A Review of the Nigerian Energy Industry

Alison-Madueke says no gazette on withdrawal of kerosene subsidy

Diezani Alison MaduekeSeeks Court interpretation on legality of NNPC deductions on kerosene

Oscarline Onwuemenyi 13 February 2014, Sweetcrude, Abuja – Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, accepted Thursday that there was a presidential directive that kerosene subsidy should be withdrawn but claimed the directive was not gazetted.

Speaking during the public hearing between the Senate Committee on Finance and the Inter-Agency Committee in Abuja, the minister stated that following the directive the inter-ministerial committee then comprising of the Minister of Finance and Minister of Petroleum Resources in 2009 directed a stay of execution of the kerosene subsidy withdrawal.

The Minister posited that should kerosene subsidy be withdrawn today, the price of kerosene will triple and that would cause pains on the Nigerian masses. “Kerosene today is imported at N150 per liter and sold at N50 per liter and this has been on for years. It will be very simple for NNPC to withdraw subsidy and if this is done, it will cause pains on the masses”.
She called for the legal interpretations of the NNPC Act in respect of the first line charge of the Corporation to decide the legality of its current status in respect of kerosene subsidy deductions and the status of the Nigerian Petroleum Development Company, NPDC the upstream subsidiary company of the NNPC.
Presenting NNPC’s position to the Committee, the Group Managing Director of NNPC, Engr. Andrew Yakubu, stated that the Corporation presented convincing proofs to the inter-agency committee on crude oil and products losses, national strategic reserve, pipeline maintenance and management and the cost incurred on petroleum products subsidy. It was the incontrovertible nature of the proofs that informed the decision of the Committee to accept NNPC’s submission, he said.
“In spite of the nonpayment of subsidy, NNPC continued to sustain petroleum products supply, even when other marketers refused to participate. This development led to the accumulation of $8.76 billion as unpaid subsidy due to NNPC for petroleum product supplied during the period under review.  This amount is comprised of US$5.25 billion for Premium Motor Spirit (petrol) and US$3.51billion for Dual Purpose Kerosene (kerosene)  and has been reconciled and signed-off by statutory agencies (PPPRA, DPR and NNPC) as outlined in Appendix III, Schedule 3”, Yakubu stated.
Engr. Yakubu said the Corporation has incurred huge costs in ensuring adequate and steady supply of petroleum products in Nigeria resulting from the purchase of crude oil at international prices while selling petroleum products at regulated rates, non-payment of subsidy claims for petroleum products supplied to Nigerian domestic market and crude oil and petroleum products losses due to syndicated theft and vandalism.
He called for the payment of outstanding subsidy due to NNPC, formal approval for the reimbursement of cost of holding strategic petroleum product stock, reimbursement of crude oil and petroleum products losses and sustenance of the recent momentum to end pipeline vandalism, crude oil and products theft.
In his submission, the Chairman of the Senate Committee on Finance, Senator Ahmed Makarfi said the PPPRA has certified the subsidy claims of NNPC, noting that the Minister of Finance who had agreed with the certification had suggested that a professional audit firm be engaged to do a forensic audit of the claims. This, according to the Minister is “because of the extraordinary times in which we are in.’’ A forensic audit will give more weight to the findings of the reconciliation committee.
On the legality of deductions at source and the status of NPDC Senator Makarfi informed that the Attorney General of the Federation has been invited to give an opinion at the next sitting of the Committee, scheduled for Thursday next week.
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