19 February 2014, Abuja – Speaker of the House of Representatives, Mr. Aminu Tambuwal, said on Tuesday that available records indicated that the Federal Government spent over N1tn on kerosene subsidy between 2010 and 2013.
Tambuwal said in spite of the expenditure not having the approval of the National Assembly, the product was not available for “suffering Nigerians” to buy.
He also noted that the product was not sold in any part of the country at the subsidised price of N50 per litre.
Tambuwal spoke in Abuja as the House Committee on Petroleum Resources (Downstream) opened an investigation into subsidy payments on kerosene between 2010 and 2013.
The committee, which is headed by Mr. Dakuku Peterside, has the mandate to establish the actual amount spent on subsidy by the Nigerian National Petroleum Corporation, the sole supplier of the product, and how it got the authority to subsidise it.
The Speaker, who was represented by his Deputy, Mr. Emeka Ihedioha, said, “Curiously, since there were no budgetary provisions for subsidy on kerosene, the people of Nigeria will obviously be interested in knowing the source of funding of kerosene subsidy and on whose authority such money was appropriated.”
But, the Group Managing Director of the NNPC, Mr. Andrew Yakubu, and the Managing Director of the Pipelines and Products Marketing Company, Mr. Haruna Momoh, evaded questions on the actual amount of money spent on subsidy during the years under review.
Yakubu at first declined to make the presentation of the NNPC, yielding the floor to Momoh to address the committee on kerosene importation and distribution.
Although he told the committee that he would adopt the presentation of Momoh, lawmakers insisted that he must answer questions on policy issues after the PPMC-MD would have concluded his submissions.
Momoh gave the figures of kerosene supplied in the respective years as follows: 2010 (2.5 trillion metric tones); 2011 (1.9 trillion metric tonnes); 2012 (2.6 trillion metric tonnes); and 2013 (2.6 trillion metric tonnes).
He explained that the figures represented both the imported product and the quantity supplied by local refineries.
Specifically, Momoh gave the imported figures as 1.7 trillion metric tonnes (2010); 1.6 trillion metric tonnes (2011); 1.8 trillion metric tonnes (2012); and 2.1 trillion metric tonnes (2013).
He told the committee that the job of the agency ended with the bulk supply of the product, adding that it was not answerable for how it reached the end-users.
Momoh said this leg of the distribution chain was the responsibility of “regulatory agencies,” which must liaise with law enforcement agencies to “ensure seamless distribution of kerosene.”
“The PPMC does not own a single filling station in the country,” he told the committee.
However, he offered explanations on why the product was scarce in spite of the huge statistics on supplies and why there were challenges in distribution.
Momoh claimed that substantial quantity of kerosene was diverted to neighbouring countries to be sold at higher prices because Nigeria subsidised the supply.
He also said that kerosene is used for road projects in the construction industry.
Momoh added that other factors like the use of kerosene as aviation fuel and the activities of vandals, who frequently destroyed pipelines, compounded the distribution challenges.
Momoh observed that there was over- reliance on kerosene for domestic purposes and therefore urged Nigerians to consider liquefied natural gas as a cheaper alternative that could force down the price of kerosene.
When asked to disclose the actual subsidy spent on kerosene in the four years under review, Momoh redirected the question to the GMD.
“It is the GMD that will answer that question because the PPMC is only an arm of the NNPC doing the field work. We don’t have information on budgetary approvals,” he said.
When the committee put the question on actual subsidy spending to the NNPC GMD, he claimed that the corporation had yet to compute the figures for the four years.
He said, “We have not computed the numbers on the budget and subsidy on kerosene. We have the numbers, but I will say that we don’t have the exact numbers here. I will go back to my documentation and relevant departments to come back again.”
Yakubu insisted that the subsidy on kerosene was never removed, but he consistently parried questions on how the NNPC got the authority to subsidise the product.
On the directive given by the late President Umaru Yar’Adua, stopping subsidy on kerosene in 2009, the GMD informed the committee that “ the ( then) directive of the President was not followed through to the letter.”
To follow the directive to the letter, he said, the Minister of Petroleum Resources, under the Petroleum Act, was empowered to gazette it to have the force of law.
Yakubu said, “If such a gazette does not come out, the NNPC will not act on it. The Petroleum Support Fund was established for subsidy.
“DPK (kerosine) has not been deregulated; there was an attempt to deregulate PMS (petrol), but you all saw how we came back to settle for N97 per litre.”
The committee chairman asked him another question on the total amount spent to import kerosene between 2010 and 2013.
“This is not about subsidy this time; we want to know the total amount spent on importation from 2010 to 2013,” Peterside said.
Yakubu again parried the question by referring the committee to the Ministry of Finance, which he said made budgetary provisions for kerosene for the affected years.
But, Peterside read a letter by the ministry, clearly saying that no budgetary provisions were made for kerosene since 2010.
As Yakubu evaded questions, the committee reminded him that he had told the Senate how the NNPC admitted spending $8.49bn on subsidy between 2012 and 2013.
Peterside told him that the NNPC made the disclosure when the Senate was investigating the allegation by the Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi, that the NNPC failed to remit $20bn to the Federation Account.
The committee also observed that the audited accounts of the NNPC for 2012 and 2013 did not reflect the payment of $8.49bn on subsidy.
Yakubu quickly cut in to say that the $8.49 covered subsidy payments on PMS and kerosene.
He said $8.49bn subsidy was paid on 5.07tn litres of kerosene and 15.1 trillion litres of petrol supplied to the country for “a period of 19 months.”
Still not satisfied, the committee confronted Yakubu with statistics obtained from the National Bureau of Statistics, indicating that there was no evidence that the quantity of products quoted was consumed in the country.
To this, Yakubu replied, “It depends on what approach they used; we also have our own methods.
“If they went to look for products that had already been consumed, of course, they would not find anything.”
He argued that the NBS records would likely not include the quantity diverted, stolen from pipelines or used for road construction.
The committee asked Yakubu to appear again on Wednesday (today) for further questioning.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, spoke for barely two minutes at the session before she hurriedly left the venue.
She told the committee that the NNPC was solely responsible for kerosene supply in the country and that the corporation was capable of addressing all the issues to be raised by the committee.
– The Punch