FG spends N784bn on fuel subsidy

A report submitted by the Senate Committee on Petroleum Resources (Downstream), yesterday, indicated that the Federal Government wasted a total of N784 billion on what it called fraudulent practices in the import of petroleum products in 2017.

The report of the panel put the total surplus in the volume of petroleum imported in 2017 by both the Nigerian National Petroleum Corporation (NNPC) and the marketers at 5.9 billion litres, which, when multiplied by the N133 landingcost gives the sum of N784 billion.

It noted that shortages in the volume of fuel claimed to have been supplied by the NNPC and the independent marketers, were major factors that led to the scarcity of fuel nationwide.

The Senator Kabiru Marafa-led committee explained that, “since the NNPC said it is importing 30 cargoes of 30,000mt (minimum) of PMS monthly through the DSDP Scheme, it means NNPC is importing 30 x 30,000 x 1,341 = 1,206,900,000 litres of PMS monthly.

Therefore, at an average consumption of 35 million litres/day, NNPC said the country consumes between 27-30 million litres/day from January to September and 30-40 million litres/day from September to December 2017.
“From the above figures, NNPC’s monthly supply is supposed to last the country for about 35 days at 35 million litres/day.”

The report further pointed out that, “the marketers, on the other hand, received from government about $1,669,180,182 at Central Bank of Nigeria (CBN) rate of N305 to a dollar to import petrol from January to August 2017. This means that marketers were supposed to bring into the country about 3.8 billion litres of PMS at a landing cost of N133. In other words, marketers’ supplies were supposed to serve the country for about 109 days at 35 million litres daily in 2017.

“The implication of this is that NNPC has five days surplus every three months, 60 days surplus in a year, added to the marketers’ 109 days supply gives a total of 169 days supply surplus of 35 million litres/day or 5.9 billion litres. The question is, who consumes this surplus before we ask of subsidy?”

The committee further listed some causes of fuel scarcity to include supply gap caused by refusal of some Direct Sale Direct Purchase (DSDP) contractors to take October crude cargoes because of the fear of incurring huge losses occasioned by the rise in the price of PMS in the international spot market, which is always the case during winter months.

The report also listed as a factor, the fact that NNPC refused to listen to genuine complaints made by the marketers during the signing of the DSDP contract.

Other factors that caused the scarcity, according to the panel, include, “withdrawal of marketers from importation because of the rise in the internatioml price of PMS occasioned by the rise in the price of crude oil and the effect of winter; the claims by oil marketers of non-payment of subsidy arrears by the government to the tune of N800 billion incapacitated their operations through the dearth of operational capital; rumours of impending pump price increase by government in December or 1st week of January, that went viral on social media.

The report further noted that massive smuggling across the nation’s borders was a major cause and added that NNPC claimed that about 4,600 trucks were smuggled out of the country during the crisis period.


Reps summon Kachikwu, Baru, PPPRA boss over N300bn subsidy

•As another PDP Rep joins APC

The House of Representatives has summoned the Minister of State for Petroleum Resources, Ibe Kachikwu and the Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru as well as the Executive Secretary,  Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu Umar, over payment of subsidy on Premium Motor Spirit (PMS), also known as petrol, without approval from the National Assembly.

Kachikwu and Baru are expected to appear before the Committees on Finance and Petroleum Resources (Downstream), to explain where they got authorisation to expend over N300 billion on subsidy payment in 2017.
The duo, as well as the PPPRA boss,  are expected to account for the money spent on subsidy from January 2017 to date, and the current petroleum pricing regime.

Adopting a motion moved by Sunday Karimi, under Matters of Urgent Public Importance, at yesterday’s plenary, the House requested the Federal Executive Council to provide for subsidy in the 2018 Appropriation Bill,  if it is interested in continuing with subsidy on petrol.

Leading the debate, Karimi told the chamber that from January to December, the Federal Government, through NNPC, claimed to have spent over N300 billion on PMS subsid, when there was no provision for subsidy payment in the 2017 Appropriation Act.

He noted that the payment, which was done without the approval of the parliament, was a breach of the 1999 Constitution, as amended.

According to him,  Section 80 (4) of the constitution stipulates that no money shall be withdrawn from the Consolidated Revenue Fund or any other public fund of the Federation without approval of the National Assembly.
Consequently, Karimi stated that subsidy payment NNPC’s subsidy payment in 2017, without the consent of the federal Legislature, no matter the intention, was illegal and unconstitutional and urged the House to investigate the matter.

“It is an impeachable offence. We cannot keep quiet.The executive cannot decide which part of the constitution to obey and which to ignore.”

Contributing to the motion, Ahmed Pategi said the Presidency and NNPC had agreed to continue on importing fuel  to make it readily available in the country, no matter what.  He, however, said no matter the motive for the subsidy payment, the House should investigate the issue, as NNPC acted without recourse to parliament.

“In this case, it is NNPC that is importing (fuel), which means NNPC is paying itself subsidy,”Pategi said.
Meanwhile, the ranks of the Peoples Democratic Party (PDP) in the House was further depleted, yesterday, when another member of the party, Odebunmi Olusegun, defected to the All Progressives Congress( APC).

Olusegun, in a letter read on the floor, before commencement of plenary, said his defection to the ruling party was in compliance with the wishes of his constituents and further disclosed that his former party is currently in “crisis.”
Quickly, another PDP member, Betty Apiah countered him. She said it is not true that the opposition party is in crisis, and noted that the party will challenge Olusegun’s defection in court.