Nigeria oil platform. Business Day reported that production during Feburary 2010 was the largest in Africa. During 2009 Angola outstripped Nigeria for overall production from the continent., a photo by Pan-African News Wire File Photos on Flickr.
Reps uncover eight billion litres fuel subsidy scam
Thursday, 19 January 2012 00:00 From Azimazi Momoh Jimoh (Abuja) Kelvin Ebiri (Port Harcourt) News
IT has been long in coming but it arrived upon us yesterday and Nigerians who long suspected that the nation was being bled through the fuel subsidy policy might be right after all!
Laying bare the fraud that might have cost the country billions of Naira, the House of Representatives Ad Hoc Committee investigating the management of subsidy on petrol learnt yesterday that the Federal Government dutifully paid for 59 million litres of the product on a daily basis throughout year 2011, when the daily consumption capacity for the country was 35 million litres only.
Shocked by this disclosure, the Committee expressed disappointment that the gap between what was paid for and the consumption capacity - 24 million litres daily – created ample room for all involved in the subsidy regime to rip off the nation.
In a related development, former Petroleum Minister, Prof. Tam David-West, said the disclosures being made before the ad hoc panel on the petrol subsidy funds were a manifestation that Nigerians have been duped.
David-West, who spoke with The Guardian yesterday in Port Harcourt, Rivers State, said the Federal Government’s directives that the Economic and Financial Crimes Commission (EFCC) should investigate fraudulent disbursement of petroleum subsidy showed that government had over the years subsidised “corruption, inefficiency and not petrol.”
Also, Nigeria National Petroleum Corporation (NNPC) yesterday differed with the Nigerian Extractive Industries Transparency Initiative (NEITI) over the fuel subsidy figures for the year 2008.
While NEITI on Monday put the amount at N360 billion, Group Managing Director, NNPC, Austin Oniwon, yesterday insisted before the Lawan panel of the House of Representatives that the figure was N630 billion.
Oniwon argued that the NNPC at no time provided information to NEITI on its operations. “We have the document for N630 billion…The N1.348 trillion was the reconciled figure between NNPC, PPPRA (Petroleum Products Pricing Regulatory Agency) and Ministry of Finance.”
The NNPC chief also warned that the full benefit of the proposed three new refineries and the proposed turn around maintenance (TAM) of the four refineries might not be realised if the spate of vandalism of oil pipelines was not addressed. .
However, Oniwon assured that the new refineries would ensure adequate supply of petroleum in the country.
He disclosed that the proposed TAM and rehabilitation of the Port Harcourt refinery would be completed by December 2012, while the TAM of Kaduna refinery would be completed by the end of the first quarter of 2013. The TAM of the Warri refinery would be finished by the last quarter of 2014.
Oniwon stressed that the fund for the TAM for the four refineries would be solely paid by NNPC from its internally generated revenue.
Testifying before the committee Executive Secretary, PPPRA, Reginald Stanley, said that the volume of petrol imported per day in 2011 was 59 million litres. But Petroleum Minister, Mrs. Diezani Alison-Madueke, on Tuesday gave the country’s daily consumption capacity as 35 million litres.
Chairman of the Ad hoc Committee, Farouk Lawan, said: “How could the nation be made to pay for 59 million litres daily when we consume only 35 million litres daily?
“The balance of 24 million litres per day might be the area of sharp practices. By making that provision, you are encouraging smuggling because we know that this 24 million litres balance would simply be smuggled out of the country since it has been paid for already and we cannot consume it.
“This is a case of serious economic sabotage because when the daily supply excess of 24 million litres is multiplied by 365 days, you get 8.76 billion litres. This is the volume of fuel that might have been smuggled out of the country in 2011,” Lawan lamented.
Stanley also drew the attention of the committee to what he called “serious challenges” facing the oil industry, pointing out that of the 46 depots in the country, only four could accommodate “mother vessels” bringing imported products to the country.
He urged the National Assembly to give accelerated consideration to the Petroleum Industry Bill (PIB) to facilitate the deregulation of the petroleum sector.
The PPPRA chief equally called for the immediate building of strategic fuel reserves saying: “It is very important that we begin to build strategic fuel reserves in the country. In most countries of the world, reserves are built to last for at least one month in case of fuel supply cut, but Nigeria does not have reserve that can last for one week.”
Oniwon, who noted that the refineries on completion would raise the capacity utilisation of the existing refineries from 30 per cent to 90 per cent, however emphasised the need to combat vandals of oil pipelines across the country.
While addressing the public outcry over the deduction of funds in Cash Calls under the joint venture with oil majors as well as fuel subsidy before remittance into the Federation Accounts, Oniwon argued that the National Assembly through the NNPC Act empowered the Corporation to deduct funds from source.
He said any attempt to halt the process would cause a shortfall in the supply of petroleum products in the country.