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Senate Hearing: Sanusi Insists $20b Is Missing, Okonjo-Iweala Unable To Prove How $10.8b Was Spent.

Central Bank of Nigeria’s Governor, Sanusi Lamido Sanusi
By Saharareporters, New York

Day Two of the investigative hearing of the Senate Committee on Finance into the alleged missing $20 billion oil money has concluded in Abuja, with the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, insisting the money is missing according to a live blogging of the hearing by Premium Times of Nigeria.

Speaking to the committee, he said that despite the explanation tendered by Finance Minister Ngozi Okonjo-Iweala, there is an outstanding $20 billion between what NNPC oil shipments and what it paid to government.

Mr. Sanusi insists the outstanding $6 billion given by NNPC to the NPDC should have gone to the federal government, but that it disappeared into private hands from there, and offered to bring in lawyers to defend that claim on the basis of three advisory opinions the CBN has already received.

Testifying earlier, Okonjo-Iweala aligned herself with the Ministry of Petroleum Resources and the NNPC, despite declaring her Ministry lacked the capacity to validate the claims contained in NNPC documents from the Petroleum Products Pricing Regulatory Agency (PPPRA) showing how the initial outstanding $10.8 billion was spent.  She said an independent forensic team was needed to examine the documents.

Concerning the $6 billion which Mr. Sanusi said the NNPC diverted into private pockets, Mrs. Okonjo-Iweala also said that finding out who owns the money would require an independent legal opinion.

But also testifying Andrew Yakubu, Group Managing Director of the NNPC, basically advised Nigerians to forget about ever seeing the N10.8 billion in question or wasting their time looking for it, declaring it has been “spent on subsidy, pipeline maintenance and other losses.”

“The impression Nigerians have is that $10.8 billion is seated in the four towers of the NNPC [offices],” he said, underlining that the money is gone.

SaharaReporters gathered that  representatives of the Ministry of Finance and the Nigerian National Petroleum Corporation (NNPC) had agreed to present a united from today at the Senate claiming that the ministry was “satisfied” with the NNPC explanations regarding the missing funds.
However, they could not carry out the plan as CBN officials refused to sign the agreement; also the minister of State for Finance, Lawal Ngama reportedly refused accepting the reconciled figures. He was fired yesterday by President Goodluck Jonathan.

President Jonathan, the Finance minister, Okonjo-Iweala and the Petroleum Resources minister,  Alison-Madueke , who rushed back from London yesterday, have reportedly resolved to prolong the investigations by bringing in forensic expert pending the time the CBN Governor, Lamido Sanusi could be completely sidelined.


Below is the Premium Times Live Blog from today’s hearing:

Nigeria: Missing $20 billion oil money Senate hearing – Day Two live blog By Ini Ekott


CBN Governor, Sanusi Lamido Sanusi

Welcome to our live blog of Day Two of the investigative hearing by the Senate Committee on Finance into the alleged missing N8 trillion [$20 billion] oil money.

12:04 -Minister of Finance, Ngozi Okonjo-Iweala, says NNPC has supplied documents from the PPPRA(Petroleum Products Pricing Regulatory Agency) showing how the initial outstanding $10.8 billion was spent.

The minister however said the finance ministry had no capacity to validate the claims. As such, she said they need an independent forensic team to examine the documents.

On the $20 billion- which includes a $6 billion which CBN governor, Lamido Sanusi, said should have gone to the federation, but the NNPC, through the NPDC, pushed into private pockets- Mrs. Okonjo-Iweala said that will require an independent legal opinion to know who owns the money.

12:11 – Finance committee chairman, Ahmed Makarfi, asked the finance minister: As the custodian of the federal government’s money, if you feel unsatisfied with what NNPC puts forward, and you said will require a forensic team, what stops you from commissioning a forensic team to verify the documents?

The minister said she hasn’t said anything has stopped her ministry from doing so. “This thing is a process,” she said.

The senate committee presses the ministry why there is need for a forensic validation now if the same PPPRA is vested with the responsibility of signing off subsidy payments.

Minister: “These are extraordinary times, otherwise we would not be sitting here. These are not ordinary times.”

12:16 – The senate committee has tasked the finance ministry to commission a forensic team to examine the PPPRA/NNPC documents within one month in the first instance.

The PPPRA is called upon now to present to the committee the subsidy claims documents it has certified, which the finance minister said requires forensic validation.

12:43 – The NNPC is called to make presentation. But Mr. Makarfi, the senate finance chair, insists that whatever happens, the PPPRA certification will undergo a forensic evaluation.

CBN governor: Sanusi Lamido, said regardless the explanations from the finance minister, as far as the CBN is concerned, there is an outstanding $20 billion between what NNPC shipped and what it paid to government.

Mr. Sanusi insists the outstanding $6 billion given to the NPDC should have gone to the federal government. He said the CBN has received three legal opinions on that position, and offers to bring in lawyers to defend that claim.

12:55 – Sanusi: PPPRA says subsidy on kerosene is legal and that certain amount was paid. PPPRA is the agency authorized to determine that. But I have a letter from the PPPRA in 2010 telling me that they do not pay kerosene subsidy. In the end, it is left for the committee to determine whether such letter was later withdrawn. It is left for the committee to decide.

