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Oil subsidy swindlers are walking away

By Dr Ugoji Egbujo
The Customs are supposed to inspect all incoming cargoes. We all know the customs. Not much was expected from them. People ‘fly’ in containers daily in Lagos, so getting documents signed without verification cannot be strange. That is what clearing and forwarding agents do here.

Corruption reigns supreme in the everywhere. Customs are not left out. Bribe is the grease that lubricates the rickety dysfunctional bureaucracy of government departments. Customs are not different. No customs official was implicated. None could have been.

At the presidential committee hearings, the Customs complained about the huge sums they are owed by the NNPC.


The Navy is charged with protecting the territorial integrity of the country on the seas. They are supposed to clear all incoming vessels. Without a naval clearance the subsidy payment of the trader\ marketer cannot be processed. So all instances where marketers made fictitious claims of having received products from vessels that were elsewhere at the time they were supposed to be around the country or from vessels that have never existed or that had been de commissioned, did our authorities engage the Navy in monitoring these things?

Instances of back loading and instances where vessels berthed and moved out with products but got their papers duly signed spoke of collusion in the scam. Navy has intelligence officers around the jetties, so they should know a few things. Did they engage them if they meant well for Nigeria? And if they did what happened?

We do not know if naval officer was indicted. Was any charged?

But one must wonder why the Navy did not conduct internal inquiry and did not seek to purge itself of such contaminated officers whose level of wealth cannot further service discipline.

The Federal Ministry of Finance And Their External Inspectors

The federal ministry of finance watched all of these happen. The minister had served under Obasanjo and was well acquainted with the subsidy programme. Granted she always canvassed for its abrogation but how did she let this happen under her watch? She was reported to have defended the high subsidy figures which she attributed to growth. A fourfold rise in subsidy in 18 months? She has left with her reputation in tact. She was not directly involved in the scam but she was definitely derelict of her duties. At the very least , moral duties.

The external firms engaged by the federal ministry as auditors of the process lacked the requisite knowledge to handle the transactions. But it is strange that while they collected 250,000 naira per vessel they failed to stem the decay. They were supposed to witness vessel arrivals and verify quality of product imported. But we now know better. Vessels that have longed been buried supposedly brought cargoes to Nigeria and subsidies were paid for such ghost cargoes. The two external auditing firms were disengaged after the inquiries.

Tragically a whooping 121 billion was paid out as subsidy without the approval of external auditors.

NNPC – A self regulating behemoth.

The NNPC, the committees concluded, engaged in rogue funding of the PSF by illegal direct deduction from crude costs depleting unilaterally , recklessly and criminally, national distributable income. NNPC variously acted outside the contemplation of the law and the PSF scheme. And outside the bounds of probity and of decency.

The PPPRA gave all allocations for the importation of kerosene( HHK) to the NNPC. President Yaradua had ordered the discontinuation of kerosene subsidy. Without any authorization, without any new express presidential directive, perhaps besides winks, NNPC resumed the deductions from crude costs for kerosene subsidy in 2011. NNPC withdrew humongous amounts from source, in disregard for any appropriation bills , without recourse to any approvals. In many instances NNPCs imports were not even verified by the external auditors but NNPC had no use for that, it paid itself. Because NNPC paid itself and the states weren’t compelled to service the PSF in advance as required by the scheme, the states and the local governments were aloof. The CBN couldn’t possible see through all what the NNPC was engaged in. Once the NNPC had the guts to warn the CBN not to meddle into the fuel subsidy matter.

Marketers , ploys , stratagems, fake vessels and forged papers.

The presidential committee reported that over 400 billion naira may have been stolen. But much more was stolen. And so much has gone into the building of new private petroleum depots . Depots have sprouted in Satellite town and Kiri –Kiri in Lagos , Oghara, Calabar and Port Harcourt. Many of these emergency depots emerged since 2009 . And the owners participated in the subsidy scheme and were indicted by the committees. Many others own large residential estates in Abuja, Lagos and Portharcourt.

With the aid of Lloyds intelligence list all marketers who claimed to have delivered products using fictitious vessels were clearly found out. But many of them have not been charged and that in itself is inexplicable. One of such vessels is Mt Zhen star. Lloyds intelligence list says it has never existed yet sanctimonious fraudulent marketers in Nigeria submitted documents and claimed billions for products supposedly delivered by Mt Zhen Star . We will get to details of companies and individuals implicated in these transactions in another episode of this expose. Using Mt Zhen star unscrupulous marketers bled Nigeria of 3.9billion naira. And for some of these transactions no form ‘M’s exist.

