Fuel importation: PPPRA pays oil marketers N98bn

 By Omoh Gabriel & Victor Ahiuma-Young

LAGOS—THE Petroleum Products Pricing and Regulatory Agency, PPPRA, has paid N98.050 billion to oil marketers, excluding NNPC, as compensation for interest on the amount owed for petroleum products imported into the country.

The payment also represented foreign exchange differential incurred by the oil marketing companies for late payment of subsidy on imported petroleum products.

Foreign exchange differential is the margin of change in foreign exchange between when the products were ordered and when it was delivered. The payment is a kind of penalty on PPPRA for making late payment of subsidy to oil marketing companies between 2008 and 2010.

Figures sighted by Vanguard at the office of the PPPRA, indicated that in May 2009, N17.324 billion was paid to oil marketing companies as foreign exchange differential on subsidy claims  for the fourth quarter of 2008. The record also showed that $41.167 billion was paid as the second foreign exchange differential in January 2010.

PPPRA schedule of payment of interest that accrued to debt owed to marketers revealed that the regulatory body paid N11.902 billion to marketers as part of interest on delay payment of subsidy and foreign exchange differentials to marketers in April 2010.

The figures further showed that the PPPRA had on its books N13.956 billion as balance of interest on delayed payment of subsidy and foreign exchange differential paid to government in May 2010 while another N13.699 billion as balance of forex differential was paid to marketers in June.

It would be recalled that the Federal Government, suspecting that massive fraud was being perpetrated at PPPRA, in the guise of subsidy to petroleum products marketers, invited foreign and local auditors to investigate the agency in 2009.
Minister of State for Petroleum at the time, Mr. Odein Ajumogobia, SAN,  had dropped the hint while speaking with newsmen  before the Federal Executive Council meeting.

Ajumogobia said the investigations would help the country eliminate the “inefficiencies” in the petroleum sector and unravel the factors contributing to high pump prices of petroleum products in the country in the face of ebbing international oil price.

The minister who gave the auditors two months to turn-in their reports, said: “We are investigating the inefficiency of the system. We have local auditors who are capable. They will work with foreign auditors to ensure absolute transparency in the process.”

On the extent of the investigations, Ajumogobia said: “We are looking at the entire process, essentially the templates. The price of oil has come down, therefore, there is the expectation that the pump price should also reflect that reduction in the crude oil price. Unfortunately, on the other side of the equation you have a huge subsidy made up of the template that PPPRA is producing and we are investigating those costs that involve demurrage. One of the biggest costs is demurrage which reflects on the pump price.”

Governors of the 36 states of the federation had also asked the then Minister of Finance, Mansur Muhtar, to investigate the N 1.15 trillion claim by the Nigerian National Petroleum Corporation,  NNPC, as petroleum subsidy from 2005 till date. Of the N 1.15 trillion, N 880 billion accounts for direct subsidy on oil while the balance is for the cost of crude and products lost to pipeline vandalism.