Nigerian Fuel Subsidy Probe: Who Pulls the Strings?

Nigeria Minister of Petroleum Resources Diezani Allison-Madueke. The oil-producing state was hit by a general strike and mass protest in January 2012., a photo by Pan-African News Wire File Photos on Flickr.

Fuel subsidy probe: Who pulls the strings?

By Victor Oluwasegun and Dele Anofi
Nigerian Nation

The probe report of the House of Representatives’ ad-hoc Committee on the management of Petroleum Subsidy Fund (PSF) has generated some misgivings. Victor Oluwasegun and Dele Anofi examine the report and its implication.

There is no doubt that the eight-member House of Representatives ad-hoc Committee on fuel subsidy management headed by Farouk Lawan has stirred the hornet’s nest.

Since the recommendations were laid before the House on April 18, hell has been let loose. The report, whose consideration was done on April 24 and 25 catalogued monumental infractions in the management of the subsidy funds.

The report called for the refund of N1.07 trillion by the Nigeria National Petroleum Corporation (NNPC), Petroleum Products Pricing Regulatory Authority (PPPRA) and some oil marketers to the government coffers.

It told the NNPC to refund N595.49 billion to the Federation Account and the trial of the Executive Secretary of the PPPRA between 2009 -2011. The report stated that the nation spent N2.587 trillion on fuel subsidy as at December 31, 2011 rather that the conflicting official figures of N1.3 trillion, N1.6 trillion and N1.7 trillion from the PPPRA, OAGF and the CBN.

It initially blamed the former Accountant-General of the Federation, Ibrahim Dankwanbo for the payment of N999 million, 128 times on January 12 and 13, 2009 but the blame was eventually shifted to the PPPRA during the consideration of the report with vehement opposition from some members of the House.

While some Nigerians praised the committee for a job well done in exposing the rot in the management of the subsidy funds, those indicted by the report cried foul. There were controversies on some of the issues in the report, particularly the major actors who were said to have been overtly or covertly involved in the subsidy scandals.

Some Nigerians, and even members of the House raised issues concerning privileges given to the Petroleum Minister, Mrs. Diezani Allison-Madueke and the former Accountant-General of the Federation, Dankwambo-who is now the governor of Gombe State. Critics blame the process that led to the removal of the former AGF from the list of indicted officials in the report and accused the House leadership of having capitulated by shielding people implicated in the scam.

The committee went on to recommend the total reorganisation of NNPC. The NNPC took out paid adverts in some dailies, to discredit the House committee report.

It said the committee was not empirical in its findings and besides, it went beyond its reference.

Lawan stated that his committee during the writing of the report tried its best to ensure fairness to all involved.

To buttress this, the House during its consideration of the report gave 17 oil marketers that did not appear at the public hearing two weeks to appear and present their cases.

The report recommended the overhauling of the management of the Petroleum Products Marketing Company (PPMC) among others. Despite of the encomiums that heralded the committee report was a horde of opposition that assailed it.

Some of the recurrent questions being asked were whether the committee was really fair in its hearing? Was the committee’s findings empirically examined? At the initial laying of the report on the floor of the House there were denials by various companies indicted in the report concerning the veracity of the committee’s findings and its recommendations.

For instance, 17 oil marketers who claimed they were not invited to the hearing and wrong doing by other stakeholders have made nonsense of the committee’s report raising fears that the document which was adjudged to have been a fair representation of the fraudulent situation in the sector may have its own margin of error after all.

The companies were given a reprieve of two weeks after threatening to head for the courts. Zenon Petroleum and Gas Limited was one of those that took the committee to task on its recommendations. The company was one of the original 15 companies listed as those that obtained Forex but did not import petroleum products.

The company, while making a case against the committee’s findings, said: “We are therefore, surprised by the publications contained in some national newspapers wherein we were listed as one of the companies that obtained foreign exchange in the sum of $232,975,385.13 with questionable utilization as regards the supply of petroleum products.

“We believe that the ad-hoc House Committee on the monitoring of the subsidy regime has not conducted its affairs in a thorough manner and its findings are not only misleading but also damaging to the reputation of established companies like ours.

“The committee did not verify or determine actual subsidy requirements from facts available. The actual daily consumption of petroleum products could easily be verified from the National Office of Statistics which is set up and has the statutory duty of keeping statistics of such nature. Even from the report of the committee, there are facts available which the committee could have assailed to determine the actual subsidy requirements but the committee instead prefer to act on conjecture, probability and unfounded beliefs.

“The committee despite all attempts by NNPC to clarify the process for the subsidy scheme as applicable to NNPC failed to grasp the mechanisms of NNPC’s involvement in the subsidy scheme. If such basic facts are understood but ignored by the committee, it calls to question the integrity and reliability of the Report.”

Supporters of the Austin Oniwon-headed corporation believe that rather than castigate the Group Managing Director of the NNPC, he should be commended. According to them, the GMD honoured the invitations of the parliament anytime he was called. Besides, they argued that NNPC can’t be said to be above the law because it has a board and reports to a minister.

In other words, if anyone is to blame, it should be the minister.

The PPPRA also faulted the report of the committee saying the sequences of N999m payment was not paid to “unknown entities” as alleged in the report, but to identified marketers.

It also denied the allegation of corruption by the report, saying contrary to the accusation that it paid itself N312 billion as administrative charges, the amount was for subsidy payments. According to PPPRA, the payment was “approved by government based on the report of the Federal Ministry of Finance appointed Auditor using e-payment.”

Many Nigerians were angry that the House at a point during the consideration of the committee’s recommendations failed to be assertive over indicted heads of agencies and ministries.

