Nigerians are really working hard to tackle corruption that is wrecking the country's economy for decades due to the prodigal greed and kleptomaniac propensity of their politicians. A group called For a Corruption-Free Nigeria! has made a post on Facebook exposing some of the alarming acts of corruption being perpetrated by government officers in Nigeria in the name of fuel subsidy. Below is an excerpt from the post. Read it, share it, and follow the group on Facebook. Together we can root out corruption in Nigerian polity:
PPPRA Executive Secretary Reginald Stanley said the payment and smuggling have been going on since 2006.
According to the agency’s figures, while Nigeria imports 59 million litres of fuel on a daily basis, only 35 million litres are consumed in the country.
Stanley said Nigeria pays subsidy on the 59 million litres imported on a daily basis.
According to him, until he assumed office, the system in place at the agency paid for all the fuel discharged. He said the discharged fuel from vessels and the volume consumed are two different things, because the country paid for the bulk.
“In the past, what was discharged was what was paid for. That is what I met on the ground,” Stanley said.
The PPPRA chief said the practice would soon end as he promised to introduce what he called “triple two system”. This, he said, would assist in tracking the volume of fuel consumed in Nigeria.
Stanley said the figures of consumed PMS since the beginning of the subsidy were arrived at through two different approaches of the actual or the Gross Domestic Product (GDP) growth.
He said: “In 2007, our GDP growth was 6.4. That was statistically sound, while in actual fact, what was recorded as our consumption on PMS was 26million litres per day as against 27million litres per day. The variance was very minimal.
“For 2011, the figure quoted 35million litres per day, while the GDP growth rate put it at 36.3million litres per day. So, the variance was also minimal. The projection for 2012 is 39.2 million litres per day. These figures cannot be faulted.
“Even if our GDP growth is driven by high crude prices, it means there will be more revenue for government to power its activities of infrastructural development and more macro-economic activities in the land.
“The apparent confusion was between what stock and consumption is. But based on what we have done, I think there is not much difference of opinion on the actual consumption vis-à-vis the stock. This is why we are advocating strategic stock, in case of supply shock in the event of glut.”
The PPPRA chief said he appointed an independent inspector, based on his experience in the oil sector, adding that there was no need for the Customs to verify the volume of imported fuel since no payment of duty is made on petroleum products.
Lawan bemoaned a situation whereby the consumption level of the country is known but certain people still import extra and pay subsidy on it. This is criminal, the lawmaker said.
He added: “Taking 2011, for instance, per day discharge was 59million litres and, consumption, from what was presented to us here, was an average of 35million litres per day. What that means is that there is a gap of 24 million litres per day being funded by Nigerians as subsidy that was not utilised by them.
“This, of course, amounts to overpayment; or, in order words, sharp practices, while we are paying for 59million litres per day instead of 35million litres per day. Someone, somehow, is being short-changed. That is, Nigerians, by 24million litres per day.
“The second implication of this is that smuggling is being encouraged by the system because if local consumption is 35million litres per day and we are paying for 59million litres per day, it means we are making available 24million litres per day for importers to smuggle out, because it cannot be consumed and this is on a daily basis for 365 days in a year.
“Moreover, it was being stated that we do not have enough storage capacity for this unaccounted for fuel that could possibly be used at the end of the year.”
NNPC Group Managing Director Austin Oniwon said at no time did he illegally take money out of the Federation Account for subsidy payment.
He said: “Let me put it on records that I have never taken money from the Federation Account. The same way this Act allows the NNPC to deduct cash call before the balance is paid into the Federation account, is the same way the Bill allows the NNPC to deduct subsidy before the balance is paid into the Federation Account.
“If we are not quarrelling about deductions of cash calls, which is allowed by the same law, I am always at a loss when I am being accused that I am touching the Federation Account.
“We don’t take money from the Federation Account. We take as provided for by the law. But the adequacy or inadequacy of what was provided for is a question I believe the Ministry of Finance will be able to talk about.
“So, I do not touch the Federation Account, I do not intend to touch the Federation Account and in a totally deregulated environment without subsidy, nobody would have any recourse to deduct anything at all.
“I only deduct what is authorised by PPPRA. Once they give me the certificate, after checking with all authorised inspectors and auditors, it is that value that constitutes what is deducted as per the Appropriation Act.
“I don’t go outside that. So, it is not for me to determine what is deducted from the crude’s value. Before I deduct, I write to the Minister of Finance that the PPPRA has approved it for me.
“That is the procedure I have been using and I believe that it is the same my predecessors used. I hope that everybody would join hands to ensure that we move towards a fully deregulated environment where subsidy is placed on production rather than consumption.”
On the differential between N360billion against N630billion claim as subsidy for 2008, Oniwon argued that NNPC at no time provided information to the Nigerian Extractive Transparency Initiative (NEITI) on its operation.
He said: “For NEITI, I don’t know how they arrived at that calculation. I have not communicated to NEITI; I never knew where the body got that figure from. I only heard the figure for the first time. We have that document for N630 billion. The N1.348 trillion was the reconciled figure between NNPC, PPPRA and Ministry of Finance.
He added that the corporation recovered N15 billion from oil marketers when the price of crude oil nosedived and the demurrage cost was built into the subsidy.
According to him, the amount paid as subsidy include the cost of five days demurrage and other cost elements on imported fuel based on the approval of the PPPRA Board.
Oniwon said: “It was the arrears of N250 billion for kerosene that was responsible. In the component of N1.3trillion that was presented, N250billion of that was for kerosene and there was kerosene arrears paid at different points, not stated in that document with you. The N1.09trillion was for PMS for the period under review, that is, 2011.
