DON’T PLACE TOO MUCH CONFIDENCE IN THE (PRESIDENT) WHO BOASTS OF BEING AS HONEST AS THE DAY IS LONG. WAIT UNTIL YOU MEET HIM AT NIGHT– Robert C. Edwards
22 April 2012, Sweetcrude, LAGOS – But we do not need to wait until we meet at night to ask a very nagging question: What was President Goodluck Ebele Jonathan thinking of when he removed subsidy?
What was Ngozi Okonjo-Iweala thinking of? What was Madam Diezani Allison-Madueke thinking of? What was Labaran Maku thinking of? Two men, two women!
A President, a finance minister, the petroleum resources minister and the information minister in that order. Still bewildered, the question must be asked: What were they thinking of?
Had there been no street protests and total paralysis of the Nigerian state in the wake of the January 1, 2012 removal of subsidy on petrol by Nigerians, President Jonathan and his economic advisers would have stuck to their policy of subsidy removal. Indeed, as Nigerians would have been paying for petrol at the intended price of N141 per litre, so would the federal government of Nigeria have been awash with petro naira to play with in the name of delivering on the SURE promises – mind you, SURE is the acronym for Subsidy Reinvestment And Empowerment Programme.
Because there is a world of difference between the desire to accomplish and the capacity to deliver, some economists had seen through the SURE programme tones of both intended and unintended consequences. But that was merely on the surface.
Today, with the public hearing put together by the House of Representatives’ committee which looked into the management of fuel subsidy and the startling revelations it has come out with, it now appears that President Jonathan and his economic management team were merely out to swindle Nigerians.
The committee is demanding that a total of N1,067,040,456,171.31 be refunded to the coffers of the federal government. The Nigerian National Petroleum Corporation, NNPC, which had become a government unto itself, is asked to refund “N310,414,963,613.00 for subsidy it collected on Kerosene after the subsidy on the product had been outlawed in the country; another N285,098,000,000 for subsidy it collected above the PPPRA recommended amount and N108, 648,000,000 for self discount it granted itself”.
Now, had all these shady dealings not been exposed via the instrumentality of the probe, Nigerians would still have had to pay the difference in subsidy from where government had hoped to rake in over a trillion to fund its SURE programme.
Therefore, if this quantum of graft had already been committed by institutions of government, what guarantees were there that the SURE funds would have been judiciously expended after Nigerians would have been squeezed to pay with their sweat.
Many had objected to and suspected that the removal of subsidy on the one hand, and the funds to be realized would not be judiciously spent.
But why did the Jonathan administration attempt to enthrone a magnifying spectre of double jeopardy on Nigerians: Tax payers money mis-managed through a dubious management of subsidy funds; and causing Nigerians to pay the differential in the subsidy at the same time.
In conclusion, the question still begs for an answer: What were President Jonathan and his advisers thinking of?
The Subsidy probe report
Three months after it began the public hearing on the utilization of the Subsidy regime on petroleum products, the Ad Hoc committee of the House of Representatives headed by Hon. Faruk Lawan last Wednesday submitted its report to the House for consideration and adoption.
The submission of the report was the culmination of several months’ investigations to unravel the mystery surrounding the continued bludgeoning of the money spent by the Federal Government in subsidizing the price of Fuel in order to make it affordable to the generality of the people, who believe that the cheap price of fuel was the only benefit accruable to them in a country that is stupendously rich in resources but where mismanagement has kept the people down and poor.
It would be recalled that following the rather abrupt removal of subsidy on petroleum products at the beginning of the year and the threat by organized labour to shut down the country to protest the unpopular decision of government, the House of Representatives in an usual resolution reconvened from its Christmas and new year recess to address the then impending disaster with a view to possibly averting the strike by persuading the executive arm of government to rescind its decision while it put in place necessary measures to cushion the possible effects of the subsidy removal.
As a fall out of that session, the House empanelled the Hon. Faruk Lawan led committee to verify and determine the actual subsidy requirements and monitor the implementation of the subsidy regime in the country.
Expectedly, the committee came under intense pressure from both those who had benefitted unduly from the regime and their friends in government who facilitated such benefits to tone down the rhetoric that had characterized the modus operandi of the probe.
But for the chairman of the Committee, Hon. Faruk Lawan, the issue of sacrificing his hard earned reputation as a meticulous legislator who has strived to remain above board in a national assembly where scandals have continued to dog its every step as a second skin for cheap popularity among a few Nigerian was not an option.
Therefore, when the hearing commenced, it was not only done within the comfort zone of the National assembly. the proceedings were beamed live on national television to millions of Nigerians who were awe struck by the magnitude of brazen thievery that had characterised the oil sector in the name of subsidy.
So when the Committee submitted its report on Wednesday and reported that the sum of N1,067,040,456,171.31 be refunded to the federation account by the Nigerian National Petroleum Corporation, NNPC, Marketers, companies that refused to appear before the committee as well as the Petroleum Product Pricing and Regulatory Agency, not many Nigerians were surprised by its recommendations but many were flustered by the quantum of money involved in the fuel subsidy charade.
Giving a break down of the money to be refunded by the various agencies, the committee noted that the Nigerian National Petroleum Corporation which had over the years gained notoriety for its penchant for graft and opaque dealings should refund a N310,414,963,613.00 for subsidy it collected on Kerosene after the subsidy on the product had been outlawed in the country; another N285,098,000,000 for subsidy it collected above the PPPRA recommended amount and N108, 648,000,000 for self discount it granted itself while marketing companies are to refund a N8,664,352,554.00. Companies that failed to appear before the committee are to refund the sum of N41,936,140,005 while the PPPRA is to refund the sum of N312,279,000,000 being excess payment it made to itself. The refunds are to be made within three months.
