*Hundreds of billions deducted without due process * Ministers deny authorisation of deductions *Subsidy funding on PMS Nigerians didn’t use

One of the outcomes of the  week-long strike that crippled economic activities in the country was the decision of the House of Representatives to critically look into the whole gamut of the subsidy regime and its usage by the government since its introduction.

It would be recalled that following the extra-ordinary convening of the House on Sunday, 8  January, 2012, in a bid to avert the impending strike, the lower chamber of the national parliament, put in place  an adhoc committee, headed by the chairman of the House Committee on Education, Hon. Faruk Lawan, to ‘verify and determine the actual subsidy requirements and monitor the subsidy regime  of the government.

Though many pundits were wont to dismiss the committee as one of such several committees set up by the House in the past, whose findings  never saw the light of the day, the choice of  Lawan, whose legislative experience spans  more than twelve years, gave a flicker of hope that, perhaps, the House was for once determined to break from its sordid past to make a difference.

But the fear of many Nigerians is not entirely misplaced. Apart from having the infamous reputation as one of the most corrupt government institutions  in the country, the Nigerian National Petroleum Corporation and indeed the oil and gas sector have been mired in controversy and any attempt by any ‘outsider’ to pry into  their  activities have not only been viewed  with skepticism but  also often times  outright hostility. In worst case scenarios,  intruders have been ‘silenced’ with irresistible monetary inducement in order to maintain the status quo of perfidy.

The week-long public hearing on the subsidy regime, last week, however opened a window of opportunity for Nigerians to peep into the wastages and impunity that have characterized the oil and gas sector, a development that has made many Nigerians poorer, even though the country is the sixth largest producer of crude oil in the world.

With the array of high profile government officials  on parade during the public hearing, the revelations that emerged  did not come as a surprise.

With  the presence of officials of disparate government agencies who are sometimes driven by inter-agency rivalry, it was not long before the internal contradictions inherent in the administration of government subsidy of fuel became manifest.

During the  hearing, the committee received briefings from the officials of the Nigeria Customs  Service (NCS), the Nigeria Extractive Industries Transparency Initiative  (NEITI), the Ministers of Finance as well as that of Petroleum Resources; the Petroleum Product Pricing and Regulatory Agency, the Department of Petroleum Resources and,  of course, the NNPC. The contradictions and buck- passing that characterized the statesments of some of the government officials that attended the hearing bore loud testimonies to the reason  Nigeria’s movement has remained in circle.

Though many persons who attended the public hearing were expecting some sort of new revelations on the vexed issue of fuel subsidy, the testimony of the NCS  sort of jolted many people. The Deputy Comptroller-General of Customs, Mr. Julius Ndubuisi Nwankwo, who represented Comptroller-General Abdullahi Dikko Inde, told a stunned committee that  most fuel importation by the NNPC did not follow due process, and  that, most importantly, the importation of petrol”, which is the raison d’être for the public hearing, “has no documentation”, a situation he said made it impossible for the NCS to  have an accurate number of vessels imported by the NNPC.

“NNPC does not make any documentation to the Customs. Several meetings were held where the NCS was directed not to ask for documents. The Ministry of Finance wrote to NCS, warning them not to ask for documents because this will cause crisis,” Nwankwo stated.

Petroleum Minister, Alison-Madueke

“Vessels imported into this country are referred to as mother vessels. These mother vessels never get to the ports in Nigeria. The vessels are normally anchored offshore. If you see the manifest covering these imports, what you will see is ‘offshore Cotonou, offshore Lome’.

“They never get to the ports. Rather, you have smaller vessels that pick these products from the mother vessels and they come to the ports to report to the Customs – in line with the provision of the enabling Act of Customs. These mother vessels do not report to Customs. Customs does not board mother vessels; we can only board vessels that are anchored within our territorial waters. The smaller vessels take these products to the ports”.

As if this was not opaque enough on the part of  the NCS, Nwankwo  explained that the NNPC  failed to pay duty on imported Premium Motor Spirit (PMS) worth N45 billion  from 1999 to 2002 when the duty was formally suspended by the Federal Government. He called for NEITI to conduct forensic audit of all the ships in Nigeria and from exporting countries.

As if the revelation of the Customs boss was not damning enough,  NEITI  corroborated  his assertion and even made more disclosures. Chairman of  NEITI, Prof. Asisi Asobie, stated pointedly that the  payments made in respect of fuel subsidy by the NNPC lacked transparency and due process.

According to him,  payment could only be effected on the approval of the Accountant-General of the Federation (AGF) with approval of the Petroleum Products  Pricing Regulatory Agency (PPPRA), but what was obatainable was that the  NNPC  deducts what it feels is the estimated amounts directly from the domestic crude proceeds before remitting the rest to the  Federation Account.

He said that during the audit of the oil and gas sector for 2006 and 2008, NEITI discovered inadequacies that complicated the problem of accurate determination of volume of imported petroleum products into the country.

According to him, in 2006 to 2008, the total oil lifted from the country was 8.8 million barrels, while NNPC lifted 4.8 million. He said that from 2002, NNPC lifted domestic crude at market price, providing incentive for export of domestic crude rather than domestic refining of all crude.