“Nigeria was declared a war zone by other exporting countries that forced vessels to pay high premium on insurance as well as on the vessels too. Secondly, the exchange rate to the dollar, whereby we buy in dollar and sell in Naira.”
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Petrol Import Fraudsters Received N669bn Subsidy Last Year - thisday
Six hundred and sixty-nine billion, eighty-eight million naira was paid out last year by the Petroleum Products Pricing and Regulatory Agency (PPPRA) to petrol import fraudsters.
The 8.7 billion litres or 24 million litres per day is the cumulative quantity of petrol that exceeds the 35 million litres that Nigeria consumes on a daily basis. This can be attributed to over-invoicing, false import claims and other tactics that the fraudsters employ to benefit from the subsidy regime.
In other words, while the country consumed 35 million litres every day that attracted N76.38 subsidy per litre, the fraudsters claimed they brought in 59 million litres daily through sharp practices.
The revelation on the products lost to the fraudsters came on Wednesday as the PPPRA gave its testimony before the House of Representatives Ad hoc Committee on Monitoring of the Subsidy Regime.
The agency further explained that under the subsidy regime, 59 million litres of petrol were imported and discharged at the ports daily as against the country's average local consumption of 35 million litres per day. The practice leaves a huge gap of 24 million litres of subsidised fuel unaccounted for in the country.
Executive Secretary, PPPRA, Mr. Reginald Stanley, who made this disclosure under cross- examination by the probe panel, said the loophole was exploited by some marketers because of the challenges at the ports.
He also said the challenges made it difficult for ocean going vessels conveying imported products to berth and the marketers had to resort to using smaller vessels to discharge the products to the designated depots.
Chairman of the House Ad hoc Committee, Hon. Farouk Lawan, had accused the PPPRA of creating an environment suitable for the marketers to divert subsidised products outside Nigeria.
Lawan said the agency was granting import approvals to firms who bring in products far in excess to the available storage capacity in Nigeria.
The lawmaker said the losses were compounded by the practice of the PPPRA in computing subsidy payments due to fuel importers based on the amount of products they claim to have imported rather than on the quantity they actually supplied to the Nigerian market.
Stanley, however, explained that the gap between the quantum of products imported and the actual daily consumption was not a deliberate attempt to aid product diversion by marketers.
The international practice, he said, was to calculate a country's average daily consumption using its Gross Domestic Product (GDP), which he said is the universal guide to the economic well being of any country.
He disclosed that Nigeria’s average daily petrol consumption is projected to hit 39.2 million litres in the current year because of the expected growth in the country's GDP.
In a bid to redress the lapses associated with the subsidy regime, the PPPRA boss said a firm of international auditors had been engaged to monitor fuel importation and ensure that subsidy was paid strictly on products that were trucked from importers' storage facilities and introduced into the market for local consumption.
According to him, the new system which was introduced on January 1, this year, had been in practice in Ghana, Benin and Togo.
But the Nigerian National Petroleum Corporation (NNPC) has unveiled plans to remedy the situation by fixing the local refineries to reduce the country's over-dependence on imported products.
Under the new action plan, the corporation said the three refineries in the country – Port Harcourt, Warri and Kaduna - would undergo a staggered comprehensive Turn Around Maintenance (TAM) over the next 24 months to bring each of them back to 90 per cent capacity utilisation.
Group Managing Director of the NNPC, Mr. Austin Oniwon, who made the disclosure at the hearing, exonerated his organisation from any lapses in the administration of the subsidy regime.
Oniwon said the NNPC does not approve fuel import licences and does not determine the amount of subsidy paid to any marketer, adding that the corporation was only one of the fuel importers.
He disclosed that much of the problems would be reduced when the three local refineries are brought back on stream.
According to him, the planned TAM would commence with the Port Harcourt refinery which is expected to be re-commissioned in December this year. The rehabilitation of the Kaduna refinery, he said, would commence in January 2013, while the rehabilitation of the Warri refinery is expected to be completed by December 2013.
Oniwon also explained that subsidy claims in recent times progressively increased due mainly to the increase in price of crude in the international market. He also said that the corporation does not enjoy any form of discount in crude oil sold to it for local refining.
He described the incessant incidence of pipeline vandalism as a major threat to the comprehensive capacity utilisation of the nation’s refineries.
He appealed to the National Assembly to collaborate with the corporation in curbing the “heinous” crime and described pipeline vandalism as a strong disincentive to new investments in refineries.
“The regular incidence of pipeline vandalism across the country has hampered the efficient distribution of petroleum products. In December 2011, we had to shut down the Port Harcourt refinery because the pipeline supplying crude to the refinery was severely vandalised,”
Oniwon said.
The NNPC boss said if the pipelines were made to work, the bridging cost of N5.80k would not be borne by Nigerians and would go a long way in revamping the Pipeline Product Marketing Company (PPMC) depots across the country.
He disclosed that the final investment decision on the proposed three Greenfield Refinery in Lagos, Bayelsa and Kogi State would soon be reached, adding that this would make Nigeria self sufficient in refined petroleum products like other member countries of the Organisation of Petroleum Exporting Countries (OPEC).
On the TAM of the three local refineries located in Port Harcourt, Warri and Kaduna, Oniwon stated that the contracts would be awarded to the original builders of the refineries and upon completion, the plants would achieve 90 per cent capacity utilisation.
He disclosed that the final investment decision on the proposed three Greenfield Refinery in Lagos, Bayelsa and Kogi State would soon be reached, adding that this would make Nigeria self sufficient in refined petroleum products like other member countries of the Organisation of Petroleum Exporting Countries (OPEC).
On the TAM of the three local refineries located in Port Harcourt, Warri and Kaduna, Oniwon stated that the contracts would be awarded to the original builders of the refineries and upon completion, the plants would achieve 90 per cent capacity utilisation.
