Senate, unending subsidy probe


Until the administration of former President Olusegun Obasanjo came into power in 1999, the phrase, fuel subsidy appears alien to Nigerians. Obasanjo introduced subsidy regime when he jerked up the prices of Premium Motor Spirit (PMS) in October, 2003.

Since then, it has been from one controversy to another. The Nigerian National Petroleum Corporation (NNPC), appears to be the big octopus, always at the centre of what has been termed “subsidygate.”

Nigerians did not pay any serious attention to alleged sharp practices in the administration of the subsidy until early 2012 when the 7th National Assembly, particularly, the House of Representatives, conducted the first public hearing on the administration of fuel subsidy in the country.

Six years after the widely-publicised probe, questions are still being asked if the outcome yielded any tangible results. After all, the man who was the moderator of the probe, later got his fingers burnt, when he was accused of allegedly soliciting for bribes from one of the major oil marketers. Today, the former member of the House of Representatives is still facing a criminal trial.

Pundits, who keenly followed the last exercise in 2012, are not particularly optimistic. They are worried that the new fuel subsidy probe embarked upon by the Bukola Saraki-led Senate, may hit another cul-de-sac.

The issues expected to be investigated, Daily Sun gathered, are two. They will be slightly different from what the National Assembly probed in 2012. First, the Senate will investigate how monies budgeted for payments of subsidy were expended between 2006 and 2016. This period captures the administration of four presidents, namely, Obasanjo, Umaru Musa Yar’Adua, Goodluck Jonathan and Muhammadu Buhari.

The second lap of the probe is the secret reintroduction of fuel subsidy payment by the current administration of Buhari. In June 2016, President Buhari, through his minister of state for Petroleum Resources, Dr. Ibe Kachikwu, announced the removal of fuel subsidy.

A litre of fuel that was sold for N87 was now pegged at N145. Nigerians were however shocked in late 2017, when the Group Managing Director (GMD) of NNPC, Dr. Maikanti Baru, revealed that the NNPC was subsidising a litre of fuel at the cost of N26. Baru claimed that the subsidy was introduced to bridge the gap of difference between N145 and N171 and invariably prevent scarcity of the product or exorbitant price increase by sellers.

Saraki, who has vowed to expose the forces behind the fraud in the management and administration of fuel subsidy regime, is always in a hurry to inform anyone who cares to listen that he initiated the first fuel subsidy probe in the 7th National Assembly.

On resumption from annual vacation in September, 2011, the 7th Senate led by David Mark was greeted by a motion sponsored by Saraki, on fuel subsidy management. The burden of Saraki’s motion was anchored in the observation that “the processes, audit, scrutiny and value for money in the entire subsidy management lacks transparency and control, as the costs have continued to maintain an upward spring.”

Saraki’s lamentations have not changed. On January, 29, Saraki, while inaugurating an investigative hearing by the senate committee on Petroleum Resources (Downstream), on alleged misappropriation of N10 trillion by the NNPC, between 2006 and 2015, reechoed a familiar phrase: “We will expose fuel subsidy cabal.”

Saraki, represented at the event by the senate leader, Ahmad Lawan, expressed displeasure about what he described as “secret and opaque re-introduction of subsidy in the prices of petrol,” without an approval of a budget by the lawmakers.

Saraki regretted that “government has not done what we need to do to nip this problem in the bud.”

According to him “findings have brought to light the fact that our downstream oil and gas industry needs critical reforms.”

He further stated that it has been exposed in “spite of the stoppage of the fuel subsidy regime, and the non-appropriation of funds for the scheme due to the fraud and mal-administration going on in the scheme that fuel subsidy payments continue to be paid from our commonwealth illegally and without appropriation by the National Assembly to a few quietly in order to dodge scrutiny and avoid exposure.”

Insisting that the senate would not rest until all perpetrators of the fraud, especially those in high public offices were exposed, Saraki affirmed that the 8th Senate “is here to expose every corruption in the system irrespective of how highly placed those involved are. This unconstitutional and illegal practice must be addressed and we are not going to rest until it is fully addressed.”

Saraki charged the committee to “get to the bottom of this issue and proffer long lasting solutions to this racketeering in the fuel market that leaves the Nigerian people poorer every year.”

Other questions the committee must seek answers to, according to Saraki, are “the actual quantity of fuel the Nigerian market consumes; the underlining reasons why the market is  struggling to operate without government intervention; and the process and all those   involved in signing out unbudgeted funds outside the budget passed by the National Assembly.”

The chairman of the committee, Kabiru Marafa, is also talking tough. According to him, the NNPC and other stakeholders in the sector will have to explain to Nigerians how they arrived at the alleged subsidy payment more than a year after its stoppage.

“At our slated investigative public hearing on the sector, NNPC and other stakeholders should be prepared to explain to Nigerians who approved the subsidy for them and who appropriated it,” he fumed.

“There is complacency in the sector and sharp practices that must be stopped. They want to take us back to subsidy regime that has never been beneficial to ordinary Nigerians across the country. We cannot go back to such scam called subsidy regime which robbed the country N10 trillion between 2006 and 2016,” he said.

He added that transparency in governance which the government started with in 2015 must be strictly adhered to as far as sales and importation of fuel is concerned.

According to him, while the previous government swapped exported crude for imported refined PMS, the present government has been using a more transparent model of direct sale of crude oil and direct purchase of refined product.

“Before we went on recess, I submitted on the floor of the senate that I am no body’s man or rubber stamp, the same way I strongly believe that the senate is not a rubber stamping platform for anybody or arm of government,” he said.

NNPC is not leaving anything to chance in the unfolding drama. Unlike the 2012 probe where it was caught unawares, NNPC appears to be ahead of the senate this time. At its first appearance in the ongoing probe, it made a strong case and called on the senate to prevail on the Federal Government to remit an outstanding debt of N170.6 billion.

GMD of NNPC, Baru, who led other top management of the corporation to the investigative hearing, said the debt was arrived at after deduction of N4.950.80 trillion received as payments from the N5.121.40 trillion approved subsidy claims of the corporation from January 2006 to December 2015.

Providing details of the accruals, Chief Financial Officer of the corporation, Mr. Isiaka Abdulrazaq, traced the origin of the subsidy regime to October, 2003 when NNPC was directed by the Federal Government to commence the purchase of domestic crude oil at international market price without a corresponding liberalisation of the regulated price of petroleum products.

He explained that under the subsidy regime, NNPC and other suppliers of refined petroleum products were entitled to file subsidy claims to the Petroleum Products Pricing Regulatory Agency (PPPRA).

Mr. Abdulrasaq, however, noted that unlike other oil marketers, NNPC did not receive cash payment for subsidy claims as its claims were deducted out of cost payment to the Federation Account after due certification by PPPRA.

“In summary, NNPC submits that the amount of over N5.1 Trillion was duly approved by PPPRA as subsidy claims for NNPC. Out of this sum NNPC is still being owed N170.6 Billion,’’ the NNPC official said.

The corporation called on the senate committee to assist in ensuring that the outstanding debt was settled to enable NNPC effectively achieve its obligation as the supplier of last resort to the downstream sector.

In the coming weeks, more players and stakeholders in the oil and gas industry will appear before the senate committee. More revelations will be made. As always, drama, accusations and counter accusations will follow. For now, pundits and keen observers will just wait to see how things will pan out.