Chairman of the Ad-Hoc Committee, Hon. Faruk Lawan who laid the report on Wednesday also recommended that relevant anti corruption agencies should investigate/prosecute all persons and companies that have been found to have committed any crime while those companies that obtained FOREX but failed to import Petroleum products should also be referred to the Anti Corruption agencies with a view to verifying what they used the forex for.
For a country that is struggling to fund its capital projects since the return to democratic rule in 1999, the realization that contrary to the official figure of subsidy payment of N1.3Trillion being bandied for the 2011 fiscal year, the discovery that what was paid out from the nation’s treasury as subsidy for the year under review was actually N2,587.087 trillion was simply benumbing.
This is more so when it is realized that the figure represents more than900% over the appropriated sum of N245Billion for the fiscal year.
Expectedly, the committee came hard on the Nigerian National Petroleum Corporation for its penchant for sleaze and minced no words in describing it as being a lord onto itself as it has demonstrated that it is not ‘ accountable to any body or authority’.
As a way out of this seeming impudence, the committee recommended the unbundling of the corporation to make its operations more efficient and transparent adding that ‘the Management and Board of the NNPC should be completely overhauled and all those involved in the following should be further investigated and prosecuted by the relevant anti corruption agencies’.
The infractions for which the committee recommended further investigation/prosecution are: payment of N285.098Billion in excess of the PPPRA recommended figure for 2011; subsidy deductions of N310,414,963,613 for kerosene against a president federation account in contravention of section 162 of the Nigerian constitution and the Illegal granting of price differential (discounts) of crude oil price per barrel to the NNPC to the tune of N108.648Billion from 2009-2011.
It further recommended that ‘the House do direct for the auditing of the NNPC to determine its solvency. This is as a result of plethora of claims of indebtedness and demands for payments by NNPC’s debtors which, if not well handled, will not only affect the entire economy of Nigeria but also the supply and distribution of petroleum products
The NNPC was not the only government agency that was found to be on the debit side of the law in its transaction. According to the report, the Petroleum Product Pricing and Regulatory Agency, PPPRA, which is supposed to ensure that the subsidy is diligently implemented to ensure that the intended beneficiaries of the regime are not short changed, was found to be deeply mired in activities to undermine the very essence it was set up for.
According to the committee’s findings, the PPPRA paid N258billion to itself in 2009 and N157Billion in 2010 and even the office of the Accountant general of the Federation, OAGF, was unable to submit details of the bulk payments arrogated to PPPR A and the account from which the bulk sums were disbursed, to the supposed beneficiaries.
In order to ensure that those who abused their offices were not left to act with impunity, the committee recommended that ‘the Executive Secretaries of the PPPRA who were the Accounting Officers, and under whose watch abuses were perpetrated that led to the government losing billions of Naira should be held liable.
We strongly recommend that those who served as Executive Secretaries of PPPRA from January 2009 to October 2010 should be further investigated/prosecuted by relevant Anti-corruption agencies.
This should also include the GM Field Services, ACDO/Supervisor Ullage Team 1 and ACDO/Supervisor Ullage Team 2 within the same period for their roles in the management of the ullaging under the subsidy scheme.
The organized pilferring of the nation according to the committee’s findings was rather ubiquitous. According to the report, it was discovered that an ” Accountant General that served during the period 2009 was found to have made a payment of equal installments of N999 Million for a record 128 times within 24 hours on the 12th and 13th of January 2009, totaling N127.872Billion.
The confirmed payments from the CBN records were made to beneficiaries yet to be disclosed by the OAGF or identified by the committee. We however discovered that only 36 marketers were participants under the PSF scheme during this period. Even if there were 128 marketers, it was inconceivable that all would have imported the same quantity of products to warrant equal payment” the report noted.
If the officials of government who were supposed to safeguard the nation’s treasury acted in the most brazen manner to deplete it, the marketers who were beneficiaries of the subsidy regime simply went for the kill. The committee in its report noted that it found out that “certain marketers collected subsidy of over N230.184 Billion on PMS volume of N3,262,960,225 litres that from the records made available to us were not supplied.
OTHER RECOMMENDATIONS BY THE COMMITTEE
*Mr. president should reorganize the Ministry of Petroleum Resources to make it more effective in carrying out the much needed reforms in the oil and gas sector.
*Given the large and complex nature of the Ministry of Petroleum Resources, the committee recommends that two ministers should be appointed to take charge of the Upstream and Downstream.
*The PPPRA should provide the Nigerian Navy and NIMASA advance copies of allocation and vessel arrival notification documents to enable the navy monitor, track and interdict vessels seeking to avoid Naval certification.
*The committee recommends that the regulatory capacity of PPPRA be strengthened and the National Assembly should commence the process of amending the Act to make the Agency autonomous
*The committee recommends that FIRS should follow up on the companies listed earlier to pay their taxes with due penalties in line with the provisions of the Companies Income Tax Act.
*The PSF guidleines should be revised to make Tax compliance a mandatory pre-qualification requirement for all participants under the scheme.
*The CBN and the Federal Ministry of Finance should critically examine and review policy guiding payment for importation of petroleum products to avoid the current fraudulent system that allows importers to bring in products from off-shore ‘lome’ or cotonou to qualify for forex payments
*The committee recommends that the PPMC management be overhauled.