NNPC’s Can of Worms

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Farouk Lawal

  • How NNPC became Nigeria’s Palace of Corruption

  • House subsidy panel indicts NNPC management, board, seeks refund of missing N1 trillion

  • Committee recommends complete overhaul of NNPC

  • Waste Disposal Firm Got N1.9b Fuel Subsidy Payment

By OHIA ISRAEL

In January this year, Nigerians from all walks of life, came out to protest the removal of fuel subsidy and also queried as to why the Nigerian government refuses to prosecute those it called cabals in the nation’s oil sector. Soon after the protest by Nigerians which paralyzed activities both in the public and private sectors, the House of Representatives swung into action that resulted in the constitution of Hon. Faruk Lawan Adhoc committee on fuel subsidy to look into the subsidy regime. The long awaited report finally came out with shocking revelations of dirty deals and unmasking the ever Biggest Fraud in Nigerian history running into trillions of naira being expended and embezzled by some Nigerians.
It will be recalled that the House of Representatives Fuel Subsidy Probe Panel, Wednesday, submitted its report, and indicted 69 oil firms for flawed transactions and indebtedness to the tune of N229.706billion. In the report the Committee seeks for a “complete overhaul” of the Nigerian National Petroleum Corporation (NNPC) leadership and the refund of more than N1 trillion of fuel subsidies among far-reaching recommendations.
The report also indicted the corporation’s management and board, as well as those of the  Petroleum Product Pricing and Regulatory Agency (PPPRA), and recommends the prosecution of those found wanting for violations that cost the nation trillions of naira. The Farouk Lawan report also said the NNPC must be made to refund to the federal purse N705 billion; PPPRA N312 billion; fraudulent marketers who drew funding without importation, N8.7 billion; while companies that refused to appear during the investigations are to repay N41.9 billion.
“The committee believes that if the Petroleum Subsidy Fund had been properly managed, the sum of N1.07 trillion would have been available to the three tiers of government,” the report said. The abuses that led to the loss of that amount were laid at the doorsteps of the NNPC and the PPPRA, the two government institutions that have been repeatedly accused and indicted for corruption activities. The committee also unveiled two oil subsidy recovery sources by the Nigerian National Petroleum Corporation (NNPC) as well as contradictory accounts from the NNPC, PPPRA and Central Bank of Nigeria (CBN) on the actual amount that accrued during the period under review.
“NNPC had two sources of recovery of its subsidy viz (1) direct deductions from domestic crude receipts accruable to the federation (2) payment by CBN through deduction from distributable revenues as per the Federation Account Component Statement. “NNPC in its submission claimed to have earned N586bn as subsidy from the supply of 7,576,726,157 litres of PMS in 2011. However, by PPPRA’s presentation, NNPC was paid a subsidy of N667.553bn for supplying 5,470,007111 litres of PMS.
“By CBN’s presentation, NNPC was paid the sum of N844.944bn as subsidy in 2011. In addition to CBN’s payment of N844.944bn as represented on the Federation Account Component Statement, NNPC made a direct deduction of N847.942bn as subsidy in 2011, bringing all claims by NNPC on subsidy in 2011 to N1, 692.886trn.
“PPRA in its presentation to the House of Representatives had hinted that the noticeable upsurge in subsidy payment in 2011 was due not only to increase in subsidy per litre but also to the computed arrears due NNPC for HHK discharges.
“This was established from NNPC submissions to be N284.580bn. This payment of subsidy arrears on HHK was an illegality, having been proscribed by a presidential directive in 2009. NNPC was stopped from further collecting subsidy on HHK.
“The corporation abided by the presidential directive but unilaterally reversed the situation without any counter-directive or order from the President. It further recommended that the Office of the Accountant General of the Federation (OAGF) under the now governor of Gombe State, Dankwambo  should refund N213.678 billion excess payments made by it, above the Petroleum Products Pricing Regulating Agency (PPPRA’s) proof of payments in 2009. The OAGF should explain over payment of NNPC subsidy receipts to the tune of N146.746billion (2009), N421.197billion (2010) and N1, 025,353billion (2011).”
