Some federal lawmakers have accused the Nigerian National Petroleum Corporation NNPC of lying to Nigerians, they say the corporation is also responsible for defrauding Nigerians of several billions of naira
under the guise of paying for petroleum subsidy.
The recent subsidy probe was catalyzed by a series of protests early this year when President Goodluck Jonathan removed subsidy from petroleum products thereby causing an astronomical rise from sixty five naira to a hundred and forty naira which is over a hundred and ten percent.
The house of representatives recently concluded its probe and this led to many revelations. This has further led Nigerians to ask series of questions which have not been answered.
Hon Peter Akpatason, the former chairman of the National Union of Petroleum and Natural Gas workers NUPENG says, the figures given by the NNPC
are false. Hon Akpatason who disagrees with civil society organizations that claim there is no subsidy, however also disagrees with the figures given by the oil corporation.
Hon Akpatason discloses that the federal government erred in removing subsidy from petroleum products saying, if government had listened to the advice and reports earlier given, the loss to the nation incurred by the strikes would have been avoided. He states in clear terms “there can be no subsidy outside the petroleum industry bill”.
Hon Akpatason maintains that it is time to restore order to the NNPC and stop the monumental loss of money to private pockets.
Though officials of the NNPC has denied any wrongdoing, Hon Akpatason maintains that the recent NNPC probe has revealed more than Nigerians bargained for.
The question of how Nigerians have consumed from thirty five million liters of petrol in less than two years to fifty eight million years is still waiting to be answered.
During the NNPC probe, officials of the Nigerian Customs Service claimed that vessels containing petrol known as premium motor spirit are not being checked by the agency as an earlier directive from the presidency had warned the agency to allow fuel importers have their way. This was during the tenure of President Olusegun Obasanjo and under the watch of Mr Adamu Ciroma as Minister of Finance.
The Minister of Petroleum Resources Diezani Allison-Maduekwe, in defense of this allegation, claims that the ministry has made changes since her appointment into office.
Mrs Allison-Maduekwe stated that the Petroleum Products Pricing and Regulatory Agency (PPPRA) which usually makes the payment to oil marketers, used to be under the presidency, but has now been removed and operates now under the NNPC. She states that this was done to ensure more effective and efficient supervision.
But People like Tunde Aremu of the Action Aid, a civil society organization claims that there is no subsidy. Mr Aremu argues that the over four hundred and thirty thousand liters of crude oil given to the NNPC daily for local consumption cannot be subsidized. He says if one barrel of crude contains one hundred and fifty nine liters and then converting the four hundred and thirty thousand liters given to the NNPC daily is approximately about sixty eight million, three hundred and seventy thousand liters of crude. “If our refineries operate at about sixty percent capacity, we are meant to have about forty-one million, twenty two thousand liters of petrol from the refineries, do we pay subsidy on locally refined petrol?”, asked Aremu.
While the NNPC is yet to give a credible explanation on how it utilizes its local crude allocation, explanations from the likes of Mr Aremu continues to make many Nigerians wonder.
Another lawmaker, Hon Hakeem Muniru from Lagos did not mince words as he stated in clear terms “the NNPC needs to be unbundled for us to rid it of the clear and evident corruption within it”. Hon Muniru maintains that the fifty-eight million liters claim by the NNPC is outrageous and frivolous.
Hon Muniru says it is time for lawmakers to act and put a stop to what he called a rape of the Nigerian economy. He states that “at this time, for the probe to reveal that there are no definite figures on how many liters of petrol is being consumed daily in the country is disheartening”, Hon Muniru also asks, “If we do not even know how much petrol we consume, what about exports?”.
He says the only solution to this rot is for the NNPC to submit itself and its budget to the National Assembly. However, the Minister of Petroleum Resources disagrees, we will recall that when asked sometime in December 2011 why the NNPC does not send its budget to the National Assembly, Allison-Maduekwe stated that, “The NNPC’s expenditures is too large to be probed by the National Assembly”. She discloses that for the NNPC to operate and compete with other international oil companies, it must be free from bureaucratic and government bottlenecks.
While lawmakers like hon Muniru disagrees, he also challenges the NNPC to publish the controversial KPMG report.
