A Review of the Nigerian Energy Industry

Renewed payment of oil subsidy an illegality – Senate President

…NNPC received N5.1tn as payment For subsidy

*Senator Bukola Saraki, President of the Nigerian Senate.

Oscarline Onwuemenyi
31 January 2017, Sweetcrude, Abuja – The Senate President, Dr. Bukola Saraki, has declared the renewed payment of petrol subsidy as illegal, stating that the current administration had claimed to have ended the subsidy regime but had continued to make the payment through the back door.

Saraki, who made this known on Monday in Abuja at an investigative hearing conducted by the Senate Committee on Petroleum (Downstream) on the challenges in the downstream sector, noted that the committee’s investigations has exposed the need for critical reforms in the sector.

Saraki’s noted in a speech that was read by the Majority Leader, Senator Ahmad Lawan that, “The findings of the committee have brought to light the fact that our downstream oil and gas industry needs critical reforms.

“It has exposed, among other things, that in spite of the stoppage of the fuel subsidy regime and the non-appropriation of funds for the scheme due to the fraud and maladministration going on in the scheme, that fuel subsidy payments continue to be made from our commonwealth illegally and without appropriation by the National Assembly to a few quietly in order to dodge scrutiny and avoid exposure.”

According to him, “This 8th Senate is here to expose every corruption in the system, irrespective of how highly-placed those involved are, and therefore, the reason for this public hearing today.

“This unconstitutional and illegal practice must be addressed and we are not going to rest until it is fully addressed.”

The Senate President stated that it was the duty of the committee to get to the bottom of the issue and proffer long-lasting solutions to “this racketeering in the fuel market that leaves the Nigerian people poorer every year.”

The Chairman, Senate Committee on Petroleum Resources (Downstream), Sen. Kabiru Marafa, had earlier prevented officials of the Federal Government from explaining the alleged continued payment of subsidy on petrol without appropriation by the National Assembly.

The officials in attendance were from the Ministry of Petroleum Resources, Ministry of Finance, the NNPC, Department of Petroleum Resources, the PPPRA and Nigeria Customs Service, among others.

Some members of the panel asked the officials to state specifically if the subsidy scheme had been reintroduced. They also asked them to explain how the government was maintaining the official pump price of N145 per litre when the landing cost had been confirmed to be N171.

The lawmakers asked for the authority that permitted the government to make the payment.

Those who asked the questions included Senator Bassey Akpan, who is the Chairman of the Committee on Petroleum (Gas); Senator Biodun Olujimi, who is Deputy Minority Whip; and Senator Chukwuka Utazi, who is the Chairman of the Committee on Financial Crimes and Anti-Corruption.

After the lawmakers asked their questions, Marafa said the hearing should be restricted to presentation by the officials as it was not to question them.

“Like I said before, today’s function is yours (the NNPC’s); it is not an interactive session where we will be asking questions for you to respond to. We expect the NNPC to make presentations. We are looking at the volume, what quantity was imported and what quantity was refined. We want a detailed documentation of every vessel that came to this country,” he stated.

The Senate had on January 17, 2018, rejected the interim report by the Marafa-led committee, with several senators criticising it as being silent on the payment of subsidy by the Federal Government without approval by the National Assembly.

Few days before the first hearing on the matter, Marafa had vowed that the Federal Government would be made to account for the payment of the differentials between the landing cost and the pump price of petrol.

Meanwhile, the Nigerian National Petroleum Corporation has stated it received a sum of N5.1tn as subsidy payment for the Premium Motor Spirit (petrol) between 2006 and 2015.

The corporation, which said the payments were approved by the Petroleum Products Pricing Regulatory Agency, said the federal government still owed N170.6bn.

The Group Managing Director, NNPC, Dr. Maikanti Baru, and the Chief Financial Officer of the corporation, Isiaka Abdulrazak, made this known on Monday in Abuja at an investigative hearing conducted by the Senate Committee on Petroleum (Downstream).

Baru, in his presentation, stated that the CFO would make the main presentation on subsidy payments.

“The NNPC is going to address essentially what it has incurred in terms of subsidy payments between 2006 and 2015, and what was paid to it under the scheme. We have it on record that the NNPC incurred N5.1214tn as subsidy as approved by the regulatory agency, the PPPRA, and it was only paid N4.9508tn. It is still being owed by the Federal Government N170.6bn,” he said.

Abdulrazak assured the panel of “full disclosure and full cooperation and transparency in the spirit of the management of the NNPC.”

He said, “All the NNPC’s subsidy claims and entitlements are duly verified and approved by the PPPRA with relevant certificates issued. The subsidy approved for the NNPC is backed out of the domestic crude cost payable to Federation Account Allocation Committee.

“In summary, the NNPC submits that the amount of N5.1tn was duly approved by the PPPRA as subsidy claims for the corporation. Out of this sum, the NNPC is still owed N170.6bn.

“Consequently, the NNPC seeks the understanding of the distinguished members of the committee on the peculiarity of its operations and its role as a supplier of last resort in the downstream sector of the economy.”

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