Among the notable Nigerians that were indicted are the Aviation Minister, Stella Oduah’s oil firm, SPG along with 68 others stolen over N241 billion of the fuel subsidy fund. Other also indicted include Ahmadu Ali, Aviation Minister, Mike Adenuga and former minister for Internal Affairs, Captain Ihenacho.
The Farouk Lawan committee in its report also informed the EFCC and ICPC alleging that 15 oil marketers received $402.2.610b as FOREX in 2010 and last year, but refused to import petroleum products. The panel said another set of 18 oil companies who benefited from the Fuel Subsidy Scheme but refused to appear before it will refund N41.936billion.
In the report are graphic details of the mismanagement of fuel subsidy and a recommendation that N1.070trillion be refunded. Other transactions anti-graft agencies should investigate, according to the panel, include: “payment of N999 million to unnamed entities 128 times to the tune of N127.872 billion. The report said: “The 72 companies listed under the financial forensics are hereby recommended for further investigation by relevant anti-corruption agencies, with a view to establishing their culpability and recovering the sums indicated against their names totaling N230, 184,605,691.00.”
In all, 15 Companies were listed in the report as those that obtained FOREX but did not import petroleum products. Those who collected in 2010 are: Business Ventures Nig Ltd ($22,927,339.96), East Horizon Gas Co. Ltd ($20,735,910.81), Emadeb Energy ($6,606,094.30), Poat Nig. Ltd ($3,147,956.19), Synopsis Enterprises ($51,449,977.47) and Zenon Petroleum & Gas Ltd ($232,975,385.13).
Those guilty of the same offence in 2011 are: Carnival Energy Oil Ltd ($51,089.57), Crownlines ($4,756,274.94), Ice Energy Petroleum Trading Ltd ($2,131,166.32), Index Petroleum Africa ($6,438,849.64), Ronad Oil & Gas W/A ($4,813,272.00),Serene Greenfield Ltd ($4,813,360.75), Supreme & Mitchelles ($16,947.000.00), Tridax Energy Ltd ($15,900,000.00) and Zamson Global Resources ($8,916,750.00). “Marketers who obtained FOREX but did not import petroleum products should be referred to the relevant anti-corruption agencies with a view to verifying what they used FOREX for,” the panel said.
The committee identified 18 oil marketers that will refund N41.936billion. It claimed that “the companies deliberately refused to appear because they had something to hide”.
The companies and the amount to be refunded are: Mut-Hass Petroleum (N1,102,084,041.30); Nepal Oil and Gas Service (N2,353,911,979.10); Oilbath Nigeria (N1,019,644,138.97); Techno Oil (N1,036,514, 387.08); Somerset Energy Services (N3,015,221,487.94); Stonebridge Oil (N1,784,158,258.14); Mobil Oil Nigeria (N14, 934, 371,661.76); AX Energy (N1,471,969,643.31) CAH Resources Association (N1,052,466,415.28); Crust Energy (N1,192,651,581.76); Fresh Synergy (N1, 417,029,059.70); Ibafon Oil (N4,687,730,540.46); Lottoj Oil and Gas (N1,427,429,910.95); Oakfield Synergy Network (N988,920,219.15); Petrotrade Energy (N1,471,027,874.73); Prudent Energy and Service (N1,360, 898,638.10); and Rocky Energy (N1,620,110,167.58). Sordid details of the multi-billion naira petrol subsidy bazaar continues to unfold as the panel as also said that a waste disposal firm got N1.9b subsidy for products it never supplied, according to the report of the House of Representatives Ad-Hoc Committee which probed the controversial subsidy.
However, the recommendations of the Farouk Lawan led adhoc panel on fuel subsidy have been adopted by the House of Representatives. The House will next forward the resolution, containing all the recommendations, to President Goodluck Jonathan for implementation and execution. The House considered 1 to 35 but recommended 30. There are 62 recommendations by the ad-hoc committee that probed the management of fuel subsidy in Nigeria.
The House adopted an amendment to recommendation 41 that Workers of the Federal Ministry of Finance, Office of the Director-General Budget, and the Office of the Accountant General of the Federation involved in the extra budgetary expenditure under the PSF Scheme (2009-2011) are to be investigated and prosecuted.