Mr. Sanusi reads a part of the PPPRA letter on stopping kerosene subsidy. The letter was signed by a former Executive Secretary, Abiodun Ibikunle.

13:08 – Mr. Makarfi said it would be wrong for Mr. Sanusi to delve into the responsibilities of other agencies. He advised the CBN governor to limit himself to what he is legally empowered to do. The comment came in respect of the PPPRA’s decision to pay kerosene subsidy despite a purported presidential directive. Mr. Makarfi said it is for the PPPRA to so decide.

Petroleum minister, Diezani Alison-Madueke speaks…

13:22 – Diezani Alison-Madueke said NNPC stayed action on the presidential directive on kerosene to save Nigerinas the hardship of buying at exorbitant rates.

She said if there must a forensic auditing of the PPPRA documents, then it should go all the way back to 2004 when the entire process started. She said there has been no problem since.

13:25-Mr. Makarfi asked petroleum minister if the government will continue with kerosene subsidy. The minister declines response. But Bukola Saraki, a member of the committee, said the senate is concerned about what happened not about the future. He said the question did not arise in the first place.

13:36-Ibrahim Gumba(Bauchi state), a member of the senate committee said it was a clear illegality to have continued with the kerosene subsidy which someone must account for.

Diezani Alison-Diezani shakes off responsibility for the kerosene subsidy. She said she was not in office at the time, but was only relating to the committee what happened. However, Mrs. Alison-Madueke said despite the presidential directive, it was no law because the directive was not gazetted.

That claim draws a murmur from the audience here.

13:43-NNPC Group Managing Director, Andrew Yakubu, speaks…

“The impression Nigerians have is that $10.8 billion seated in the four towers of the NNPC,” he says referring to the NNPC’s corporate office.

He said to put the records straight, the money is not seated anywhere. He explains the $10.8 billion as having been spent on subsidy, pipeline maintenance and other losses.

13:51-“Nigerians believe NNPC is sitting on money. But I want it known that these monies we are taking about are not “realizable flows”- NNPC GMD

14:11- Finance minister, Okonjo-Iweala, takes exception to a comment by a senator, Isa Galaudu, that the finance of “this country is messy”

Okonjo-Iweala claims Nigeria has one of the most transparent budget in the world that allows citizens to know how much is spent on “forks and spoons in state house”.

Mr. Galaudu said Mrs. Okonjo-Iweala must take charge and be in control. Ngozi appears emotional, and is telling the senate committee that the finance ministry has been doing its work and that it believes in transparency. “That is why we are seeking an independent forensic team for this to satisfy Nigerians,” she said.

14:58-The hearing has ended. The committee will receive a legal opinion on the NPDC $6billion next week while the finance ministry will commission a forensic examination of NNPC/PPPRA claims.

How NNPC Illegally Diverted $20 Billion From The Federation Account -CBN Governor Sanusi.


CBN Governor, Sanusi Lamido Sanusi
By Sanusi Lamido Sanusi

I am pleased to stand before you and present a summary of my latest submission on this subject. The submission itself is about 20 pages long with 30 Appendices, providing documentary backing for all material statements. The background to this session remains my letter to the President in which I indicated that there was a difference between the value of crude lifted by NNPC between January 2012 and July 2013 and the amount of foreign exchange repatriated into the Federation Account. This difference was placed at almost $50 billion and I respectfully advised the President to order an investigation into a number of areas I suspected were responsible for leakages in oil revenue.

My letter was, sadly, leaked and published in a highly politically-charged atmosphere. The Central Bank was practically accused of involvement in politics and in December it was clear to me that no tempered and positive discussion would take place. In order to calm nerves and avert major crisis I agreed to a joint press conference with Finance Ministry, the Petroleum Ministry and also to present a common front at the National Assembly.

Since December, however, there has been an orchestrated campaign aimed at undermining our credibility and misleading Nigerians into believing that all monies due to the Federation Account have been either remitted or accounted for. I am, therefore, compelled to present to this committee detailed evidence that NNPC has in violation of the law and constitution been diverting money from the Federation Account, and involving itself in activities that warrant full investigation for more serious violations of the law.

I have established, in my presentation, the following:

1. That NNPC, in paying what it calls kerosene subsidy, is confessing to a number of serious infractions. First, I have shown, based on NBS data, that kerosene is not a subsidised product, and, therefore, the so-called subsidy is rent generated for the benefit of those in the kerosene business. Second, I have produced evidence that President Yar’Adua had issued a presidential directive eliminating this subsidy payment as from July, 2009. Third, these huge losses inflicted on the Federation Account have not been appropriated.

The burden of proof on NNPC is to show where they obtained authorization to purchase kerosene at N150/litre from Federation Funds and sell at about N40/litre, knowing fully well that this product sells in the market at N170-N220/litre. At what point was the presidential directive revered? NPA records would suggest that NNPC imports about 4-6 vessels of kerosene a month. Industry sources place the value of each vessel at $30m and the amount of “subsidy” per vessel at $20m. This means, at an average of 5 vessels a month, the Federation Account loses $100m every month to this racket.

