The House of Representatives Ad Hoc Committee on the Need to Investigate the Petroleum Products Subsidy Regime in Nigeria finally laid out its report, 11 months after the task was assigned to the panel.
The Chairman of the committee, Ibrahim Aliyu, laid the report in plenary on Wednesday.
On June 29, 2022, the House resolved to investigate payments for subsidy on petroleum products, especially Premium Motor Spirit, popularly known as petrol, under the last administration led by Muhammadu Buhari.
The Speaker of the House, Femi Gbajabiamila, had set up the panel, whose probe covered 2017 to 2021, with the mandate to report back to the House within eight weeks for further legislative action.
The probe was based on a motion titled ‘Need to Investigate the Petroleum Products Subsidy Regime in Nigeria from 2017 to 2021,’ which a member of the House, Sergius Ogun, moved at the plenary on Wednesday and the lawmakers unanimously adopted.
Ogun had said that as of 2002, the Nigerian National Petroleum Company Limited (formerly the Nigerian National Petroleum Corporation) was purchasing 445,000 barrels per day of crude oil at international market prices to enable it to provide petroleum products for local consumption.
He had said, “The House is concerned that as of 2002, the installed capacity of Nigeria’s local refineries stood at 445,000 barrels per day, however, their capacity utilisation began to nosedive and eventually fell completely to zero due to the ineffectiveness and alleged corruption of critical stakeholders in the value chain.”
Ogun explained that due to the decline in the production capacity of the refineries, the NNPCL found it more convenient to export domestic crude in exchange for petroleum products on a trade-by-barter basis, described as Direct Sales Direct Purchase arrangement.
The lawmaker pointed out that the component costs in the petroleum products subsidy value chain claimed by the NNPC are “highly over-bloated,” while the transfer pump price per litre used by the NNPC concerning PPMC is under-quoted as N123-N128, instead of N162-N165, “and this fraudulent under-reporting of N37-N39 per litre translates into over N70bn a month or N840bn a year.”
He said, “The House is worried that the consumption rate of PMS is 40 million to 45 million litres per day. However, the NNPC uses 65 million to 100 million litres per day to determine subsidy as discoverable from the NNPC’s monthly reports to the Federal Allocation Committee.
“The House is also worried that the subsidy regime has been unscrupulously used by the NNPC and other critical stakeholders to subvert the nation’s crude oil revenue to the tune of over $10bn, with records showing that as of 2021, over $7bn in over 120 million barrels have been so diverted.”
Join our WhatsApp Group to receive news and other valuable information alerts on WhatsApp.