KOLAWOLE DANIEL highlights some of the revelations at the on-going sitting of the House of Representatives panel probing fuel subsidy regime, submitting that Nigerians are expecting nothing short of good results from the panel’s investigation.

THE ongoing probe by the House of Representatives on subsidy regime in the country has further exposed the rot in the nation’s oil sector, coupled with the conflicting facts and figures being churned out on a daily basis by those who ought to know better. Noteworthy are the submissions of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke; Central Bank of Nigeria (CBN) governor, Mallam Sanusi Lamido Sanusi; chairman of Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mr. Elias Mbam; the Nigeria Extractive Industries Transparency Initiative (NEITI) and other stakeholders in the sector which confirmed the sorry state of the nation’s most-priced resources sector.

Though the Coordinating Minister of Economy and Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala, had claimed before the panel that the government had paid the sum of N1.4 trillion on fuel subsidy in 2011, the CBN governor, on his part, claimed that the subsidy on fuel had hit N1.7 trillion, while the committee of the House probing the subsidy regime also maintained that from documents at its disposal, the amount of money to be paid on fuel subsidy might hit N2 trillion.

Submissions by those who appeared before the panel, both from the private sector and government circle, especially those importers who were the beneficiary of the subsidy fund, exposed the Nigeria National Petroleum Corporation (NNPC), Petroleum Product Pricing Regulatory Agency (PPPRA) and other agencies connected with the subsidy regime. To make the matter worse, the Independent Petroleum Marketers Association of Nigeria (IPMAN) told the panel how the agencies connected with the fuel subsidy regime had been awarding fuel importation contracts to “briefcase importers” and as a result, contributed to the abuse of the subsidy regime in the downstream sector of the petroleum industry.

IPMAN president, Alhaji Aminu Abdulkadir, while testifying before the panel, noted that such importers neither had retail outlets nor storage facilities. Yet; they enjoyed favourable patronage from the NNPC and PPPRA, questioning further that “you don’t have retail outlets, you don’t have storage facilities, but you get contracts to import fuel; where does the fuel go to after the subsidy has been paid?” he stressed that there were instances were major marketers and the association’s members who met the requirements for the award of contracts were sidelined in favour of the briefcase contractors.

Abdulkadir recalled that in 2011, IPMAN got less than one per cent of the fuel importation contracts, compared to the “huge number of retail outlets and storage facilities that we have” and described the case of kerosene as being the worst as third-party contractors were allegedly favoured to import the product only to resell to “the real marketers who have retail outlets.”

To this end, IPMAN called on the Federal Government to take the bold step of removing the briefcase contractors from the system and ensure that regulatory agencies did not provide a platform that encouraged cutting of corners.

He equally maintained that, the money being spent on subsidy yearly could have been used to build new refineries so that the country could go beyond refining for local consumption to exporting refined products.

Addressing the panel, the managing director of the Nigerian Ports Authority (NPA), Mr. Omar Suleiman, disclosed that the NNPC was owning the authority about N6 billion, being cost of landing and clearing products from its ports located in Apapa Port complex, Port Harcourt, and the Delta ports of Warri, Koko, Sapele, Alajda Steel Jetty and the crude oil terminals of Escravos, Forcados and Pennington, as well as Calabar ports.

The NPA boss was represented by the Acting Executive Director, Marine Operations, Mr. Sotone Ineiyenge-Etomi, who claimed that the NPA had nothing to do with fuel subsidy, but had granted waivers to the NNPC to the tune of N1.77 billion and $135.39 million between July 2009 till date on the orders of the Federal Government, while the corporation was owing NPA about N6 billion.

The Indigenous Ship Owners Association of Nigeria (ISOAN), while appearing before the panel, also alleged that the country lost about N45 trillion annually due to the preferences given to foreign ship owners over the indigenous owners. ISOAN Chairman, Chief Isaac Jolapamo, also accused the NNPC of deliberately sidelining Nigerian ship owners from lifting fuel both locally and internationally, during the fuel subsidy regime.

He maintained that the NNPC set unnecessary bulwarks that made it impossible for Nigerian vessels to take part in the lifting of oil that were either imported or locally sourced “because once you fly the Nigerian flag, then you are not good enough. No Nigerian ship was used throughout the subsidy regime, except a handful of vessels used by the foreign ships that brought in the fuel and this has further short-changed Nigeria as we lose as much as N3.7trillion monthly in freight or shipping costs that Nigeria should be earning.”

Chief Jolapamo noted that despite the existence of the Cabotage Law in Nigeria, foreign ship owners were still consulted before Nigerian ship owners that the law was crafted for, saying, ”if you look at Section 33 Sub Section 1 of the Cabotage Act, Nigerian shippers have the exclusive right to the shipment of local government, state and federal government’s freight, both for exports and imports, and Section 37 further amplifies it, stating that it includes bulk, dry and liquid cargo.”

According to him, “we have 100 per cent capacity to perform as there are more than 250 ships owned by Nigerians and we are easily disqualified, not based on the issue of decertification, but because our only crime is that we fly the Nigerian flag. Today, despite our 100 per cent capacity, we are doing less than 20 per cent and NNPC has not really done well because suddenly, it changed its biding methods from international standard to a bogus standard to reflect special interests.”

While accusing the NNPC of engaging in shady deals with foreign ship owners, the ISOAN chairman alleged that the corporation’s pre-qualification process was deliberately skewed to exclude local ship owners.