The House further ruled that although accounting firms, Akintola Williams Delliote & co and Olusola Adekanola and partners, have been blacklisted by the Finance ministry, government should prosecute them as they adopted recommendation 36. Also in the House of Reps Subsidy debate, Mrs Uche Ekwunife strongly argued that the Accountant General between 12th and 13th January 2009 (current Gombe State governor) who made an “irregular” payment of N999 million 128 times in 24 hours “did not breach any rule”!
However, Farouk Lawan explained that the payment of N999 million 128 times in 24 hours by the accountant general between 12th and 13th January 2009 is “irregular.”
He read a letter from CBN indicating the payments were made to PPPRA’s account and further paid to 52 companies.  He has letters from Ibrahim Dankwanbo, the then accountant general, who is now the governor of Gombe State saying the same thing.
Mr Lawan further proposed that the PPPRA, rather than the then Accountant General of the Federation, be investigated.  In the end, the House adopted Farouk Lawan’s amendments to recommendation 42 and ruled that PPPRA (not Mr Dankwanbo) should be investigated for the “irregular” payments by the accountant general in January 2009.
In the end the House adopted recommendation 43 requiring it to enact a unique law targeted at criminalizing extra-budgetary expenditure.
Meanwhile, civil Society organizations’ reaction to the Report of the House of Representatives Ad-hoc committee, which investigated the controversial subsidy on petroleum products in the country, have called on President Goodluck Jonathan to take action to sanitize the situation in the country.
At a press conference in Abuja, the United Action for Democracy (UAD) said that the revelations that emanated from the probe by the Representatives confirmed its position of and that of the masses of Nigeria that it was the corrupt enrichment of a minority and not the affordability of fuel for the vast majority of Nigerians that was being subsidized
The UAD therefore called for the prosecution of all individuals and corporate bodies found to have been the beneficiaries of the supposed ‘subsidy’.
“Further, we call for the immediate resignation or sacking of Dr. Ngozi Okonjo Iweala, Minister of Finance, Diezani Allison-Madueke, Minister of Petroleum, and Labaran Maku, the Minister of Information for their demonstrated culpability by acts of omission or commission in the fuel subsidy, the anti people hike in the price of petrol and the conscious promotion of lies to cover up the truth are both quite unfortunate,” the group said.
And in a press statement in Benin City, the Executive Director of Africa Network for Environment and Economic Justice (ANEEJ), Rev. David Ugolor, said the report of the committee further confirmed the rot and mindless corruption represented by the Ministry of Petroleum Resources. “It exposes the fact that the Minister of Petroleum Resources, Diezani Allison Madueke, has been presiding over sleaze and she has no option now but to take the path of honour,” he declared.
He said it ought to be clear to President Jonathan by now that he was misled on the issue of fuel subsidy removal on January 1, but that the people of Nigeria have now triumphed over the negative forces in government and Mr. Jonathan should demonstrate his commitment to fighting corruption in the sector. “He should get his anti-graft agencies to prosecute all those linked with this monumental fraud that led to the crisis of confidence between Nigerians and his administration,” he said. “He should be courageous enough to fire the Petroleum Minister so that Nigerians could be convinced that there are no sacred cows in his cabinet.”
“The January uprising was a popular upheaval of the poor and suffering Nigerians against the dire and worsening state of poverty, corruption and impunity in high places and disillusionment with the ruling elite in Nigeria which was ignited by the hike in fuel price,” the body said.  Despite the premature suspension of the general strike at its peak by the labour movement, which UAD considered to be unfortunate, it said the outcome was a partial victory and Nigerian people are victorious because they dared to struggle.

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