Real Subsidy Or Subsidy Fraud?

a petrol station in nigeria

a petrol station

Nigeria claims to have spent N1.2 trillion on subsidy this year, but many Nigerians believe the bulk of the money was pocketed

There have been allegations of how a cartel, in collusion with officials of PPPRA and NNPC, has hijacked the process of petrol import to rip off the country through fraudulent claims of subsidy payments. Various examples of alleged foul play by the importers facilitated by corrupt officials of the two regulatory agencies have been given by those familiar with the process of fuel importation. Peter Esele, President, Trade Union Congress, TUC, who is also a worker in the oil industry, in an article in a national newspaper noted that a chunk of the expenditure paid out as subsidy is as a result of “corruption, deceit and other inefficiencies” by NNPC. Owei Lakemfa, Acting Secretary General of Nigeria Labour Congress, NLC, recently noted that there have been reports of how some of the importers bribe their way to get quota allocations. Based on the alarm raised by Senator Bukola Saraki on how the NNPC had by August spent N931 billion on subsidy payment even though the total allocation for the year in the budget is N240 billion, the Senate set up an ad -hoc committee to probe subsidy payments and administration by the NNPC and the PPPRA over the years.

Gov Bukola Saraki

The revelations from the sittings of the committee so far have confirmed suspicions of corruption in the subsidy administration process. For one, the joint committee said it has discovered overpayment of N192.5billion to some importers as subsidy. Consequently, it directed the Minister of Finance to make available to it details of fuel imports audit certificate for the past 11 months. The committee also said it discovered that NNPC imported 17 billion litres of petrol between January and September, above the 14.5 billion litres it should have imported based on the import quota allocated to it during the period. This means NNPC will make an excess demand of subsidy of 2.5 billion litres chargeable to revenues accruable to the Federal Government for the excess import. Even PPPRA and NNPC could not agree on the amount shared out as subsidy during the period. Another revelation from the committee sittings is that the government has been violating set rules for accreditation of petroleum importers. Magnus Abe, Chairman of the committee confronted the boss of PPPRA at the meeting that one of the companies granted licence to import petrol was a construction company. In the same vein, Senator Saraki, also a member of the committee, noted that though part of the guidelines for licence as oil marketer specifies that applicants must own a tank farm and the company registered at the Corporate Affairs Commission, information available to the committee indicated that some importers who do not own tank farms use names of oil majors to receive subsidy as marketers.

Also, it was discovered that the list of companies benefiting from subsidy, which was three as at 2006, has progressively grown to over 100 companies sharing N1.42 trillion between January and August 2011. Thus, even as the President argued and begged for support on subsidy removal, the corruption that has dogged the process was pointed out to him. National Assembly members, after one of such consultation sessions on 16 November told the President that rather than spend his time on the plan to remove subsidy, his focus should be on how to tackle the fraud that has dogged the process. While arguing that removal of subsidy will make life more unbearable for Nigerians, the lawmakers said if fraud is taken out of the process, the total subsidy payment in a year will not exceed N500 billion. This amount, they argued, is affordable by the country.

Some Companies named by the Senate and the amount of money they received this year.

Oando Nigeria plc                            –             N228.506 billion

Integrated Oil and Gas plc            –             N30 billion

MRS                                                       –             N224.818 billion

A.A. Rano                                            –             N1.14 billion

A-Z Petroleum                                  –             N18.61 billion

A.S.B                                                     –             N3.16 billion

Arcon plc                                             –             N24.116 billion

African Petroleum                           –             N104.58 billion

Aminu Resources                             –             N2.3 billion

Capital Oil                                            –             N22.4 billion

ConOil                                                   –             N37.96 billion

Avante Garde                                    –             N1.14 billion

Avido                                                    –             N3.64 billion;

Boffas and Company                      –             N3.67 billion

Brilla Energy,                                      -              N960.3 million.

D. Jones Petroleum                        –              N14.86 billion

DownStream Energy                      –              N789.648 million

Dosil Oil and Gas                               –              N3.375 billion

Inco Ray,                                              -              N1.988 billion

Eterna                                                   –              N5.574 billion;

Folawiyo Energy                               –              N113.32 billion

Frado International                         –              N2.63 billion

First Deepwater Oil                         –              N257.396 million

Heden Petrol                                     –              N693 million

Honeywell Petrol                             –              N12.2 billion

AMP                                                      –              N11.417 billion

Ascon                                                    –              N5.271 billion

Channel Oil                                         –              N1.308 billion

Fort Oil                                                 -              N8.582 billion

Enak Oil & Gas                                   –              N19.684 billion

Bovas & Co. Nig Ltd                         –              N5.685 billion

Obat Oil                                                –              N85billion

AP                                                          –              N104.5 billion

IPMAN Investment Limited         -              N10.9 billion

ACORN                                                 –              N24.1 billion

Atio Oil                                                 –              N64.4 billion

AMP                                                      –              N11.4 billion

Emac Oil                                               –              N19.2 billion
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