It will be recalled that the KPMG report was released since 2010 after an extensive audit of the oil corporation, it was only recently that the NNPC picked up the report. This was because federal lawmakers had began to demand for the report. When Allison-Maduekwe was asked about the report sometime in December 2011, she says she would not comment on the report because the NNPC board had not considered it. The big question is, a report that had been submitted for over a year, why will the board not consider it?
Hom Muniru claims that the report is evident that his accusations are true. He challenges the NNPC to publish it and claims that whenever its officials are asked about it, they become jittery.
The report which is a thirty-nine page document indicts the NNPC. For example on page seventeen, the report states that there is poor data management, it further reveals that there is no centralized location for storing electronic copies of historical production and allocation data. It said that these information are stored on personnel and individual workstations.
For an organization of the size of the NNPC, this is highly unacceptable. For official data to be stored on staff personnal computers. The effect of this is that data can be manipulated and tampered with.
On page eighteen of the report, it stated that it was observed that there were variances in crude sales price, especially with regards to domestic sales to the pipeline products and marketing company (PPMC). Crude sales to NNPC were at lower prices (lower than approved) than to other off-takers, which is not in compliance with Government’s directive. It appears that there is no formal documentation to support this decision/ practice.
A look at page nineteen is also shocking, it states that: NNPC is invoiced in US$ for domestic crude allocations but is expected to remit the equivalent value in naira to the Federation Account. However KPMG the international audit firm observed that exchange rates used by NNPC were lower than the average exchange rates published by the CBN during the review period.
Exchange rate variances for 2007, 2008 and 2009 were estimated at N25.7 bn, N33.8 bn and N26.7 bn respectively. (using CBN rates for the month of transaction)
NNPC claimed they obtained the exchange rates from CBN via phone but there was no document to substantiate this claim.
On page twenty four, the auditors observed that crude oil sales and collections are not promptly captured on the accounting system. Typically, these transactions are captured in the accounting system after the transaction have been approved at FAAC meeting which is typically two (2) months in arrears.
Also on page thirty one, KPMG observed that observed that NNPC’s subsidy claims and PPPRA‟s verification are based on volume of petroleum products available for sale (volume of products imported and actual production from the refineries) as against duly verified volume of products lifted out of the depots (volume of petroleum products sold) as stipulated in the subsidy guidelines.
The above implies that there is a Potential risk of subsidy payment on products not consumed by end users due to losses from pipeline vandalism, theft e.t.c., also a rough estimation of subsidy payment on product losses for the period under review (2007 – 2009) is estimated at N11.8 billion naira. The Risk of payment of subsidy on locally refined products which is not the intent of subsidy may encourage inefficiencies in the refinery process, it is this claim that is being investigated by the committees in the National Assembly. Currently, the senate is also probing the NNPC and PPPRA subsidy regime.
One of the most indicting discoveries is on page thirty six of the report which states that the firm observed discrepancies in the volume of petroleum product import receipt at Atlas Cove Jetty in June 2010. While a volume of 193,160 Metric Tonnes was reported, Mosimi Area Office quoted a volume of 184,989 Metric Tonnes for the same transaction. Further evaluation of this report presented and compared to that of Mosimi Area Office revealed that the figures were misstated. This is proof of incomplete and inaccurate recording/ reporting of product receipts.
While the report in several other pages indict the NNPC, members like Hon Muniru insists that for the rot to come to an end, the NNPC must be unbundled into smaller units so that the magnifying glasses of lawmakers will see the units more clearly and more effectively.
Nigerians are anxiously waiting to see if President Goodluck Jonathan will keep to his promise and tackle these weighty allegations, many believe the Minister of Petroleum resources is an untouchable because of her closeness to Mr President, some even regard her as part of his inner circle, civil society organizations have called for her sack, but one will be tempted to say all these allegations did not begin in her time so it is wise to be careful since she inherited an organization hydra headed in corruption.
Many Nigerians however are not interested in whether Allison-Maduekwe should be sacked or not, all they want is that the players involved in this corruption orchestrated chess should be brought to book. This many say will be a welcome step in the fight against graft.
Written by Amadin Uyi, an Abuja based Journalist.