OIL SUBSIDY PROBE: Confusion over price of kerosene•NNPC says N50; PPMC, N75 - 110; PPPRA N130 - N131 •There’ll be fuel crisis soon if...

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OIL SUBSIDY PROBE: Confusion over price of kerosene•NNPC says N50; PPMC, N75 - 110; PPPRA N130 - N131 •There’ll be fuel crisis soon if... - PPPRA

Written by Jacob Segun Olatunji and Kolawole Daniel, Abuja Thursday, 09 February 2012

AS the House of Representatives ad hoc committee probing the subsidy regime adjourned sine die on Thursday, the Nigerian National Petroleum Corporation (NNPC), Petroleum Products Marketing Company (PPMC) and Petroleum Products Pricing Regulatory Agency (PPPRA) stunned the panel with conflicting prices of a litre of kerosene in the country.

Responding to a question posed by the panel about the actual cost of a litre of kerosene as currently being subsidised by the Federal Government, the Group Managing Director of the NNPC, Mr Austen Oniwon, claimed that the product cost N50 per litre. The Managing Director of PPMC, Mr Haruna Momoh, put the cost at between N75 and N110, while the Executive Secretary of the PPPRA quoted between N130 and N131 as the cost of the product per litre.

The panel frowned on the conflicting figures presented by the three agencies under the supervision of the Federal Ministry of Petroleum Resources, stressing that the heads of the agencies should have known better had it been they were committed to their duties.

The panel also frowned on the payment of unapproved subsidy on kerosene by the NNPC, saying that the excuse given by the GMD of the NNPC that the sickness of the late President Umaru Yar'Adua prevented the corporation from seeking official position of the government on the matter was not valid.

According to the panel, “the action of the NNPC without seeking official clarification or approval from the appropriate quarters on kerosene subsidy amounted to spending public money without authorisation, which will not be tolerated.”

The panel warned that it would take far-reaching measures to bring to book those who might have run foul of the law during the subsidy regime as it would not hesitate to recommend appropriate sanction to be taken by the judiciary and executive arms, while others would be taken by the legislators.

This is coming just as both the NNPC and PPPRA raised the alarm that there might be acute fuel shortage in the country soon, owing to the resolve by major oil marketers to stop importation of fuel due to the Federal Government's policy to phase out fuel subsidy regime.

The chairman of the panel, Honourable Farouk Lawan had posed a question to the NNPC GMD if there was any likelihood of fuel scarcity, with Mr Oniwon responding that, "definitely there is a lot of uncertainties in the sector, most players are wary to import the petroleum products to the country.”

According to him, “presently, NNPC has about 1.18 billion litres of PMS. We do hope within the next few days the situation will be clarified but from what we have, if status quo remains, we should be able to supply the products to Nigerian consumers for the next 33 days.”

On his part, the PPPRA boss said, "at the beginning of this hearing we had said that we would experience supply shock, because without the banks giving the oil importers credit line they will not be able to import the products.”
But the chairman of the panel appealed to the importers for caution, saying, "something will be paid as subsidy. Naturally, government will have to bear the difference in the oil price that should not be a matter of concern to the importers, since government has not completely removed the subsidy".

In a related development, the panel frowned on the inability of the Accountant General of the Federation, Mr Jonah Otunla, the Central Bank of Nigeria (CBN), PPPRA and NNPC to give the nation the actual amount paid to oil marketers as subsidy, saying that it was disheartening as all the agencies were giving conflicting figures on the payments while the importers also gave conflicting figures on payments and outstanding debts.

While the AGF’s office said that the subsidy payment was N1.3 trillion, both the NNPC and PPPRA gave N1.3 trillion as the figure and the CBN put its figure at N1.76 trillion for 2011 alone.

This is coming just as the panel displayed a document allegedly obtained from the Accountant-General of Liberia showing that NNPC supplied excess barrels of crude oil to the country.

The document read out by Honourable James Faleke claimed that the Liberian government had asked for supply of 10,000 barrels of crude oil but the NNPC, through Adax Petroleum, supplied one million barrels of crude and that the excess was yet to be returned to the Nigerian government.

Mr Oniwon said, "yes, but this has nothing to do with subsidy" and the panel kept mute.

Also on Thursday, the panel frowned on the manner in which PPPRA gave permits for petroleum products importations into the country to unserious oil marketers who were given five allocation slots but could only meet one and still the agency went ahead to be patronising them at the expense of serious importers.

According to the panel, the allocation of permits to importers for importation of products was more of a bazaar, querying why permits would be issued to companies that could not meet their responsibilities at the expense of efficient companies.

On the N46 billion debt being owed Nigeria Customs Service by the NNPC, the panel gave the corporation one week within which to pay and report back to the Customs, because the money belongs to the Federation Account.