Govt spends N451b on fuel subsidy in six months
MEMBERS of the Senate panel probing the management of fuel subsidy regime yesterday sought explanations from the Finance Minister, Dr. Ngozi Okonjo-Iweala and the Nigerian National Petroleum Corporation (NNPC) on the secrete foreign account allegedly managed by the Corporation.
Okonjo-Iweala, who responded to other issues, disclosed that the Federal Government had paid N451 billion as fuel subsidy in the first half of this year.
The government also paid N1.7 trillion as subsidy arreas for 2011, bringing the total amount paid as subsidy this year alone to N2.19 trillion.
The minister, however, declined to speculate on the total amount the country would pay as subsidy by the end of the year, saying it was the Petroleum Products Pricing Regulatory Agency (PPPRA) that handles fuel allocation to marketers.
The Joint Committee comprising Petroleum Downstream, Appropriation and Finance Committees alleged that NNPC had been paying proceeds from the sale of crude first to JP Morgan account, which was opened and managed before the money is returned to the Federation Account.
The Magnus Abe-led Committee, which cited sections 80, 84 and 162, sub-section 1 of the 1999 Constitution as amended, which prohibits withdrawal of public funds without the approval of the National Assembly, maintained that the said account lacked legitimacy and should be closed.
The lawmakers stated that any amount due to the country should be paid directly to the Federation Account.
According to them, the NNPC does not have the mandate to withdraw public funds and remit whatever it considered appropriate to Federation Account at a later date.
Although the Minister of Petroleum Resources, Diezani Alison-Madueke was not at the session, the legitimacy of the account was sought from the Group Managing Director of NNPC, Mr. Andrew Yakubu. The committee also demanded identities of the signatories to the account.
Yakubu confirmed knowledge of the fact that the NNPC sells crude and pays the proceeds into an account managed by the Central Bank of Nigeria (CBN). His answer was faulted by the lawmakers, who insisted that CBN cannot manage such account.
The NNPC boss, who said he had spent 32 years in the system, rising to the office of Group Executive Director (Exploration) before his appointment as the corporation’s GMD, however insisted that the account was not managed by NNPC, adding that the CBN was a signatory to it.
Okonjo-Iweala, in her submission said she knew of the account but insisted that it was not maintained by the Finance Ministry.
“I know that since NNPC deals with the marketing of petroleum products, it has external account and I also know that it has an account with JP Morgan but I don’t have the details. I am not aware of that specific account.”
The minister explained that revenues of the government were generated by three main agencies including NNPC, Nigeria Customs Service (NCS) and Federal Inland Revenue Service (FIRS). According to her, there is an estimated amount expected to be remitted by the agencies on monthly basis.
“The Minister of Finance does not go abroad to collect money from the sale of crude on behalf of NNPC. We only cross-check to see that they remit exactly what they are expected to do; although, sometimes it could be less or more. And when the remittance is done, the states get their monies,” she said.
Okonjo-Iweala further said while she might have access to accounts within her jurisdiction in CBN, she cannot give details of JP Morgan’s account as she was not a signatory to it. However, the amount to be remitted is cross-checked through the quantity of crude exported “and that is how it was discovered that there was going to be 17 per cent shortfall this month due to oil theft and bunkering,” she stated.
According to her, proceeds could actually be paid directly to CBN but there was also need for commercial account, where dollars received from sales are changed to Nigeria’s naira account being remitted to the Federation Account.
“As long as the accurate amount is remitted, it is no longer an issue. The job of the Ministry of Finance is to ensure that there is a Federation Account into which all monies or revenues collected by the government agencies shall be paid,” she said.
The Accountant-General of the Federation, Mr. Otunla Jonah, who was also taken on the issue, said he was aware of the revenue account. He noted that generally, NNPC makes its remittance to the CBN, which in turn transfers the revenue to the office of the AGF.
The committee thereafter summoned the NNPC’s Executive Director (Finance) to appear before it as the hearing continues today.
Just like the Farouk Lawan report, the storm is gathering over the recent report released by the Technical Committee on Subsidy.
Some petroleum marketers alleged yesterday that the committee did not do a thorough investigation before writing its report.
The Chairman and Managing Director, Integrated Oil and Gas Limited, Captain Emmanuel Iheanacho yesterday picked hole in the report, which he said had erroneously presented his company as part of those who collected unmerited subsidy claims.
Iheanacho, whose company was cited thrice in the list of 88 firms that were paid subsidies without auditors’ signature said: “This allegation is sadly not correct… The refund was fully validated by signatures of three PPPRA checklists for import documentation, evidencing the submission of the 38 critical importation documents which are routinely required by the PPPRA in considering import documentations from marketers for the payment of PSF refunds.”
Oando Plc has also reacted to the report. In a statement signed by the Head, Corporate Communications, Meka Olowola, said the committee ought to have taken adequate steps to ensure the veracity of its report by listing all its queries and inviting the operators to defend themselves.
He said: “On the allegation of subsidies paid without auditor’s signature on shore tank receipt documents (10 transactions listed against Oando) - upon the arrival of vessels, government agencies including PPPRA auditors and the Department of Petroleum Resources (DPR), verify quantity on board as well as shore tank volumes prior to the commencement of receipt.”
