Nigerian Senate is seeking explanations from Ibe Kachikwu, Minister of State for Petroleum Resources and Maikanti Baru, Group Managing Director, Nigerian National Petroleum Corporation, NNPC on how government got into implementing and payment of petrol subsidy through the back door. President Buhari’s government, May 2016, removed petrol subsidy. The policy moved petrol pump price from N90 per litre to N145 per litre.
Ibe Kachikwu, Maikanti Baru and top officials in the oil and gas sector have been invited by the Senate for further investigation. Nigerian House of Representatives, towing the same line, summoned Ibe Kachikwu, Maikanti Baru, as well as Abdulkadir Saidu Umar, Executive Director of Petroleum Products Pricing Regulatory Agency, PPRA, to provide further insight into the payment of petro subsidy.
On the platform of the 15th Joint Planning Board and National Council on Development, in Kano, Thursday, August 25, 2016, Vice President Yemi Osinbajo disclosed that government has saved N1.4 trillion from the discontinuation of Petroleum subsidy. “With the deregulation of the downstream petroleum sector, there has been a significant increase in the availability of petrol throughout the country, plus the savings of N1.4 trillion on subsidy payments alone”, Osinbajo said.
During “on the spot check” on fuel situation which plagued the country during Yuletide period, with visits to Petroleum Deports of Total and Oando in Apapa, Lagos, Monday, December 25, 2017, Yemi Osinbajo in company of Ibe Kachikwu revealed that NNPC, and not the federal government pays the fuel subsidy that emerged from N171 per litre landing cost of petro, against official retail pump price of N145 per litre.
Osinbajo told journalists: “NNPC is trading in fuel; the federal government is not, at the moment, paying for any subsidy. NNPC is trading. If you are buying and selling fuel, you would have to be able to pay for it. So, it’s not a question of government provision for subsidy. The federal government, at the moment, isn’t paying any subsidy”.
“And don’t forget that the way that the NNPC trade is that, in many cases, NNPC is actually giving fuel; there is 445,000 barrels of fuel. So really what you are seeing, in many cases is more or less an exchange of PMS. So at the moment, NNPC is paying the cost”, the Vice President added.
Osinbajo’s public admission that Buhari’s government has been involved in petrol subsidy payment elicited public reactions and comments. Nigerian Senate responded by setting up an Adhoc Committee led by Senator Kabiru Maraga on Downstream Petroleum Sector, to investigate the premium motor spirit, pms, crisis across the country, and the claimed subsidy payment by government.
The Senate is asking some questions. Who approved the implementation of petroleum subsidy? What budget provision was made for petroleum subsidy implementation? Could it not amount to NNPC paying itself petroleum subsidy, being the sole importer of refined petroleum product at the moment? Could what is being carried out by NNPC in the name of subsidy not amount to brazen act of corruption?
At the Senate Committee’s investigation, January 4, Kachikwu and Baru told the committee that landing cost of petrol is N171 per litre, at the same time; petrol is being sold at official pump price of N145 per litre. Both officials stated that the difference of N26 per litre is being paid by government as subsidy. They did not give details of who authorized the payment of subsidy and how much is involved in the payments.
When the Senate debated the report submitted by the committee, Wednesday, January 17, it said the report was not a true representation of “its integrity”. The Senators said failure of Kabiru Marafa’s Committee to investigate and expose the new wave of subsidy imposed by the federal government, despite absence of approval by the National Assembly to that effect was unacceptable.
Kabiru Marafa’s Committee had, curiously, left out subsidy implementation and payment out of the committee’s report. The Senate requested the Committee on Petroleum Resources Downstream to go back and do a more through investigation on the actual volume of petrol imported into the country as well as issues leading to the scarcity and subsidy payment.
The Committee’s Report, which is now subject to review, stated that Nigeria lost a total of N784 billion to what it described as “fraudulent practices in the import of fuel in 2017 alone”. It said total surplus in the volume of petrol imported in 2017 by NNPC and the marketers was 5.9 billion litres. When multiplied by N133 landing cost, amount to N784 billion.
The report noted that shortages in the volume of fuel claimed to have been supplied by the NNPC and the marketers were major factors that caused the scarcity of fuel.
According to the report, “marketers received from government about N1, 669,180,182 at CBN rate of N305 to a dollar to import PMS between January and August 2017. The committee stated that marketers ought to bring into the country about 3.8 billion litres of PMS at a landing cost of N133. Marketers supplies were should have served the country for about 109 days at 35 million litres daily in 2017.