Bulk of missing $10.8b spent on fuel subsidy, NNPC claims

NNPC Towers*Says it has not broken any laws

Oscarline Onwuemenyi

10 January 2014, Sweetcrude, Abuja – The Nigerian National Petroleum Corporation, NNPC, on Friday insisted that the bulk of the $10.8b alleged to be missing was actually spend on subsidizing petrol consumed in the early part of 2012.

The corporation during a press briefing in Abuja noted that the amount reflected the costs incurred on behalf of the federal government.

The $10.8b is part of the $49.8b which the Governor of Central Bank of Nigeria, Lamido Sanusi alleged that NNPC owed the Federation Account.

But according to NNPC Group Executive Director, Finance and Account Directorate, Bernard Otti, the “$10.8b reflects expenditures incurred by the NNPC in the period under review and are really made up of the following: subsidy claims, $8.49b, pipelines management and repair costs, $1.22b, products/crude oil loses $0.72b, and cost of holding the strategic reserve, $0.37b.

“The sum in question has been expenditures incurred as part of statutory responsibilities which the NNPC as the National Oil Company executes on behalf of the federal government and by extension the entire people of Nigeria.”

He stressed that NNPC has broken no laws in deducting those cost as they are needed to keep the corporation as a going concern and in line with the NNPC Act.

“Let me assure you that as law abiding corporate entity NNPC’s processes and procedures are guided by the provisions of the law. Whatever expenditure we have incurred in the discharge of the above national responsibilities are backed by the law setting up the corporation,” he added.

Throwing more light on the issue, NNPC’s Coordinator Corporate Planning and Strategy, Tim Okon noted that there “is a process at which revenues accrue to the federation accounts, there is also government policy that states that subsidy is still in place and NNPC implement this policy and do not create them. The subsidy claim which is $8.9b has arisen after the 2011 period where we were the only importer of petroleum products because prices had gone up.

“The subsidy claims are normally known by all the agencies and there was nothing discovered because of any letter.”

He added that unfortunately the “PPPRA templates on claims you can make under the subsidy regime does not cover any recovery mechanism for pipeline repairs and maintenance. And everybody is aware that pipelines are constantly being vandalized in Nigeria and the cost of keeping these pipelines running is what we are reflecting here. NNPC has a duty to keep the pipelines running because that is our mandate”.

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