2. I have also shown, in my submission, that claims by NNPC of spending the money on PMS subsidy are not credible. I have submitted proof that as from April, 2012, NNPC has consistently rendered returns to FAC indicating that it made no deduction for subsidy. This is after rendering returns on amount deducted monthly for 20 consecutive months to March, 2012. NNPC had previously explained that it had stopped deductions from 2011 and that the N180b taken in Q1:2012 related to fuel imports for Q4:2011. As from 2012, the directive was for NNPC to submit its papers to PPPRA, the relevant government agency set up and given the responsibility for verifying and paying subsidy claims. Having officially reported that it was not making deduction for fuel in 2012 and 2013, it is surprising that the GMD and GED of NNPC would now claim that $8.49b was used to pay for subsidy.

I am convinced that a major source of revenue leakage from the system is NNPC’s unverified claims for subsidy and unilateral deduction from the Federation Account. If we take the PPPRA template, subsidy/litre of PMS is about 1,136litre/MT, the subsidy is around N1.5b. This means that for every $1b claimed by NNPC as subsidy deduction, the corporation is claiming to have imported at least 100 vessels of PMS. In addition to the N180b reported in Q1:2011, NNPC had deducted N845 billion in 2011. According to the Farouk Lawan report, NNPC deduction for PMS subsidy in 2011 alone amounted to N1.7 trillion, if we add claims on Excess crude naira account. Any serious investigation into these matters will require an audit of NNPC’s database which it is statutorily required to keep based on subsidy guidelines. Only verification of the legitimacy of these claims can form the basis for a true reconciliation.

3. Based on NNPC’s disclosure to the effect that it shipped $6b worth of crude oil on behalf of NPDC, I have argued here that at least a part of this amount is due to the Federation Account. This part relates to oil produced from blocks operated under “Strategic Alliance Agreement”. I have given you three legal opinions that unanimously argue that these agreements merely serve to transfer revenue due to the Federation to private hands. I have also shown how, based on these arguments, NNPC has effectively given tax relief and concessions to its business partners.

Also customs duties and levies are treated as “development costs” and recouped from “cost oil” and “cost gas”. These companies recover OPEX and COPEX from production, take 20-70 per cent of the profit and pay no tax, on JVs in which the Federation was previously entitled to 55 per cent of the entire profit oil when Shell was the operator. I have given details of these transactions and my concerns in the paper.

4. Although the above 3 areas exhaust the areas covered in NNPC’s explanations, I have also taken time to submit my analysis of the crude-for-refined-product swap contracts entered into by PPMC. This is because a significant part of the domestic crude taken by NNPC is in these transactions. I have indicated where i believe we are losing money in these transactions.


Having thus explained my major opinions on NNPC‘s explanations, I will come to the reconciliation.

NNPC itself has submitted that it lifted $67b worth of Crude between January 2012 and July 2013. Of this, we have been able to agree that the following amounts have been remitted to the Federation Account:

1. $14 billion as equity crude

2. $15 billion as payment to FIRS by IOCs. They paid in crude which was lifted by NNPC on behalf of FIRS. There was nothing in our records linking the two transactions.

3. $2 billion Royalty payment to DPR by IOCs under similar arrangements as in (2) above.

4. $16 billion out of the 428b taken as Domestic Crude Paid in Naira, not dollar.

The following items are outstanding and need to be proven by NNPC:

1. $12 billion out of domestic crude sales yet to be remitted. NNPC has already disclosed N180 billion as subsidy payment in Q1.2012. If PPPRA confirms this number, we will adjust the balance accordingly. As for the balance of $10.8 billion, NNPC has publicly disclosed that 80 per cent applied to petrol and kerosene subsidy. We have already explained why this explanation is untenable and NNPC needs to provide the relevant proofs.

2. $6 billion shipped on behalf of NNPC. We have explained why some this belongs to the Federation and the need to investigate and audit the SAAS to recover amounts unconstitutionally diverted.

3. $2 billion “third-party” financing” we have not been given any documents explaining or proving this along with other claims around pipeline repairs, maintenance, strategic reserves etc.

There was no appropriation for these expenses and NNPC also needs to substantiate them.

In summary, it is established that of the $67 billion crude shipped by NNPC between January 2012 and July 2013, $47 billion was remitted to the Federation Account. It is now up to NNPC, given all the issues raised, to produce the proof that the $20billion unremitted either did not belong to the Federation or was legally and constitutionally spent. There is no dispute that $20 billion out of $67 billion has not been paid into any account with the CBN.

Our recommendation remains that this matter requires thorough independent investigation, as simple explanation will not suffice.

I concluded my submission with recommendation for the future, to protect the economy from these unsustainable losses.

I would like to make the following recommendations going forward:

Recommendations :

NNPC should stop collecting 440,000bbl daily as “Domestic Crude”. The amount of crude should be reduced to the refining capacity of its refineries based on a signed refining contract that clearly states what products are to be delivered for each barrel. Sale proceeds net of recognised processing costs are to go to the Federation Account;

All Crude for Product Swaps should be terminated and crude should be exported and sold at market price.