Some others fell in love with the name Mt Hellenic blue, a vessel that was buried in February 2010 according to the Lloyds register. Perhaps her ghost brought fuel to the west African coast in 2011!

A total of 21billion naira was lost to marketers who claimed to have brought in products from mother vessels that were at some other locations in the far east as at the time they were supposed to be offloading their cargo in west Africa.

And unthinkably, some claims of marketers of having imported cargoes were disclaimed by their banks. The banks washed their hands of transactions but Nigeria lost about 12.154 billion naira to this category brazenness.


Kerosine deserves a special mention

The nation sells kerosene (HHK) to marketers at N40.90 per litre . And because the refineries do not work well , we have to import the bulk of the kero we consume. Kerosne in the international market was well over N120 in 2011. The subsidy was supposedly retained because of the poor. Tell me something. PPPRA grants all allocation to import kerosene to NNPC who imports and hands over to PPMC its subsidiary to allocate to marketers at the rate of 40.90. The private depot owners pay ridiculous bribes and corner most the imported subsidized kerosene . Anyone who has a faint acquaintance with goings on in the downstream petroleum sector will tell you that the ministry of petroleum supervised the allocations which PPMC released.

Let’s bring some clarity into the equation. NNPC could import a ship load of kerosene which before it arrived the big man in the ministry of petroleum resources or the presidency had allocated through the PPMC to a friend or business partner who owns a tank farm. The favoured marketer / front for the politician , would pay about 1.2 billion naira for the kerosene and when he was done selling it at his depot , at the prices that prevailed then, he would reap a profit in excess of 2.4 billion naira. 200% profit, high volume goods. And all of these could take a week. And happen again and again.

It’s easy to see why the subsidy was for the rich and powerful. No poor man ever got kero at the approved prices. People raised money for elections through the subsidy scheme. And no wonder NNPC could go on importing without looking back. You can now understand why many made allegations as to who was the treasurer of the past regime.

But there was even more. Airplanes use Jet A1 which is not subsidized. JET A1 and HHK are all kerosines. So the HHK or household kerosene can be converted to JET A1. The truth is that some of the Kero imported into this country under the subsidy scheme leave the country back into the international market where it is cracked to JETA1 which major marketers bring back into the country to sell to airlines at international rates. Some of the major marketers were involved in this. The subsidy programme is unsustainable

So why would anyone keep the subsidy on petroleum? Your guess may be better than mine.

The EFCC And Police

The EFCC investigated the cases and is prosecuting some marketers. EFCC’s degree of accountability has been poor. Justice demands that like cases be treated alike. So why are some marketers asked to make refunds while others were charged? Who is making refunds? And what has been refunded?

Why have some marketers who claimed to have brought in products from mother vessels that have never existed according to the Lloyds intelligence list and as confirmed by the presidential committee not been prosecuted? Why?

Opacity helps no one. This was a major public scandal of immense proportions . The EFCC can only retain the confidence of the public if it is transparent and fair and if it carries the public along. Like cases must be treated alike , the law is no respecter of persons. Tongues have been wagging. Four years after, who has been convicted ? Who has had a plea bargain? What progress has been made with the cases in court. The public needs to know, needs to know every detail.

The EFCC is not to blame. What sort of signal does the federal government send to the prosecutors when it allowed indicted marketers to continue to participate in the scheme? When a person accused of stealing billions is awarded lucrative crude contracts while being prosecuted, the prosecuting agency must suffer discouragement.

The way forward

Fuel subsidy must be scrapped immediately. The Federal ministry of justice and EFCC must revisit all the files. Stolen billions must be recovered. Like cases must be treated alike. If the government is intent on pardoning some marketers then everybody must be pardoned. Otherwise everybody should be prosecuted. The managing directors of the bigger firms are not sacred cows. Officials of government agencies that exhibited gross incompetence and criminal collusion must face the law. The banks must not be spared. Their CEOs and directors can be named, shamed and made to face the law too. The marketers were not alone in this and could not have been alone. Justice must be done and be seen to have been done.


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