Corporation’s subsidy claim rises to N1.2trn
By Omoh Gabriel, Business Editor
LAGOS â€” The Minister of Finance, Dr. Mansur Muhtar has said that the downstream sector of the Nigerian petroleum industry is haemorrhaging as a result of inefficiencies in the system.
The minister, in an exclusive interview with Vanguard, said NNPC posed a challenge to the Federal Government.
He added that the corporation recentlyÂ submitted to his office claims on subsidy amounting to N1.2Â trillion.
According to him:Â â€œNNPC presents a big challenge to us. Again, I think there are some issues to be considered here.
Why NNPC can’t remit N450bn
”NNPC has outstanding claims against the government in relation to petroleum subsidy, which has not been paid over the years.
”In addition, as an organisation, it also has taken some money to repair pipelines vandalised by the militants.
â€œThese, over the years, have risen considerably. What the corporation has been telling the Federation Account Allocation Committee, FAAC, is that it is unable to remit the money because government has not settled obligations or the outstanding liabilities due to it. I said it is a big challenge.
â€œIt is not just about NNPC, really, but how we manage the entire downstream sector of the petroleum industry because of the inefficiencies, which have led to the haemorrhage, not leakage, that we currently experience in that sector.
”Few days ago, I got an invoice from NNPC. I got this invoice with the amount of N1.15 trillion in relation to money owed NNPC, and about N880bn of that amount represents outstanding subsidy payments.
â€œWe have, of course, some additions. Even if we net out the N450bn, NNPC will, in the circumstance, still has a claim against the Federal Government and the states.
”That is why we keep saying that we really have to frontally address and resolve this issue,” he stressed.
Why projects appearÂ in every budget
OnÂ why some projects appear in each yearâ€™s budget, the minister said: â€œIn relation to some of the money that was in the budget for which it appeared that the projects had been completed, I have enquired about this.
”In many instances, what happens is that basically, the project execution, especially in the construction of roads and other construction projects, where you have a long-term commitment of government, say a two, three-year project, there are times when execution is ahead of payment and there are many outstanding certificates to be issued.
â€œMany times, when you make a budget, you use some of it to pay outstanding certificates and there are specific instances,Â where these jobs have actually been completed by the end of the year.
”When you have the budget and anybody goes to see it and say, ‘ah, but, this road has already been completed and drivers are plying the road, so, why is this road in the budget? You have to look at all the details.
“The other thing that people forget is that many contracts have built-in provision for what is called the retention fee.
”It means, like this building (Ministry of Finance), we have a provision that even after we finish building and the contractor completely hands over, there is a six-month period or so during which we would not pay the outstanding money of a certain amount until we certify that we are satisfied with the quality of work. It is among the items that reflect on the budget.
“It is also impossible that there may have been some mistakes in the budget process itself. We are not infallible. You are talking about numbers â€” thousands and hundreds of thousands of entries.
”Certainly, we cannot rule out the possibility in the budget that someone may try to smuggle in some numbers. For us, really, we always make sure that the budget submissions are defended line by line.
Dr. Muhtar speaks more on accountability, click below to read more
Nigerians should hold us accountable â€“ Finance Minister