Where NNPC needs to generate cash flow to fund PMS imports, it can “borrow” crude, on the approval of the Finance Minister, for 90 – 120 days. This crude is to be valued at the ruling market price. NNPC may sell the crude, import PMS and sell through its outlets. It should claim subsidy from PPPRA like every other marketer and present all required documents. Thereafter, NNPC should pay back the full value of crude lifted to the Federation Account and retain the profit. Where NNPC delays payment, the amount outstanding should attract interest at commercial rates until payment.

All the SAAs entered into by NPDC should be investigated for constitutionality. The production numbers, Opex and Capex, and profit shares should be audited. The tax arrangements entered into with these parties should be reviewed and all revenues due to the Federation collected. If possible the SAAs should be terminated. Certainly, NNPC should be prohibited from entering into any SAAs in the future.

NNPC to account for subsidies claimed in 2010-13 by producing documentary proof of legitimacy.

As for what action needs to be taken on what has happened in the past, we express no opinion. The decision on what to do in this case rests entirely with the Government. My task is limited to raising an alarm over what I think is a development that is harmful to the economy, and establishing that the alarm was neither spurious nor baseless. I still insist that an investigation is needed to establish the extent of the losses and the nature of offence committed.

I believe I have placed enough information before this committee to make the point. The amount in 19 months may be $12 billion or $19 billion or $21 billion, we do not know at this point but if we extend the period the amount will increase anyway, since this has been going on for a long time. The first priority is to stop it. It is unsustainable, and it will ultimately, if not stopped, bring the entire economy to its knees.


NNPC And The Running Kerosene Fraud: Still Waiting For Jonathan To Act By Ifeanyi Izeze.

By Ifeanyi Izeze

As claimed, the Nigerian National Petroleum Corporation (NNPC) through its downstream subsidiary, the Pipelines and Products Marketing Company (PPMC) pushes to the domestic market between 10 to 11 million litres of kerosene every day against the 8 million-9 million litres estimated national daily consumption level. As said, this supply is distributed through allocations to licensed marketers: the Independent Petroleum Marketers Association of Nigeria, (IPMAN), Depot And Petroleum Products Marketers Association, (DAPPMA), Major Marketers Association Of Nigeria (MOMAN) and NNPC Retail Limited, which sell to the general public through their various retail outlets.
The above disclosure would have been hailed but for the wide gulf between what the NNPC claims and what is on ground across the country. If the NNPC pushes 11 million litres of kerosene into the market everyday through the above marketing groups, why is it that only NNPC retail outlet and a few other outlets sell kerosene at the government approved price of N50 per litre? Is the NNPC not aware that the other marketers who get the product from PPMC at government regulated price of N40.90k sell at average price of N110 per litre far above the recommended price?

It should bother our rulers that for over two years running, the issue of the senselessly high cost of kerosene a commodity that is mainly used by the poor, low-income and the middle class strata of the Nigerian population has remained unresolved despite the hundreds of billions of Naira our government claims to be paying as subsidy for the product? How can a government that is supposed to be “of the people by the people and for the people” display such callous aloofness to the sufferings “of this same people inflicted by the people that were supposed to be sitting for the interest of these suffering people?

Is it not funny that kerosene used by the masses for their everyday survival costs more than petrol and diesel in this country? It is even more annoying that the current hardship faced by the majority of the citizenry that depend on kerosene could be traced to sharp business practices by people in and around government and its agencies.

What is actually the function of the Petroleum Products Pricing Regulation Agency (PPPRA)? That marketers sell kerosene which they got from the NNPC at government regulated prices is it not an indictment on the PPPRA? Is it not the responsibility of the PPPRA as the government regulatory agency to ensure that the allocated petroleum products, including kerosene, reach the consumer at the approved prices as intended by government?

For no other reason but complicity in the kerosene and other products racketeering, the PPPRA has preferred to be indifferent to the ongoing fraud by deliberately failing to enforce compliance with the government approved prices.

It has been said that no matter what the administrators of the Nigerian National Petroleum Corporation (NNPC) may coerce us to believe, the nation’s apex oil concern is full of glaring aberrations some systemic and most deliberately dubious. It would be recalled that both the Association of Petroleum Products Marketers  and Major Oil Marketers Association of Nigeria petitioned President Goodluck Jonathan and alleged that the NNPC is the source of the sharp practices in kerosene marketing and consequent high cost of the product. According to the group, “The sharp practice is attractive, because while NNPC which was supposed to sell kerosene at the subsidised price of N50 per litre, now sells DPK as aviation fuel at about N152 per litre to airline operators.

The tragedy of the NNPC fraud is that because aviation fuel, Jet A1, has been very scarce and airline operators have resorted to the use of DPK as substitute for Jet A1, the NNPC and its importers now found it more profitable to sell the subsidised kerosene (DPK) to the airline operators that buy at more than triple the official government-pegged pump price for kerosene.