Robinson Uwak PDP member Akwa Ibom was one of the lawmakers that sensitized the House to the groundswell of discontent amongst Nigerian over the refusal of the House to mention names.

The lawmaker during the consideration of the report on April 24 raised a motion under order of privileges saying that his constituents have been calling him and alleging that he and the House by extension shielded the Minister of Petroleum, Alison-Madueke in the consideration of the previous day.

Uwak said: “since yesterday, I have been receiving calls from my constituents, accusing me that we as members are shielding the Minister of Petroleum Resources, many Nigerians were angry that the House at a point during the consideration of the committee’s recommendations failed to be assertive over indicted heads of agencies and ministries. Mrs Alison-Madueke. This allegation is rubbing negatively on the credibility of my person.

“We should recommend that the Minister of Petroleum Resources should resign her office with immediate effect.”

Though Uwak was applauded by other members, the motion did not sail through.

Uwak later spoke with reporters in his office. According to him, he was trying to save an embarrassing situation that could portray the House in a negative light. He said he could not fathom a situation whereby the House would indict some people who serve under a particular Minister, and leave the Minister whom every other person reports to and who oversights the Ministry looking like a saint.

During the consideration of the report, some of the recommendations were altered and various arguments were put forward for the alteration by those who proposed the motions. Some of the prominent amendments included recommendation (4), which urged the “speedy drafting and submission” of a well drafted and comprehensive PIB to the National Assembly.

This elicited a heated debate on whether or not the bill was already in the House. Members involved in this argument include Emmanuel Jimeh, Eziuche Ubani, Femi Gbajabiamila, Samson Osagie eventually agreed the bill was in the House. Ubani said: “I was there when the bill was submitted. We should go ahead and consider the bill. When we get to public hearing if the executive has anything to add, they will add.”

On recommendation (5) in which the word “direct for the auditing of the NNPC to determine its solvency” was changed to “urge…” Samson Osagie, Minority Whip suggested the auditing of NNPC’s account by the Auditor–General within three months.

This caused a furore as many said there might be a cover up if the auditing was done by the Auditor-General’s office. Femi Gbajabiamila, Minority leader said: “Because of the nature and the objectives of the investigation, we need an independent body.” The House eventually voted for the Auditor General to conduct the audit because it is that office that should statutorily carry out the assignment.

On recommendation (36), which deals with the accounting firms Akintola Williams Delloite and Olusola Adekanola & Partners, Betty Apiafi said:”Over the years we have watched the incompetence of the companies engaged to monitor the payment of the subsidy. The recommendation is not hard enough. These two companies should be prosecuted. All the payments made on fuel subsidy was based on the approval of these firms and due to their incompetence, the country has lost billions.”

Mohammed Barwa, Chief Whip wanted “Negligence and abetting” to substitute the word “Incompetence.”

Chairman of House Committee on Rules and Business Sam Tsokwa, revealed that the firms were collecting N275, 000 for the subsidy approval for each vessel. He said the huge financial consideration led to the continuous approval of those that did not qualify. He added: “They are two of the best in the country but they were professionally negligent.”

On recommendation (41) that has to do with Ministry of Finance, Ubani said: “We should name those involved.

Tsokwa added: “They should be investigated and prosecuted by the anti-corruption agencies.”

One of the amendments that shook the House was recommendation (42): “that the payment of N999,000, 000 in 128 times within 24hrs (12 and 13 January, 2009) by the Office of the Accountant-General of the Federation should be further investigated by the relevant anti-corruption agencies.”

The Deputy Speaker, Emeka Ihedioha who presided over the committee said Lawan, the had clarifications to make.

Lawan said a CBN letter has shown that the former AGF has no case to answer, that the payments were from PPPRA. But Hon. Femi Gbajabiamila objected saying instead of deleting the former AGF’s name from the recommendation, it should be co-joined to the PPPRA.

Uche Ekwunife said rather than concentrate on the number of times the money was withdrawn, members should consider what the funds was used for to find out if the withdrawals were justified. She said at the time of the N999m withdrawals “there was a CBN policy that no individual or corporate entity could withdraw up to a billion in a single transaction. “We should concentrate on what the money was used for,” she said.

But Mrs Abike Dabiri-Erewa disagreed saying not only should the former AGF’s name be included, he should also be indicted. She described the recommended punishment “investigation by relevant anti-corruption agencies,” was too mild. “if one person stays in his office and writes cheques of N999m 128 times, that person should be indicted.”

Such tense moments ran through the two-day consideration of the report.

It is asked if there are traitors in the House?

Are there certain lawmakers in the House who have been positioned to set certain agendas during the course of the discussion of the report? Were there people working against the recommendations of the report of the ad hoc committee from the floor of the House? People who were positioned to make contributions and sponsor motions specifically targeted at certain indicting recommendations?

Going by the events that unfolded in the House during the consideration of the report by the House, many have ventured suggestions that a number of lawmakers had been bought over by certain interests.

Already, a hypothetical scenario has presented itself before Nigerians with the two weeks reprieve given to 17 oil marketers who were initially asked to refund a total of N41.9 if necessary, through the intervention of anti-graft agencies for their refusal to appear before the ad hoc committee. There have been insinuations that things may not be as it seems, and that the house may have been compromised. Obviously, the river the House committee has to cross will be that of the integrity of the probe process. The committee needs to debunk the notion that it has been “reached” or that certain lawmaker had been recruited in order to cleverly sidetrack the initial recommendations of the panel so as to work towards a predetermined answer.

How well the House retains the confidence of the nation will be seen in the way it concludes the final leg of the investigation with the oil marketers.