NNPC’s petrol subsidy claims mirrors 2011 fraudulent regime


March 13, 2018 | 1:30 am
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In more ways than one, it is looking like 2011 all over again for Nigeria.
In 2011 fraudulent oil marketers were submitting invoices for petrol laded vessels that arrived but did not discharge products as they were diverted and sold outside Nigeria and consumption is said to have jumped to 35million litres from about 20 -28m per day.
Today, NNPC is the sole importer of fuel at a time when the pump price has risen to N145 from N86 per litre (which should discourage consumption), the country has is just recovering from a recession and purchasing power of Nigerians is abysmally low, yet the corporation claims it is importing between 50m and 80m litres per day.
As a result of a fraudulent fuel subsidy regime of 2011, Nigeria lost over N2trillion to false claims by oil marketers in active collusion with state-owned oil firm.
On an estimated50million litres per day with the landing cost of petrol now above N171 per litre, it leaves a difference of N26 and when compared to the regulated price of N145, amounting to a daily monthly subsidy of N24bn.
“NNPC is concerned that continued cross-border smuggling of petrol will deny Nigerians the benefit of the Federal Government’s benevolence of keeping a fixed retail price of N145 per litre despite the increase in PMS open market price above N171 per litre,’’ Maikanti Baru, NNPC GMD told Hameed Ali, the Comptroller General of the Nigerian Customs Service.
However the claim that proliferation of fuel stations in communities with international land and coastal borders across the country, is leading to the cross-border smuggling of petrol to neighboring countries of up 15m litres a day flies in the face of reason.
In 2010, Muhammed Barkindo, then NNPC GMD approved the purchase and deployment of ultra-modern vessel tracking devises to enable the NNPC War Room maintain an unimpeded tracking of ships and ocean liners conveying petroleum products to Nigeria. The Petroleum Equalisation Fund (PEF) also claims it has computerised systems for monitoring product supply across the country on its Aquila Platform.
It is therefore strange that Baru told a recent senate investigative panel that in December, it could not track the movement of 148,533,000 million litres of fuel, saying it had been diverted.
NNPC has insulated itself from public scrutiny claiming a freedom of information request does not apply it.
“We regret to inform you that the NNPC is not in a position to provide any information or document as your request is incongruous with, unsupported by or outside the scope and purview of the Freedom of Information Act,” Sarah Ndukwu general manager, Litigation, Arbitration and Property Law Development, of NNPC wrote in response to an FO1 request by Human rights lawyer, Femi Falana.
“Be informed that the FOI Act is not applicable to the NNPC because it is not a public institution within the meaning of Section 31 of FOIA.”
But the corporation manages the assets of the three tiers of government hence it’s inefficiency in part accounts for the state and local governments inability to pay public servant and leads to regressive polices like Lagos State’s land use charge, analysts say.
“It is also worthy to note that the NNPC does not subject its budgets to the National Assembly for appropriation as stipulated by the Constitution and the Fiscal Responsibility Act,” Femi Falana said last year.
Analysts also doubt NNPC’s claims because with storage capacity of only 54 percent of its regular 35m imports, NNPC relies on private depots and does not have the capacity to retain 80m litres daily or distribute the product nationwide with only 1,733 trucks conveying about 30,000 litres of petrol.
NNPC pays between N2-N4 per litre for storage of its products in private depots and a claim of storing a phantom 80m litres could be a windfall mirroring the 2011 scam.
Adeola Adenikiju, director, Centre for Petroleum and Energy, University of Ibadan said, “The issues of subsidy is a major problem since NNPC is the only importer, so when they sell their crude they also buy products which they sell at a loss in the open market, this is why the inefficiency of NNPC is very high.”
With landing cost of petrol put at N171 per litre, NNPC incurred N37 on each litre of fuel at a depot price of N133.80, leading to a daily subsidy of N2.9billion for 80million litres in December.
The landing cost of petrol has been higher than N145, after crude oil prices rose to $45 per barrel in January 2017. This puts total subsidy spends since February 2017 to date at over N746.79billion. There is no better manual on how to self-destruct an economy.





March 13, 2018 | 1:30 am
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