRS boss said the policy, which was introduced in 2002, was to make petroleum products available without creating an excuse for marketers to further increase the pump price.

She explained that taxation was a way of raising revenue but was waived by the government in respect of imported petroleum products because of its likely implications on price and the resultant pains it would have inflicted on consumers.

“Tax on petroleum products is a major source of revenue but government had always been sympathetic to the people and that is why the emphasis has been on how to ensure that the burden was not on the consumers. Taxation is a very emotional and sensitive issue but it is a sacrifice we all need to make,” she said.

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