Asobie said that the measurement methods used by PPMC and DPR  have not been  in line with international best practice and cannot be relied upon, adding that the systems used for recording the movement of refined products through the PPMC pipeline system were outdated paper based and subject to error.

The presentation by the executive secretary of the PPPR  further muddled the already murky water of lack of transparency obtainable in the sector. Under questioning from members of the committee, the executive secretary of the  agency, Mr Reginald Stanly, who made a huge capital from the fact that he had been in the agency for only five months, admitted that while the country’s internal consumption requirement of petrol was 35 million litres per  day, the Federal Government paid for 59 million litres daily, an excess of 24million litres throughout  2011.

He could not satisfactorily explain what happened to the excess 24 million litres which obviously could  not be stored in the country because the  installed capacity of storage tanks in the country cannot accommodate the huge surplus annually.

Chairman of the ad-hoc committee,  Lawan, summed up the indignation of  members of the committee and Nigerians watching the unfolding drama, broadcast live on national television, when he asked: “How could the nation be made to pay for 59 litres  when we consume only 35 million litres daily? The balance of 24 million litres per day might be the area of sharp practices. By making that provision, you are encouraging smuggling because we know that the  24 million litres balance would simply be smuggled out of the country since it has been paid for already and we cannot consume it.

“This is a case of serious economic sabotage because when the daily supply excess of 24 million litres is multiplied by 365 days, you get 8.76 billion litres. This is the volume of fuel that might have been smuggled out of the country in 2011”. The Executive Secretary had no defense.

The presentation of the other agencies ofgovernment set the ground for the appearance of the ministers of finance and petroleum resources, Ngozi Okojo-Iweala and Deziani Allison-Maduekwe, respectively to provide their perspectives on  the unfolding national embarrassment.

While  Okonjo-Iweala’s ministry is responsible for all payments from the country’s accounts, Allison-Maduekwe’s petroleum ministry is neck deep in the series of allegations of sharp practices in the oil and gas sector. The appearance of Allison-Maduekwe was therefore expected with anxiety and expectation. At the end,  the minister provided information  already at the public domain while scoffing or parrying questions that would have given  an  insight into who is responsible for some of the decadence in the industry.

For instance, while admitting that “there have been manipulations in the sector and the ministry under her is looking into it very very aggressively, she claimed ignorance of who is the approving authority for the deduction by the NNPC but insisted that the deductions were in compliance with extant laws of the land.

“I need to say clearly that we have done nothing unconstitutional as a ministry particularly regarding deducting at source. We do not take money from the federally appropriated revenue”, she said.

Similarly, while claiming ignorance of the existence of  a cabal in the oil and gas sector, the minister of petroleum resources who, for most part of her appearance looked subdued and bereft of the halo of confidence that characterised her previous appearances before the parliament, however, said: “There  have been manipulations in the sector; there is no question about it.

“Yes, we are looking into it very very aggressively and we have made certain changes and  we have taken time to look at the situation on ground to begin to institute those aggressive changes which are already reaping rewards for us. I will continue to do that as I am sure the entire country can see that a lot of things are happening, that we will continue to harp on until we are able to wrought out those who have actually corrupted the system and manipulated the system to their own advantage  but to the detriment of the country and the economy.

“There are elements who have not done so and who have gained a lot from manipulating the system and we expect to find them in the soonest possible time. But I think we should not criminalize the actual act or legal marketing or the concept of fuel subsidy”.

The appearance of  Okonjo-Iweala, who was widely, even if wrongly, credited with pushing for the subsidy removal, was characterised by a certain level of deference from members of the committee. Apart from the fact that the chairman of the committee,  Lawan had had several interface with her during her first sojourn as Minister of Finance during  Obasanjo’s government, the frankness with which she answered questions  engendered confidence amongst members. In an uncanny way she sounded convincing to many members of the committee.

Okonjo-Iweala pledged to work with the lawmakers to stamp out corruption in the oil sector.

According to the minister, her mission in government is to fight corruption and improve efficiency by plugging wastages and ensuring more transparency and accountability in the management of public resources.

On the removal of subsidy, she said it is not an ideological issue but a challenge to  ensure that subsidies are properly targeted to get to the people who need it most.

On how she will tackle the rot in the oil and gas sector, the  minister said her ministry was determined to re-introduce an oil and gas monitoring unit to watch over the sector and ensure strict compliance with extant laws and regulation as well as adhere to transparency principles. She recalled how a similar unit, which she set up during her previous stint as finance minister got some international oil companies to pay the country $1.2 billion following a study of their contractual obligations.

With the end of the public hearing by the ad-hoc committee, Nigerians are  poised to see how far the House of Representatives will go in uncovering the rot in the sector especially as it regards the management of the fuel subsidy. Whether the House will go the whole length and match its rhetoric with action by ensuring that those who may be found wanting are brought to book or the report of committee would be allowed to go the way of other committees is yet to be seen.

But as the Minster of Finance said during her appearance before the committee, “Posterity and our children will judge us if we do not take matters of finance very seriously which is why I am committed to directing government expenditure in an efficient manner and plugging leakages in revenue especially in the oil and gas sector”. Nigerians are watching.

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