He, however, denied insinuations that lack of adequate insurance coverage was responsible for the exclusion of Nigerian vessels from petroleum products importation, insisting that local ship owners had sound insurance coverage.

Making presentation before the committee, the Group Chief Executive Officer, Oando Plc, Mr. Wale Tinubu, said that “it is inappropriate to consider the subsidy paid on imported products as a favour done to the marketers by the government,” noting that marketers, like Oando, were not “beneficiaries” of subsidy, but were being paid for legitimate transactions they were engaged to do. According to him, the marketers were spending an average of $30 million to import a 30,000-metric tonne vessel of petrol and selling the products for about $15 million, the balance was being paid to the marketers as subsidy.

He added that, “the Petroleum Support Fund expected that there would be under-recovery. For example, when the landing cost was higher than the pump price, the government will owe us money, which is paid as subsidy.

“When there is over-recovery, that is, when the landing cost is less than the pump price, we pay back to the government. For example, during the (late President Umaru) Yar’Adua-led administration, when petrol price was N65 and the crude oil price dropped to $50 per barrel, the marketers paid back to the fund. I remember that Oando paid back N1.6 billion to the Federal Government.”

Appearing before the panel, Lagos-based human rights lawyer, Mr. Femi Falana, alleged that fuel subsidy administration in the country was a package of fraud designed to deceive the government and the public, declaring that the evidence of all the departments of government before the committee, including the NNPC, PPPRA, CBN, ministries of finance and petroleum resources, among others, had established “a clear case of institutionalised corruption” in the oil sector.

In his words, “otherwise, how could a Federal Ministry of Finance be restraining the Customs Service from checking the documentations of vessels bringing fuel into the country? How could a Federal Ministry of Finance give a figure of N1.3 trillion, while the Central Bank of Nigeria has paid N1.7 trillion in 2011? Why did the Ministry of Petroleum Resources disregard the presidential directive stopping subsidy from Kerosene? Why did the PPPRA allow the NNPC to usurp its statutory functions? Why is PPPRA promoting smuggling by importing 59 million litres of PMS when the local consumption is not more than 35 million litres per day?”

Speaking further, he said “both the Federal Ministry of Finance and the CBN ought to have questioned the astronomical rise of fuel subsidy from N623 billion in 2010 to N1.7 trillion in 2011,” maintaining that it was disheartening that having abdicated their statutory duties, both the Federal Ministry of Finance and CBN engaged in the misconceived campaign for the removal of fuel subsidy when they ought to have known that the so-called subsidy was a package of fraud.

He said despite that the nation’s crude oil was being refined at the neighbouring countries and brought back into the country, the nation was being made to pay huge subsidy to importers. To this end, he advised that as a matter of urgency, the Federal Government should demand for refund of the huge subsidy paid to importers by both the NNPC and PPPRA, while all outstanding payments for subsidy should be stopped forthwith.

In addition, he said since there was a presidential directive that there should be no more subsidy on kerosene since June 2009, the Federal Government should seek for refund N300 million illegally collected on kerosene subsidy in 2011, while the agencies should also be directed to pay a sum of N821 million collected on behalf of the Federal Road Maintenance Agency (FERMA) currently domiciled in two different accounts of the CBN.

While commending the House for setting up the panel he, however, said that, “if we can get it right this time around, we are going to have more money for development because many Nigerians are cynical of probes conducted by the National Assembly; most of the recommendations never see the light of the day.

“This is not unconnected with the fact that the recommendations of the reports of other probes in the past were not implemented. Reports of other probes did not even see the light of the day. But I decided to submit a memorandum to this committee based on my implicit confidence in the leadership of the House, coupled with the belief that the report of this committee will not be swept under the carpet.”

Also, the immediate past executive secretary of PPPRA, Mr. Goddy Ogbuji, who was summoned by the committee to clear grey areas in the presentations of government agencies and marketers, said some of the oil importers who appeared before the panel as saints were failure as some of them normally failed to meet their obligations at times when granted permit to import fuel.

He said this was why, during his tenure, he had to increase the number of companies involved in importation of petroleum products from 51 to 110 as the existing companies were in capable of efficient services needed in the sector.

He told the panel that on assumption of office in February 2011, the board of PPPRA had reached an agreement to increase profit margin to oil marketers and because of its financial implication, he had to alert the Federal Government to what was going on, but was told that government was not interested in correcting any anomalies in the sector, but rather in effecting full deregulation.

He said the attempt by the Federal Government to deregulate the sector in April 2011 was halted because of the general elections and unfavourable security reports which warned that there would be crisis in the country, if the policy was implemented, while another failed attempts was made in October, before it was removed on January 1, 2012.

However, an area where the House committee seems to be encountering problem is the refusal of managing directors and chief executives of major oil marketers to personally appear before the probe panel.

The development might not be unconnected with the suspicion that the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) officials had been attending the proceedings of the hearing.
The adhoc committee chairman, Honourable farouk Lawan has to issue a directive last week that it is mandatory for the chief executives of the major oil companies appear before the committees, rather than sending their cronies.

Not a few Nigerians are happy with the turn of events over the public hearing, particularly with regard to the involvement of the antigraft agencies.

The development has given hope that this time, it appears that government would make errant people pay for their sins so as to serve as deterrent to others and sanitise the oil and gas sector.

Though the panel has yet to conclude the probe of subsidy regime, with the gory revelations, the information at the disposal of the Nigerian public and the involvement of the EFCC and ICPC, it will be foolhardy for the committee to come up with recommendations that fall short of their expectations.