• Monday, February 26, 2024
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Kerosene subsidy: NNPC spends trillions without appropriation

Diezani Alison-Madueke

Testimonies, given on Thursday by various parties at the investigative hearing on the $49.8 billion oil money unremmitted by the Nigerian National Petroleum Corporation (NNPC) have revealed reckless spending of the federation’s revenue on kerosene subsidy even when such has not been provisions for such either in recent past budgets or the present one being considered by the National Assembly.

Reginald Stanley, the Executive Secretary, Petroleum Product and Pricing Regulatory Agency (PPPRA) for instance confirmed at the hearing that between January 2012 and July 2013 alone, his office certified about N543, 890,398,525 ($3. 51 bn) as expenses for subsidy on kerosene.

However, BusinessDay checks show that following Presidential directive by late President Yar’Adua in 2009, the federal governmnet has not made any provisions for subsidy payments till date, a situation which questions NNPC authority to continue to make such claims.

It would be recalled that the governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi raised a fresh alarm last week that out of the $67 billion the NNPC shifted between January 2012 and July 2013, only $47 billion has been received by the apex bank, leaving $20 unaccounted for.

Sanusi also faulted NNPC claims of using some of the missing monies for payments for subsidy on kerosene as fraudulent and illegal since President Yar’Adua had issued a presidential directive eliminating subsidy payments since July, 2009.

At the resumed Senate Committee on finance public hearing on the alleged unremitted funds by the NNPC yesterday, the law makers questioned NNPC authority to continue to use earned monies for subsidy payments even when there is a presidential directive to that effect and especially as such monies have not, in past years been appropriated for in the budget.

Diezannie K. Alison-Madueke, minister of petroleum resources admitted that the CBN’s position that it will not accept the legality of deductions from crude may be true but that she thinks that , “the appropriate body to decide might be the law courts.”

But when asked how the Corporation and the ministry of petroleum resources were going to get the monies to fund kerosene subsidy for the year since it was not appropriated for, Allison Madueke responded that their intention was to seek the approval of senate committee, saying that “a lot would depend on what the comimittee decides.”

In her submissions, she further admitted that there was actually a presidential Memo stopping kerosene subsidy at some point but that action had been stayed on it so ao as not to inflict pains on Nigerians.

Her words, “First of all, the issue of presidential directive on stopping kerosene subsidy given by late President Yar’Adua has come up severally. There was a presidential memo written in 2009 and we have a copy of that.

“At a time, the inter ministerial meeting was held and both minister of finance and petroleum were parties at the meeting where the decision was taken to stay action on that memo for the reason of not inflicting pain on Nigerians by keeping up the price at N50 per liter.

“However, the GMD at that time wrote two memos asking the minister of finance for clarification on the stay action based on the fact that there was a presidential memo but no reply came. The GMD after him also wrote a Memo, no clarification came and as such the subsidy remained.”

In her response, The Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo-Iweala who is leading the reconciliation effort admitted that kerosene has actually not been provided for in the 2014 budget.

“In the budget we have submitted, we have not covered kerosene subsidy, thank you,” she stated, and when asked further whether there ae plans to submit a supplementary budget to cover subsidy claims, she responded, “We have not discussed that.”

Meanwhile, the Committee reconciling the $10.8 billion alleged unremmitted oil revenue by the Nigerian National Petroleum Corporation (NNPC) has received report on how the alleged monies were spent- but it insists that the documents submitted by the Corporation must be subjected to an independent forensic audit to determine the veracity of information provided.

The committee is also seeking a legal interpretation as to whether the some billions on naira which NNPC claims it had paid to the Nigerian Petroleum Development Company Limited (NPDC) out of the alleged unaccounted funds really belong to the company or not.

Okonjo-Iweala said that eventhough the NNPC data has been duly certified by the Petroleum Product and Pricing Regulatory Agency (PPPRA), they believe there was need to bring in technical expertise to re-certify the numbers, which the reconciliation committee lacks.

Testifying before the Committee chaired by Ahmed Makarfi, Chairman, Senate Committee on Finance, she also noted that the issue of unremmitted funds by the NNPC had been ongoing and that as at December 2013, the cumulative unreconciled figures or shortfalls from NNPC payments stood at N1.792 trillion or $11billion.

In her submission, the finance minister said NNPC presented data showing that of the $10.8 billon, it withheld $8.766 billion for Subsidy (both for fuel and kerosene) while $4599 million represented the amount for holding cost for strategic reserves. There was also crude oil and product losses put at $0.76 billion as well as pipeline management costs at $905 million bringing the total to $10.89 billion, she said, quoting NNPC figures.

She stressed that the data presented were all accepted, certified and signed off by PPPRA, which is an independent body legally set up to certify claims by the NNPC.

He words, “We asked during the documentation to see the back-up documentation, to enable further verification. Our judgement is that a proper examination of these documents requires technical expertise beyound the capacity of the reonciliation team and therefore further work needs to be done.

“And I venture to say that what we would need beyound that is an independent forensic audit of the documents that have been provided and the audit managed independently.

“I think this is the only way we can answer questions to the country and to Nigerians about the veracity of these documents. And I repeat that the expertise of the team is not adequate for this and I think that GMD of NNPC had also noted in some of his submissions that they do not have the audit capacity of any of us and I think that an independent forensic audit is needed.”

On the issue of $20 billion represented last week by the CBN as the total sum yet to be remitted by the NNPC, she observed that the NPDC and third party arrangements featured in the original reconciliation effort in the cascade presented by the NNPC.

She said however that these new figures include amounts deemed to be due to the federation account as proceeds from NPDC operations of oil fields previously owned by Shell Petroleum Development Company (SPDC), and unremitted amounts Captured as third party financing.

“In looking at these elements, the reconciliation committee concluded that the issues are largely legal and require careful legal interpretation, which would need to be given more detailed attention by legal experts.

“We have to look at the two issues separately. On the $10.8 billion which we had originally agreed was a shortfall that was due from NNPC. They have produced documents certified by PPPRA which background documentation. But we do not feel that the reconciliation committee has the expertise.

“On the on the issue of $20 additional charges made by CBN, let me repeat that if you look at the issues carefully, the committee feels that this hinges around legal issues and it therefore requires legal expertise to answer the question of who owns those monies- NNPC or the federation account,” the finance minister submitted.

In his interrogations, Ahmed Makarfi, Chairman, Senate Committee on Finance reminded the ministry of finance that it did not need any approval to set up an independent forensic audit of the documentations submitted by the NNPC and directed that such should set up immediately and submit the final report to the committee.

Meanwhile, he told the Senate investigative panel that the Auditor General and Minister of Justice is being expected on Thursday next week to give a legal opinion on the legality of the NDPC.

Making his presentations, placed on record that never had any data certified by his organisation been subjected to independent forensic audit for authentication.

He however explained the document, by the way, was jointly worked on by the PPPRA, DPR and NNPC which have statutory role to do so as he also denied any knowledge of the presidential directive on kerosene subsidy removal.

Reading out some of data contained in the certified document, he insisted the PPPRA has gone through NNPC records meticulously and found that between January 2012 and July 2013, he said the NNPC spent some N813, 802, 673, 022 as subsidy for Petroleum ($5.254 bn).

For kerosene, for same period, N543, 890,398,525 (N3.51 bn) was expended, he disclosed.

But Sanusi , the CBN governor in his presentation insisted that the NNPC still had explanations on the alleged $20 billion.

He also insisted there is still an existing presidential directive on kerosene subsidy removal but had been violated by the NNPC over the years.

By: Onyinye Nwachukwu