SOURCE: Guardian 3 July 2012.
MEMBERS of the Senate panel probing the management of fuel subsidy regime yesterday sought explanations from the Finance Minister, Dr. Ngozi Okonjo-Iweala and the Nigerian National Petroleum Corporation (NNPC) on the secrete foreign account allegedly managed by the Corporation.
Okonjo-Iweala, who responded to other issues, disclosed that the Federal Government had paid N451 billion as fuel subsidy in the first half of this year.
The government also paid N1.7 trillion as subsidy arreas for 2011, bringing the total amount paid as subsidy this year alone to N2.19 trillion.
The minister, however, declined to speculate on the total amount the country would pay as subsidy by the end of the year, saying it was the Petroleum Products Pricing Regulatory Agency (PPPRA) that handles fuel allocation to marketers.
The Joint Committee comprising Petroleum Downstream, Appropriation and Finance Committees alleged that NNPC had been paying proceeds from the sale of crude first to JP Morgan account, which was opened and managed before the money is returned to the Federation Account.
The Magnus Abe-led Committee, which cited sections 80, 84 and 162, sub-section 1 of the 1999 Constitution as amended, which prohibits withdrawal of public funds without the approval of the National Assembly, maintained that the said account lacked legitimacy and should be closed.
The lawmakers stated that any amount due to the country should be paid directly to the Federation Account.
According to them, the NNPC does not have the mandate to withdraw public funds and remit whatever it considered appropriate to Federation Account at a later date.
Although the Minister of Petroleum Resources, Diezani Alison-Madueke was not at the session, the legitimacy of the account was sought from the Group Managing Director of NNPC, Mr. Andrew Yakubu. The committee also demanded identities of the signatories to the account.
Yakubu confirmed knowledge of the fact that the NNPC sells crude and pays the proceeds into an account managed by the Central Bank of Nigeria (CBN). His answer was faulted by the lawmakers, who insisted that CBN cannot manage such account.
The NNPC boss, who said he had spent 32 years in the system, rising to the office of Group Executive Director (Exploration) before his appointment as the corporation’s GMD, however insisted that the account was not managed by NNPC, adding that the CBN was a signatory to it.
Okonjo-Iweala, in her submission said she knew of the account but insisted that it was not maintained by the Finance Ministry.
“I know that since NNPC deals with the marketing of petroleum products, it has external account and I also know that it has an account with JP Morgan but I don’t have the details. I am not aware of that specific account.”
The minister explained that revenues of the government were generated by three main agencies including NNPC, Nigeria Customs Service (NCS) and Federal Inland Revenue Service (FIRS). According to her, there is an estimated amount expected to be remitted by the agencies on monthly basis.
“The Minister of Finance does not go abroad to collect money from the sale of crude on behalf of NNPC. We only cross-check to see that they remit exactly what they are expected to do; although, sometimes it could be less or more. And when the remittance is done, the states get their monies,” she said.
Okonjo-Iweala further said while she might have access to accounts within her jurisdiction in CBN, she cannot give details of JP Morgan’s account as she was not a signatory to it. However, the amount to be remitted is cross-checked through the quantity of crude exported “and that is how it was discovered that there was going to be 17 per cent shortfall this month due to oil theft and bunkering,” she stated.
According to her, proceeds could actually be paid directly to CBN but there was also need for commercial account, where dollars received from sales are changed to Nigeria’s naira account being remitted to the Federation Account.
“As long as the accurate amount is remitted, it is no longer an issue. The job of the Ministry of Finance is to ensure that there is a Federation Account into which all monies or revenues collected by the government agencies shall be paid,” she said.
The Accountant-General of the Federation, Mr. Otunla Jonah, who was also taken on the issue, said he was aware of the revenue account. He noted that generally, NNPC makes its remittance to the CBN, which in turn transfers the revenue to the office of the AGF.
The committee thereafter summoned the NNPC’s Executive Director (Finance) to appear before it as the hearing continues today.
Just like the Farouk Lawan report, the storm is gathering over the recent report released by the Technical Committee on Subsidy.
Some petroleum marketers alleged yesterday that the committee did not do a thorough investigation before writing its report.
The Chairman and Managing Director, Integrated Oil and Gas Limited, Captain Emmanuel Iheanacho yesterday picked hole in the report, which he said had erroneously presented his company as part of those who collected unmerited subsidy claims.
Iheanacho, whose company was cited thrice in the list of 88 firms that were paid subsidies without auditors’ signature said: “This allegation is sadly not correct… The refund was fully validated by signatures of three PPPRA checklists for import documentation, evidencing the submission of the 38 critical importation documents which are routinely required by the PPPRA in considering import documentations from marketers for the payment of PSF refunds.”
Oando Plc has also reacted to the report. In a statement signed by the Head, Corporate Communications, Meka Olowola, said the committee ought to have taken adequate steps to ensure the veracity of its report by listing all its queries and inviting the operators to defend themselves.
He said: “On the allegation of subsidies paid without auditor’s signature on shore tank receipt documents (10 transactions listed against Oando) - upon the arrival of vessels, government agencies including PPPRA auditors and the Department of Petroleum Resources (DPR), verify quantity on board as well as shore tank volumes prior to the commencement of receipt.”
SOURCE: Guardian 3 July 2012.
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