Statistics from the PPPRA show that the landing cost of DPK is N108.06, local distribution takes another N13.20 per litre, bringing the ex-depot price to N121.26 per litre against the federal government’s official pump price of N50 per litre, showing a subsidy of N71.26 on every litre. So selling to the airlines at N152 per litre, the NNPC makes extra N30 on every litre thus bringing its rake-in to about N100 on every litre of kerosene brought into this country. Good business is it not?  But the question is: at whose expense?

Is it not curious that none of the self-acclaimed advocates for the interests of the Nigerian workers and masses- the Trade Union Congress, Nigerian Labour Congress, Petroleum and Natural Gas Senior Staff Association (PENGASSAN) and even the National Union of Petroleum and Natural Gas Workers (NUPENG), has seen anything wrong in the issue of availability of kerosene to the ordinary citizens of this country to warrant any form of protest or face-off with government? Meanwhile, these same groups would spit fire on the slightest upward review of the prices of petrol and diesel. What kind of a selfish bunch of people do we say represent us?

(IFEANYI IZEZE is an Abuja-based Consultant and be reached on:; 234-8033043009)

The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of SaharaReporters

Subsidy Fraud: Akintola Williams Delloite Indicted As Court Admits Key Documents In Trial of Walter Wagbatsoma.


Walter Wagbatsoma in court
By SaharaReporters, New York

The audit firm of Akintola Williams Delloite was today indicted for playing a role in a series of fuel subsidy scams.

The firm’s indictment surfaced today during the continued trial of fuel importers, Walter Wagbatsoma and Adaoha Ugo-Ngadi as well as their company, Ontario Oil and Gas Limited. The accused are part of a clique of fuel importers accused of making fraudulent fuel subsidy claims to the tune of N1.9 billion.

Continuing his testimony today, Sheu Muhammed, an investigator with the Economic and Financial Crimes Commission (EFCC), stunned the court by accusing the government’s official auditing firm, Akintola Williams Delloite, of culpability in widespread subsidy scam. Mr. Mohammed began his testimony last week.

At today’s court session, the EFCC submitted two documents which demonstrated the audit firm’s unsavory role in the extensive scheme. It is conservatively estimated that numerous fuel marketers defrauded the Nigerian people of more than $6 billion through inflated subsidy claims.

Justice Lateefat Okunnu ruled to admit the documents despite strong objections by one of the defense lawyers, Wole Olanipekun. Mr. Olanipekun tried, but failed, to suppress the admittance of the documents on technical grounds.

The admitted documents are extracts from audit reports prepared by Akintola Williams Deloitte and recommending payments to oil marketing companies that participated in fuel importation for Batch M10, October 2010 and Batch S10, January 2011. A lawyer who observed the trial told SaharaReporters that the documents establish the auditing firm’s culpability in the inflation of figures claimed by rogue oil marketers.

Mr. Mohammed’s testimony revealed that both Akintola Williams Delloite and the Petroleum Products Pricing Regulatory Agency (PPPRA) neither audited nor verified the fuel import claims made by marketers.

Mr. Mohammed disclosed that EFCC investigators determined that Ontario Oil and Gas Ltd received some N754 million in excess payments in two transactions. He blamed the inflated claims and payments on the complicity of various government agencies that failed to discharge their responsibility for verifying subsidy claims. He told the court that the PPPRA and Akintola Williams Delloite were key players in the fraud.

Mr. Mohammed told the court: “Our findings showed that Ontario Oil and Gas Ltd in the second quarter of 2010 discharged 12 million liters in the farm tank of  Integrated Oil Services Limited but claimed to have imported 19 million liters, but Akintola Deloitte recommended that it supplied 18 million liters for which about N900 million was paid.” He explained that Ontario Oil and Gas received an inflated payment of about N340 million from that transaction.

The witness added that the audit firm of Akintola Williams Delloite recommended payment for 19 million liters in a separate transaction where the oil marketer imported only 10 million liters of fuel.

“The PPPRA and the government-appointed auditor, Akintola Williams Deloitte, did not witness the discharge of the products,” the witness told the court. He revealed that Ontario Oil and Gas Ltd received N414million in overpayment in the second transaction. The total amount overpaid to the marketer in the two fraudulent deals totaled N754 million, the EFCC investigator stated.

Earlier, another prosecution witness had also underscored the role played by the PPPRA in the massive fuel subsidy fraud. The witness told the court that the agency had not verified the authenticity of the certificates submitted by the marketers to support their subsidy payment claims.

Mr. Fakuade Babafemi, an employee of the PPPRA, and Mr. Ezekiel Ejidele, the managing partner at Akintola Williams Delloite, are also accused in the suit filed by the EFCC.

Justice Lateefat Okunnu adjourned till Tuesday for continuation of testimony by prosecution witnesses.

The Cost Of Governance: Petroleum Products Pricing Regulatory Agency By Nasir Ahmad El-Rufai.

In December last year, the National Assembly Joint Committee on Petroleum (Downstream) asked the Petroleum Products Pricing and Regulatory Agency (PPPRA) to justify the N5.7bn budget for overheads and personnel for its staff of 249 for 2012. Out of the N5.7bn, a total of N4.95bn had been released.

