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House of Representatives Fuel Subsidy Report: 69 Firms To Refund N229.7bn To FG

April 17, 2012

The report of the Hon. Farouk Lawan-led House of Representatives committee on the management of fuel subsidy has indicted 69 oil firms for defective transactions, saying that the firms are to refund N229.706billion to the coffers of the federal government.

The probe was instituted by the House of Representatives following protests and industrial action by the organised labour as a result of sudden increase in the pump price of petrol by government from N65 per litre to about N145.

The report of the committee came barely 3 months after its inauguration. Though, according to the committee chairman, Farouk Lawan, the committee was not given a timeframe within which to submit its report, its presentation is coming a month after the chairman has promised to submit it.

During the committee’s public hearings, there were startling revelations which point to discrepancies in the actual litres of petrol that were consumed and the amounts that were paid as subsidy on the petrol.

In the course of the hearing, the different government agencies involved in the management of the fuel subsidy regime contradicted each other on the actual monies that were spent on the exercise.

The Coordinating Minister for the Economy and Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala, had claimed before the panel that the government had paid the sum of N1.4 trillion on fuel subsidy in 2011. The CBN governor, on his part, claimed that the subsidy on fuel had hit N1.7 trillion, while the committee of the House probing the subsidy regime also maintained that from documents at its disposal, the amount of money to be paid on fuel subsidy might hit N2 trillion.

Also some of the oil companies that participated and benefitted in the fuel subsidy booty informed the committee that they neither have professional expertise nor technical capacity and know how in the petroleum business, hence their inability to deliver on the terms in their contract agreement.

According to extracts in the report, which is expected to be formally presented before the plenary of the House today and obtained by LEADERSHIP last night, the defective transactions by these firms  amounted to 3,453,690,070 litres of Premium Motor Spirit (PMS).

The report   recommended that the Office of the Accountant General of the Federation (OAGF) should refund N213.678 billion, being the total of excess payments made by it over and above what the Petroleum Products Pricing Regulating Agency(PPPRA) identified as paid in 2009.

The report, which covers the period from 2009 to 2011, further said that the EFCC and the ICPC should ensure that the OAGF accounts for the ‘over-recovery figures of N2.766billion and N5.27 billion respectively’.

The committee has been under intense pressure not to present its report. But the panel has criticised the activities of the  OAGF in its handling of the subsidy funds, saying that  ‘The OAGF is not only responsible for the accounts of the federation including the PSF and Domestic Crude Account but refused to say so during the public hearing’.

The report further said, “ the OAGF should  explain over payment of NNPC subsidy receipts to the tune of N146.746billion (2009), N421.197billion (2010) and N1,025,353billion (2011).”

On the Nigerian National Petroleum Corporation (NNPC), the committee  discovered  that the corporation had two sources of recovery of its subsidy, and noted that there were conflicting accounts from the  NNPC, the PPPRA and the Central Bank of Nigeria (CBN) on the actual amount that accrued during the period under review.

The report noted that the PPPRA had in its presentation to the committee,   hinted that the upsurge in subsidy payment in 2011 was due not only to increase in subsidy per litre but also to the computed arrears due to   NNPC for HHK discharges.

The report said that this was established from the NNPC’s submission to be the sum of N284.580 Billion, adding that “this payment of subsidy arrears on HHK was an illegality, having been proscribed by a presidential directive in 2009.”

Culled from Leadership of  Tuesday 17th April 2012


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