Oil subsidy scam: How I arrived at $32bn figure – Saraki

Senator Bukola Saraki

Senator Bukola Saraki

27 May 2015, Abuja — Former governor of Kwara State, Senator Bukola Saraki, who claimed Monday, that Nigeria was spending $32 billion on non-existing oil subsidy operators, has explained that he arrived at the figure from the monthly and yearly payments to the operators by the Petroleum Product Pricing and Regulatory Agency, PPPRA.

This came as the Department of Petroleum Resources (DPR) vowed to revoke the licence of any filling station that sells petroleum products above the stipulated price in spite of the current scarcity, saying the Federal Government has not increased the price of fuel.

Senator Saraki, who represents Kwara Central in the Senate, had argued on Monday that the fuel subsidy management in the country was a very big platform for fraud and, therefore, advocated removal of subsidy.

Defending his claim of the loss of $32bn to subsidy scam, he insisted that the figure he gave was authentic, telling those who cared to know more about his claim to contact the agency for the details.

Speaking yesterday, the former Kwara State governor simply said:
“I arrived at the amount from the calculations of the monthly and yearly payments by the PPPRA. The monthly and yearly payments by PPPRA will reflect that.”

He said there was nothing he would say about the oil subsidy that will be different from what he has been saying since 2011.

According to him, “countries that are producing oil are not going through what we are going through, because when oil was $100 per barrel, they used the money effectively because it was clear a day like this would come. I have been saying it that the major issue confronting us has been the subsidy management. We are talking about a minimum of over $32 billion over five to six years,” he insisted.

Saraki, who regretted that the alleged fraud in the scheme was being allowed to fester by the Federal Government, urged the incoming administration of General Muhammadu Buhari to completely remove fuel subsidy and restore normalcy to the petroleum sector.

He accused the government of issuing import licenses to bogus companies totaling 82 which were being used by oil marketers and government officials to rip off the country on a yearly basis.

He argued that it would be better to remove fuel subsidy and deliver the sector and the citizenry from the grip of racketeers in the industry, who would never allow things to work well because of their personal aggrandizement.

According to him, subsidy in itself was never a problem to the country but the bad management of it, which had been turned into a huge racket that is causing the lingering crisis in the oil sector.

He said: “No matter what is happening now, If you go back and look at it, the major issue that swindled us was the subsidy management. We are talking of about minimum of over $32billion wasted on it over the last five to six years. That is the difference between where we are now and that time. It has impacted on our exchange rate, it is going to impact on our infrastructure, there is no money for capital budgets.

The latest template from the Petroleum Product Pricing Regulatory Agency, PPPRA, the body responsible for managing the subsidy regime indicates that a liter of petrol should ordinarily cost N143, but the price is brought down to N87 a litre allegedly as a result of government subsidy.

Components of the pricing regime include demurrage, freight, traders’ margin, lightening expenses (cost of transferring products from big tankers to lighter vessels), NPA fee, product fee, fee for discharging the fuel, depot charges, among others.

Marketers flout DPR’s warning
Meanwhile, NOIPolls, yesterday, stated that kerosene is currently being sold at an average of N137 per litre across the country, with some regions buying as high as N166 per litre. This was in spite of subsidy on the product, with the Federal Government fixing the price at N50 per litre.

NOIPolls, in its latest weekly poll results, stated that only three per cent of Nigerians buy kerosene at N50 per litre and less, while 97 per cent of Nigerians buy above N50 per litre.

According to the poll, the North-East, North-West and South-West zones pay the highest average amount of N155 per litre for the purchase of kerosene, when compared to other zones in the country, while the South-West zone has the largest proportion of Nigerians who purchase kerosene from major marketers’ filling stations at an average price of N129 per litre.

Giving a breakdown of the findings, NOI Polls stated that in the North-Central, kerosene is sold at an average price of N141 per litre; North-East and North-West— N155 per litre; South-East — N166 per litre; South-South — N131 per litre and South-West — N129 per litre.

The report further noted that 96 per cent of Nigerians use kerosene for cooking, while only six per cent of the population use the commodity for lighting.

The poll result also revealed that only 23 per cent of Nigerians are aware of the official pump price of N50 per litre of kerosene.

“Almost eight in 10 adult Nigerians (77 per cent) are not aware of the N50 official pump price of kerosene. Nationwide average price of kerosene stands at N137 per litre,” NOIPolls stated.

The NOIPolls, had a few days ago, identified corruption and mismanagement of petroleum subsidy funds as the major factors hindering citizens from enjoying the full benefits of subsidy.

The polling agency had in one of its survey, revealed that about 52 per cent of Nigerians who purchase Premium Motor Spirit, PMS, are of the view that Nigerians have not enjoyed the full benefits of petroleum subsidy.

Giving a breakdown by geo-political zones, 72 per cent of North-East respondents claimed Nigerians have enjoyed the full benefits of the petroleum subsidy, compared to 37 per cent of respondents in the South-South who shared similar view and 40 per cent in the South-West.

In the North-Central, 42 per cent of respondents believed that Nigerians have enjoyed the benefits of petrol subsidy; 49 per cent and 50 per cent of South-East and North-West respondents respectively, share similar view.

This perception, according to the polling agency, may be guided by the fact that a larger proportion of Nigerians purchase petrol at a price above the subsidized rate of N87.

The poll further revealed that majority of its respondents blame corruption as the key factor hindering Nigerians from enjoying the full benefits of petrol subsidy.

Specifically, 66 per cent of the respondents identified corruption as the factor that has hindered Nigerians from enjoying the full benefits of petroleum subsidy; 39 per cent blamed it on poor management of petrol subsidy, while 18 per cent blamed it on inefficient regulatory authorities.

Furthermore, 12 per cent of the respondents blamed their inability to enjoy the full benefits of subsidy on difference in the cost of fuel importation; 12 per cent chose inefficiencies of petrol price control mechanisms, while four per cent blame it on bad government/leadership.

DPR warns
Responding to reports that marketers are selling petroleum products above official price, the Department of Petroleum Resources (DPR) in a statement, yesterday, said it will revoke the licences of marketers who flout the warning. DPR in a statement said while it is making every effort to ensure that fuel is available and reaches every part of the nation, “it is hereby emphasised that the Federal Government has not increased the price of fuel.

“The price remains at eighty seven Naira per litre (N87.00). Any station caught selling above the stipulated price, will have its licence revoked.

“No station should sell in jerry cans as there is enough fuel and for safety reasons. Any station caught dispensing into jerry cans will be sealed.”
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