Analysis of the PPPRA budget further showed that N2.1bn was earmarked for regular allowances, and had been released and utilized even before the end of the fiscal year. What kind of work is the PPPRA doing to justify paying 249 people nearly N6bn in just one year? Why should government pay each staff an average of a lavish N23m annually?

While it is true that the political leadership makes policies, the bureaucracy and agencies of government are tasked with implementing those policies, and in certain instances, also initiate policies in public interest. Considering the poor level of implementation and recurrent reversals of public policies in the country, it is little surprise that Nigerians have been left with the short end of the stick. Yet while the quality of governance is abysmally low, the running cost of our MDAs remains one of the highest in the world.

Since the beginning of the examination of government by this column, we have focused on specific policy areas. The message, if anything is that save for a handful of exceptional CEO’s not of MDAs, this president, nor his coterie of advisers have done a decent job of formulating sound policies and focused implementation.  Indeed, what seems to come across very clearly is that the Yar’Adua-Jonathan administrations have systematically destroyed organizations, systems and processes in order to expedite the unmatched plunder of resources that is going on with impunity. Whatever the truth may be, it would be worth our while to examine some government agencies to see what Nigerians pay for the personnel, policies and processes that have only led to growing poverty, ballooning unemployment, division, hatred and general decay. It is actually a fair question to ask if Nigeria still has a functional government.

Let’s consider the facts. It is a fact that unemployment in Nigeria is at an alarming 29.3%, a figure which has risen steadily since the Jonathan government started administering Nigeria some three years back. With government neglect and non-implementation of policies and budgets, Nigeria’s life expectancy of between 47 and 52 years, shows no signs of improving anytime soon. About 43% of our adult population is illiterate in all languages and do not have access to adult education.  The country’s minimum wage is a paltry N18,000 and at nearly N7trn, Nigeria’s debt stock is going out of control.  In an economy with all these ills, it is also a fact that a few public servants earn a monthly salary of N1.8m or an annual salary of about N23m that our legislature approved for PPPRA in 2012.

The PPPRA is an offshoot of the Petroleum Products Pricing Committee, which came into existence through the recommendations of the Special Committee on the Review of Petroleum Products Supply and Distribution in 2000. However, it was not until February 2003 that the Bill for its establishment was passed into law and assented to by former President Olusegun Obasanjo in May the same year.

Dr Oluwole Oluleye was the agency’s pioneer Executive Secretary and served for six years (June 2003 – July 2009), Mr Abiodun Ibikunle succeeded him and served from July 2009 to February 2011. Most recent are Engr. Goody Chike Egbuji (February – November), and Mr. Reginald Chika Stanley (November 2011 to date).

Among other functions, its prime responsibilities were to moderate volatility in petroleum products prices, while ensuring reasonable returns to operators; determine the pricing policy of petroleum products; regulate the supply and distribution of petroleum products; establish a data bank through liaison with all relevant agencies to facilitate their making of informed and realistic decisions on pricing policies and establish parameters and codes of conduct for all operators in the downstream petroleum sector.

Nearly a decade since its establishment, would we say long queues have disappeared from our fuel stations? With the very volatile fuel pricing situation, are things not even worse off now? How has the regulatory agency contributed to better pricing of petroleum products for Nigerians? Can it be sadly concluded that the PPPRA Act itself creates as many problems as it solves?

There is some serious limitation regarding the membership structure of the PPPRA. While the Act itself provides for membership of the top operational level of the agency amongst special interest groups like NACCIMA, MAN, NLC, PENGASSAN, Transport owners, Nigerian Media, NIM, NNPC etc. There does not appear to be a direct representation of the proverbial ‘common man’ whose good the regulatory agency should be serving.

Another lacuna is that the Act neither mentions nor addresses the existing powers of the Minister of Petroleum Resources and NNPC to regulate the downstream sector. This is in spite of the fact that the NNPC Act 1977 contains provisions empowering the minister, through the department of Petroleum resources to regulate the sector, including fixing petroleum product prices. Furthermore, the MPR/DPR has sole regulatory authority over technical standards, refining, and logistics in the sector under the NNPC Act. The conclusion therefore is that Nigeria currently has at least two regulatory authorities for petroleum products with responsibilities overlapping.

We may then ask what parameters or codes of conduct has the agency established for downstream operators? None. Except you choose to consider the stunning revelation before a Lagos High court in January last year by Mr Zamani, Assistant General Manager at the PPPRA Lagos zonal office, that the PPPRA only receives photocopies of documents required for processing subsidy claims and the fact that their relationship with marketers is based on ‘trust’. Is it not also under this regulatory body that worse cases of trillion Naira subsidy fraud in 2011 and 2012 have been found? Does this not all point to the ineffectiveness and lack of capacity of the PPPRA?

In 2012, the agency was allocated some N5.7bn which was 9.8% of the Petroleum Ministry’s total allocation of N59bn. Its entire allocation was for recurrent expenditure, with N76m for overheads and N5.7bn for personnel cost. One would notice the same trend in the 2013 budget; the Petroleum Ministry is allocated some N60.8bn and with a budget of N6.2bn, the PPPRA alone took about 10% of the entire sum.

