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THE FRAUD IN SUBSIDY BUSINESS: The shady deals at Atlas Cove


As the controversy on fuel subsidy continues to rage, and the federal government’s announcement of a new price regime for petrol on January 1 is being contested by labour, it has become imperative to look at the dynamics surrounding the fuel subsidy debacle which as at the time of filling this report has claimed casualities.

The government’s argument as to why fuel subsidy should go is understandable but what appears worrisome is government’s insincerity to itself on the dynamics of petrol pricing and regulation.

This write up beams a searchlight on the activities of oil marketers and government agencies at the various petroleum products entry points across the country.

Well meaning Nigerians including former petroleum minister, Prof. Tam David-West, continue to insist that there was actually no subsidy in the first place and government has only been dolling out free lunch to rent seekers.

The Atlas Cove Jetty, Apapa, Lagos, is Nigeria’s major delivery and re-distribution point for refined petroleum products.

First built in 1979, and rebuilt by Julius Berger in 2000, the jetty is owned and managed by the Pipelines and Products Marketing Company, PPMC, on behalf of Nigerian National Petroleum Corporation, NNPC, as a storage farm/facility that channels refined products through System 2B pipelines that runs through Ejigbo (a suburb in Lagos).

These pipelines supply petroleum products to the entire Western region of Nigeria, Kwara and Edo States. Depots served by the Atlas cove jetty include Mosimi, Ore, Ibadan and Shagamu. The Atlas Cove Jetty is also used to off-load coastal vessels as well as pump petroleum products to the Atlas Cove Depot for storage.

This command center for refined petroleum products is administered from Abuja by the PPMC, a subsidiary of the government owned NNPC.

A very dependable source at Atlas Cove told Sunday Vanguard that the country is being held hostage by the petrol import cabal in connivance with the same government officialsthat claims to be serving and protecting Nigerians.

According to the source, what has been happening at Atlas Cove can best be described as “round-tripping.

According to the source, “they bring in a particular volume of refined products, declare the volume on arrival to the relevant government agencies’ staff (DPR, PPPRA, Petroleum Equalisation Fund, PEF) and after these officials have okayed the product quantity in preparation for subsidy application, about half of the product originally meant for domestic consumption would then be diverted to other neighbouring West African states”.

He also noted that “the so called cabal is all-inclusive as some very popular major marketers are also involved as well as some seemingly obscure oil marketing companies.

“They are all involved in this scheme and the DPR officials at the entry points who are supposed to regulate the products and ascertain the quantities are conniving with these people. It is so bad that they sometimes bring in products from within the country and say it is imported so you will see the government paying double subsidy for one product; but this approach is mostly carried out on behalf of top people in government” he alleged.

This assertion was recently corroborated by the Director General of the Nigerian Maritime Administration and Safety Agency, NIMASA, Mr. Patrick Ziakede Akpobolokemi, during an interview in Lagos. The NIMASA boss affirmed that most of the importers actually get their products from local refineries and when they get to the Lagos waters, they discharge same into another vessel, stating that the ship is now taken outside the country’s territorial waters and returned back to the country with the claim that the product was newly imported.

The NIMASA boss claimed that as the agency saddled with the responsibility of monitoring and regulating our waterways, the information cannot be anything but factual. It is in this same vein that Lamido Sanussi Lamido, Governor of the Central Bank stated during the recently held town hall meeting on subsidy removal that the nation does not consume 35 million liters as stated and the federal government continues to dole out tax payers money.

Another oil industry professional who also pleaded anonymity told Sunday Vanguard that the reports may have some elements of fact as it is common to see DPR officials easily fraternizing with operators and marketers whom they are meant to regulate.

“The moment you see the Nigerian Police openly fraternising with criminals then you know it is over for Nigeria. It is for this same reason of huge corrupt practice going on in the sector that no one can boldly tell you the truth about happenings in the oil sector especially if that person is an operator, as they will seriously come after you both from government and every other angle, hence the sector has remained covert and would continue to remain so. This is the reason why the TUC President said regarding the PPMC at the last town hall meeting in Lagos that the more you look the less you see.

“Remember that under the Yar’Adua administration, 90 million liters of petrol was reported missing here in Lagos at a particular depot which government was then partnering with for products storage and till date nothing was heard of that issue. That is the nature of the oil sector we run; the operators can chase you out of business and life if required”, he enthused.

Sunday Vanguard also gathered that before the announcement that jolted the nation on the January 1, 2012, the federal government through the PPMC had passed a directive to all oil tank farms and depots across the country for them to commence ‘dipping’ an operation meant to ascertain the quantity of products in the tanks.

This directive was issued because the federal government plans to retrieve from these marketers the amount of subsidy which would be commensurate with the products in their tanks and this accounted for the immediate hike in prices at petrol stations nation-wide.

It is common knowledge also that various interest groups have at one time or the other asked the federal government to probe the pricing template with which it arrives at its prices, both landing cost per liter of PMS and the pump price but government has never responded to these demands.



Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.