NNPC Illegally Spends N700 Million On Kerosene Subsidy Daily – Senate

NNPC Illegally Spends N700 Million On Kerosene Subsidy Daily – Senate

By ThisDay on February 21, 2014
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As the controversy on kerosene subsidy rages, the Senate yesterday said it had uncovered how the Nigerian National Petroleum Corporation (NNPC) illegally spends N700 million on kerosene subsidy everyday.

Consequently, the parliament gave its Committee on Finance a fresh mandate to unravel the mystery behind the scam and report its findings to the Senate.

The resolve followed a motion by Senator Babajide Omoworare (Osun East).

The revelation concided with the disclosure by the Attorney General of the Federation (AGF) and Minister of Justice, Mohammed Adoke yesterday that the NNPC is under obligation to remit revenue from its operation into the Federation Account but can equally defray all expenses incurred in the course of such operations.

Omoworare had alleged that following the discovery that NNPC spends N700 million unappropriated funds on kerosene subsidy per day, the corporation had spent as much N4.2 billion in just six days.

The senator said the unappropriated sum being spent on subsidy by NNPC as admitted by the Petroleum Products Pricing and Regulatory Agency (PPPRA) and Ministries of Finance and Petroleum Resources, was illegal, unconstitutional and a breach of the appropriation acts by the National Assembly.

He also said the action contravened Section 80 and 162 (1) of the 1999 Constitution (as amended).
Omoworare, who said only less than 10 per cent of petroleum products’ outlets in the country sell kerosene at alleged N50 subsidised rate, argued that the general rate at which the product is sold is N150.

He added that the so-called subsidy scheme had totally failed to ameliorate the living conditions of the masses of Nigeria whom he said should ordinarily be beneficiaries of the scheme.
He also said the Senate noted with sadness that only less “than 10 per cent of Nigerians benefit from this heartless massive scheme that drains the nation’s treasury,” adding that the amount is “more than double of the aggregate annual budget for education, health, roads, security and agricultural sectors while majority of our populace wallow in abject poverty at the expense of these few mindless rich cabal network.”

He further argued that in view of the prosecution of kerosene subsidy scheme outside the national budget, the trend portrays a dangerous impact on fiscal stability and economic well being as well as the future of Nigeria as a sovereign constitutional democracy.

Also contributing to the motion, Senator Olubunmi Adetumbi (Ekiti North), said contrary to the claim of Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, that kerosene is subsidised in the interest of the masses, the masses pay exorbitant rates to obtain the product as he proceeded to enumerate varying rates at which the product is sold in different locations.

According to him, while the product was sold at N65.00 at an NNPC mega station in Yenagoa, the capital of Bayelsa State, where Alison-Madueke comes from at 7p.m. on Wednesday, kerosene was sold in Odi, another community between N170 and N180 as well as in some petrol stations on East -West Road same time.

He also said while kerosene was sold at New Nyanya, Abuja at the rate of N105 at 6.44 a.m., it was sold at N155 at the Depot in Makurdi, Benue State same time.

Adetumbi said he gave the breakdown of varying sales to debunk the minister’s claim that the product is subsidised for the masses, saying what the minister had done by this kerosene subsidy is to suspend the constitution by spending unauthorised funds from the federation account.
He challenged the Senate to live up to its responsibility by defending its power of appropriation, saying it’s only the military that has the tradition to suspend the constitution as he insisted that democracy and dictatorship cannot co-exist.

Also speaking on the matter, Senate Leader, Victor Ndoma-Egba, said the National Assembly was not only duty bound to appropriate but also to carry out oversight on what had been appropriated and as well as ensure compliance.

He echoed Adetumbi that the Senate should take responsibility for the violation of its appropriation power by failing in its power of oversight.

While Senator Isa Galaudu described the kerosene subsidy as blood money, Senators Abdul Ningi, George Akume, Bukola Saraki and Ayogu Eze insisted that henceforth kerosene subsidy must stop until investigations into the scam are concluded.

Meanwhile, Adoke who spoke during the investigative hearing of the Senate Committee on Finance on the alleged unremitted $49.8 billion oil revenue, however explained that the corporation is legitimately allowed to transfer its participating interest in oil mining leases (OML) to its wholly owned subsidiary, the Nigerian Petroleum Development Company (NPDC).
The AGF provided the legal position on the alleged unremitted $49.8 billion oil revenue especially in respect of the status of $6 billion NPDC gross revenue which the suspended Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, had alleged should have been remitted to the Federation Account by the NNPC.

A statement from the acting Group General Manager Public Affairs of NNPC in Abuja quoted Adoke as saying that by virtue of paragraph 14 to 16 of the First Schedule of the Petroleum Act, CAP.P.10 Laws of the Federation of Nigeria, LFN, 2004 (NNPC Act) and Regulation 4 of the Petroleum (Drilling and Productions) Regulations 1969 as amended, a holder of an OML or Oil Prospecting License (OPL) can assign its interest to any party provided the consent of the Minister of Petroleum Resources was obtained.

He further informed that section 6(1) (C) of the NNPC Act empowers the NNPC to establish and maintain subsidiaries for the discharge of its functions, adding that the NPDC was thus incorporated as a limited liability upstream company of NNPC to carry out its upstream operations as envisaged by the law.

“It is pertinent to note that the transfer of the participating interests in the OMLs in question relates to a joint venture arrangement between NNPC, on the one hand and Shell Petroleum Development Company of Nigeria Ltd, Nigerian Agip Oil Company Ltd (AGIP) and Total E & P (Nigeria) Limited on the other hand,” Adoke explained.

While making clarifications of all revenues derived by the NNPC from upstream operations including those under which OMLs in the Joint Venture operations are payable to the Federation Account, Adoke explained that NNPC is generally under an obligation to remit its revenue from the upstream petroleum operations into the Federation Account but that was dependent on definition of revenue within the intendment of section 162(10) (c) of the Constitution of the Federal Republic of Nigeria.

Adoke said: “This is however dependent on the definition of ‘revenue’ within the meaning and intendment of section 162 (10) (c) of the Constitution of the Federal Republic of Nigeria 1999. NNPC can by virtue of section 7(4) of the NNPC Act defray all expenses incurred in the course of its business in the upstream operations.”

The AGF further stated that the NNPC is required to pay into the Federation Account the ‘net revenue’ as opposed to the ‘gross revenue.’

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