In 2013, the cost of running this agency would increase by some 7% over 2012 figures. 98% of the Agency’s N6.2bn budget would cover personnel costs; plainly put, maintaining the staff of PPPRA in 2013 would cost a hefty N6.1bn representing an increase of 7% over the N5.7bn 2012 provision that the Legislature queried. Overhead expenditure is allocated some N69m and capital expenditure allocated a very pitiable N100m which would be used simply for the purchase of office furniture and fittings.

Is it not evident from these figures that this agency is only concerned with paying and receiving extravagant salaries at the expense of over 112 million Nigerians who live on less than a dollar a day? One would even wonder what good comes of all these Senate committee hearings if they cannot bring about desperately needed change like cutting recurrent costs and raising capital expenditure in MDAs.

The PPPRA as regulator has failed the oil industry and Nigeria woefully.  It has become a major participant in all corruption cases plaguing the industry from price fixing based on questionable templates to its involvement and indictment in the trillions of Naira lost to oil subsidy scams.

Incidentally, the Orosanye Committee which was instituted by the Federal Government in August 2011 to amongst other things review previous reports on the restructuring of parastatals and advice on their relevance since observed that the 26-member board of the PPPRA is very unwieldy and should be reduced to a more manageable size of 7. It also observed that with the ultimate enactment of the Petroleum Industry Bill, (presently in the National Assembly) and/or removal of the subsidy on petroleum products, the PPPRA would cease to exist. Considering this, the report recommended that the PPPRA and Petroleum Equalization Fund be merged into a single department in the Ministry of Petroleum Resources; and the bridging process of distribution of petroleum products be fully automated in order to eliminate abuses.

There is certainly a need for a regulator in the downstream sector, but this regulator must bring together the strands of regulatory authority that presently reside in the MPR, DPR, NNPC, PPPRA and create a single new regulatory authority that incorporates the institutional know-how of both the PPPRA and DPR within an empowered and more credible organizational and statutory framework.  Can the Petroleum Industry Bill when passed provide that? Only time will tell.


PPPRA Does Not Authenticate Documents Of Fuel Importers Before Processing Their Subsidy Claims, Its Official Tell Lagos Court.

PPPRA Executive Secretary Mr. Reginald-Stanley
By Saharareporters, New York

More facts emerged in court today as to how subsidy fraud suspects succeed in receiving subsidy claims with forged documents, as official witnesses of the Petroleum Product Pricing Regulatory Agency (PPPRA) told a Lagos High Court that their relationship with oil marketers is based on “trust.”

Victor Zamani and Tope Ogundola of the PPPRA, who testified before Justice Okunnu at the trial of Rowaye Jubril, the Executive Director of Brila Energy Limited at the High Court in Ikeja, disclosed this while explaining the agency’s process of qualifying fuel marketers for claims from the government’s petroleum support fund.

The witnesses described their routine of looking through all relevant documents submitted by fuel importers after discharging imported products to daughter vessels which, in turn, distribute to local retailers.

Mr. Zamani, who acts as Assistant General Manager at the Lagos Zonal Office of the PPPRA, disclosed that every mother vessel importing fuel for daughter vessels carries up to 60,000 metric tonnes of the fuel product and discharges for the daughter vessels at various tank farms in the country.

He said the business of the PPPRA at their level was only to receive photocopies of the required documents for processing subsidy claims to satisfy that the marketers have fulfilled all quality, quantity, insurance and other relevant requirements to qualify for the subsidy fund.

While confirming the testimony of the first witness Mr. Ogundola said his job was to receive photocopies of all relevant documents, among which are the certificates of marine insurance; certificate of quality; certificate of product quantity; ship-to-ship transfer documents; and relevant bank documents.

He said that the PPPRA has a checklist of 38 items it uses, after which it receives and keeps copies of the documents from the marketers.  The witness also said there is a ‘checker’ person whose job is only to check whether the kinds of documents submitted by the marketers correspond with those required.  After completing the documents checking cycle from the agencies and institutions – without verifying whether they are genuine or forged – the PPPRA’s officials said they keep two photocopies and send copies to their head office in Abuja to process Petroleum Support Fund payment for the marketers. According to him, no effort is made to authenticate the documents submitted throughout their document-checking procedures.

“We do everything with the marketers on the basis of trust,” said Mr. Ogundola.  To a cross-examiner, he said that since the PPPRA does not operate on 24 hours basis, it was not possible for officials to determine whether fuel marketers take the products back from the daughter vessels to which they have discharged fuel after they have inspected the transfer of contents from mother to daughter vessels.  He said, however, that such a practice would be an aberration in the profession, and that they trust marketers not to engage in such a practice.

Observers said that today’s testimonies by the two PPPRA officials suggest a poor documents verification procedure which makes adequate room for any marketer to present forged documents and then claim subsidy funds without really qualifying to be paid.

Mr. Okunnu adjourned trial of Mr. Jubril to the 11th, 12th and 19th of March 2013.

Strike: FG slashes petrol price to N97 per litre.


