The Petroleum Products Pricing Regulatory Agency, PPPRA, Monday told Senate that it has for 11 years assessed petroleum subsidy payment to the tune of N8.9 trillion.
Stating this in Abuja at a public hearing organised by the Senator Kabiru Marafa, APC, Zamfara Senate Committee on Petroleum Downstream on the Subsidy Payment by NNPC, on subsidy payments from 2006 to 2016, Abubakar Saidu Umar, Executive Secretary of PPPRA, said of the amount, N5.1 trillion was paid to the NNPC while the oil marketers got the remaining.
The NNPC also told the Senate that the Federal Government was indebted to the corporation to the tune of N170.6 billion outstanding subsidy payments due from January 2006 to December, 2015.
Speaking when he led a team of top management of the NNPC to the public hearing, Dr. Maikanti Baru, the Group Managing Director of the corporation, said the figure was arrived at after deduction of N4.950.80 trillion received as payments from the N5.121.40 trillion approved subsidy claims of the corporation for the 11 years.
According to Baru, while NNPC incurred N5.12 trillion under the subsidy regime, it has received N4.95 trillion, leaving an outstanding sum of N170.6 billion.
Isiaka Abdulrasaq, NNPC Finance Director, who corroborated the claim of NNPC GMD and provided the details of the accruals, traced the advent of the subsidy regime to October 2003, when NNPC was directed by government to commence the purchase of domestic crude oil at international market price without a corresponding liberalization of the regulated price of petroleum products.
The Finance director explained that under the subsidy regime, NNPC and other suppliers of refined petroleum products were entitled to file subsidy claims to the PPPRA, adding that unlike other oil marketers, NNPC did not receive cash payment for subsidy claims as its claims were deducted out of cost payment to the Federation Account after due certification by PPPRA.
Abdulrasaq, who noted that the arrangement was such NNPC had to pay for the crude oil it lifted at international market price and then sell refined product at government-controlled price, said the differential was what constituted the “subsidy” which government did not at that time make provision but was transferred to NNPC.
He said that while independent oil marketers were paid in cash, NNPC drew the money directly from proceeds it was expected to send into the Federation Account.
Both NNPC officials said the subsidy claims are genuine and duly certified by the regulatory agency, PPPRA which issued a subsidy certificate to that effect.
Abdulrasaq said: “In summary, NNPC submits that the amount of over N5.1 Trillion was duly approved by PPPRA as subsidy claims for NNPC. Out of this sum, NNPC is still being owed N170.6 billion.”
Meanwhile, the committee gave PPPRA and the Department of Petroleum Resources one week to furnish it with the list of all marketers, a breakdown of the quantities, the vessels, the countries the ships came from, who brought what and when, among others.
They were also asked to provide information on volumes and how much was supplied on yearly basis against the backdrop that Nigerians want to know whether there was the need for subsidy or not.
The committee also asked NNPC to come forward with more documentary evidence to substantiate its claims, especially details of the volume of fuel imported into the country during the period of the subsidy regime, just as it demanded explanation over allegation that NNPC fraudulently collected subsidy for locally refined product.
The committee has, however, expressed its displeasure over the refusal of the Central Bank of Nigeria, CBN, Minister of Finance and the Chief of Naval Staff to honour the invitation.
Meanwhile, Kachikwu Ibe, the Minister of State for Petroleum, who was represented by the Permanent Secretary, Folashade Yemi-Esan, completely washed off the hands of his ministry from the subsidy regime, pointing out that the ministry had delegated the management of it to agencies within its supervision.
Kemi Adeosun, the Minister of Finance, Godwin Emefiele, CBN Governor, and Hameed Ali, the Comptroller of Customs failed to appear before the Senate Committee.
They, however, sent proxies from their respective offices who the lawmakers summarily dismissed.
Chairman of the Senate Committee, Senator Kabiru Marafa, commended NNPC for the elaborate presentation, and pledged its support to stakeholders in the sector to ensure uninterrupted supply and distribution of petroleum products.
In his remarks, Senate President Bukola Saraki, while declaring open the two-day public hearing, said the probe had become very imperative to find a lasting solution to the years of fuel crisis and sleaze plaguing the country.
Saraki also said that the National Assembly under his watch would not sit back and allow the sleaze in the form of illegal payment of subsidy to persist.
Represented by the Senate leader, Senator Ahmad, Saraki, who noted that subsidy had become a cash cow where a few milk Nigeria of trillions of Naira, said: “For years, our country has been plagued with the issue of fuel subsidy and for too long, a scheme designed to reduce the burden on the poor has become the cash cow of a few who continue to milk the country dry in trillions under a process so opaque and insulated from public scrutiny called fuel subsidy.
“You would recall that it was only after my motion on March 5, 2012, with the support of my colleagues in the 7th Senate and after a thorough review and investigation of the scheme, we unearthed the monumental fraud bigger than our capital budget for a year going on in the name of fuel subsidy five years down the line we are back on the same matter. This is not acceptable and we are determined to get to the root of it.
“This hearing today spotlights the importance of the recently passed Petroleum Industry Governance Bill, PIGB, which after many years and several obstacles faced, has been passed by the Senate and the House of Representatives for the first time in 17 years and is ready for the assent of Mr. President.
“It is our belief that this piece of legislation, if implemented to the letter, has the potential to eliminating the present distortions in the system and sanitise the governance of the oil and gas industry of corruption and the rot in the system.
“It will introduce the market competition that would bring efficiency to the system. It is our hope that this will set the tone for the necessary institutional reform required to clean this all-important industry of opacity and maladministration.
“Let me implore the committee to ensure that they carryout a comprehensive investigation of these issues and advise the Senate on appropriate steps to take to make sure that never again are we going to be back here discussing these issues anymore and Nigerians will no longer be queuing to buy fuel at the pump stations ever again.”