…reads riot Act to hoodlums.
President Godluck Jonathan has directed reduction in the price of petrol
from N141 to N97 per litre following inability of government – labour talks
on Sunday to reach a consensus on how to resolve the lingering crisis
triggered by the controversial policy.
In a nationwide address to Nigerians, President Jonathan said the
reduction was a unilateral decision by government since its dialogue with
labour on the matter ended in deadlock.He however said government would still pursue full deregulation of the
nation’s oil sector to ensure ultimate removal of product subsidies.“Government will continue to pursue full deregulation of the downstream
petroleum sector.
However, given the hardships being suffered by
Nigerians, and after due consideration and consultations with state
governors and the leadership of the National Assembly, government has
approved the reduction of the pump price of petrol to N97 per litre. The
Petroleum Products Pricing Regulatory Agency (PPPRA) has been
directed to ensure compliance with this new pump price.“Government is working hard to reduce recurrent expenditure in line with
current realities and to cut down on the cost of governance. In the
meantime, government has commenced the implementation of the
Subsidy Reinvestment and Empowerment projects: including the Federal
Government- assisted mass transit programme which is already in place,
and job creation for the youth”, he said.

Government, he warned would no longer tolerate acts of violence and
wanthom destruction of property under the guise of protests against
subsidy removal, adding that culprits will be visited with the full weight of
the law.

Here is the full text of the Presidential Address on the Implementation of
the Deregulation Policy in the Downstream Sector of the Petroleum

“Dear Compatriots,

1.    This is the second time in two weeks I will address you on the
deregulation of the downstream petroleum sector. In the last seven days,
the nation has witnessed a disruption of economic activities.  Although,
the economic imperatives for the policy have been well articulated by
government, the Nigerian Labour Congress (NLC) and the Trade Union
Congress (TUC) went ahead to declare a nationwide strike.

2.    There was also near-breakdown of law and order in certain parts of
the country as a result of the activities of some persons or groups of
persons who took advantage of the situation to further their narrow
interests by engaging in acts of intimidation, harassment and outright
subversion of the Nigerian state. I express my sympathy to those who
were adversely affected by the protests.

3.    At the inception of the deregulation policy, Government had set up
the Justice Alfa Belgore Committee to liaise with Labour and other
stakeholders to address likely grey areas in the policy, but despite all our
efforts, Labour refused the option of dialogue and also disobeyed a
restraining order of the National Industrial Court of Nigeria.

4.    However, following the intervention of the Leadership of the National
Assembly, and other well-meaning Nigerians, Labour accepted to meet
with government, but this yielded no tangible result.

5.    It has become clear to government and all well-meaning Nigerians
that other interests beyond the implementation of the deregulation policy
have hijacked the protest. This has prevented an objective assessment
and consideration of all the contending issues for which dialogue was
initiated by government. These same interests seek to promote discord,
anarchy, and insecurity to the detriment of public peace.

6.    Government appreciates that the implementation of the deregulation
policy would cause initial hardships and commends Nigerians who have
put forth suggestions and credible alternatives in this regard. Government
also salutes Nigerians who by and large, conducted themselves
peacefully while expressing their grievances. Let me assure you that
government will continue to respect the people’s right to express
themselves within the confines of the law and in accordance with the
dictates of our democratic space.

7.    Government will continue to pursue full deregulation of the
downstream petroleum sector. However, given the hardships being
suffered by Nigerians, and after due consideration and consultations with
state governors and the leadership of the National Assembly, government
has approved the reduction of the pump price of petrol to N97 per litre. The
Petroleum Products Pricing Regulatory Agency (PPPRA) has been
directed to ensure compliance with this new pump price.

8.    Government is working hard to reduce recurrent expenditure in line
with current realities and to cut down on the cost of governance. In the
meantime, government has commenced the implementation of the
Subsidy Reinvestment and Empowerment projects: including the Federal
Government- assisted mass transit programme which is already in place,
and job creation for the youth.

9.     Furthermore, the legal and regulatory regime for the petroleum
industry will be reviewed to address accountability issues and current
lapses in the Industry. In this regard, the Petroleum Industry Bill will be
given accelerated attention. The report of the forensic audit carried out on
the NNPC is being studied with a view to implementing the
recommendations and sanctioning proven acts of corruption in the

10.    Let me assure Nigerians that this administration is irrevocably
committed to tackling corruption in the petroleum industry as well as other
sectors of the economy. Consequently, all those found to have contributed
one way or the other to the economic adversity of the country will be dealt
with in accordance with the law.

11.    My dear compatriots, I urge you to show understanding for the
imperatives of the adjustment in the pump price of petrol and give
government your full support to ensure its successful implementation. I
further appeal to Nigerians to go back to work and go about their normal
duties as government has made adequate arrangements for the protection
of life and property throughout the federation.

12.    Government will not condone brazen acts of criminality and
subversion. As President, I have sworn to uphold the unity, peace and
order of the Nigerian State and by the grace of God, I intend to fully and
effectively discharge that responsibility.  Let me add that we are desirous
of further engagements with Labour. I urge our Labour leaders to call off
their strike, and go back to work.

13.    Nigeria belongs to all of us and we must collectively safeguard its

14.    Thank you. God bless the Federal Republic of Nigeria.

President, Federal Republic of Nigeria”

By African Examiner.

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