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No record of fuel importation by NNPC – Customs

JANUARY 18, 2012 BY JOHN AMEH, ABUJA 34 COMMENTS
Petro 

The House of Representatives Ad-hoc Committee on the Monitoring of the Subsidy Regime heard on Tuesday that the exact quantity of petrol on which subsidy was being charged might not be known as there were no verifiable records of importation into the country.

It also heard that the Nigerian National Petroleum Corporation had not paid any duty to the Federal Government on imported petrol since 2002 owing to a presidential waiver.

Prior to 2002, the corporation allegedly owed the Nigeria Customs Service over N46bn as accrued duty on petrol.

These revelations were made in Abuja when the NCS testified before the Farouk Lawan-led committee investigating the administration of subsidy funds in the country.

The Deputy Comptroller-General (Accounts and Tariffs), NCS, Mr. Julius Nwogu, who represented the service, said the practice over the years was that “Mother Vessels” berthed off-shore to discharge products instead of going to designated ports.

While on the high seas, Nwogu said that the vessels discharged the products into “smaller vessels” for onward delivery to the ports.

He told the committee that the manifest accompanying the smaller vessels usually indicated that the product came from either “offshore Cotonu” or “offshore Lome” as the case might be.

He explained that since customs personnel were barred from examining offshore vessels, they could not determine the exact quantity of products the vessels brought into the country.

According to him, efforts by the NCS to engage NNPC over the “illegal operations” yielded no results because the corporation had the backing of the Federal Ministry of Finance.

Nwogu added, “The Customs and Excise Management Act provides that vessels from foreign countries must berth at the ports of destination, not at unapproved locations. So, what the NNPC does are illegal operations. NNPC argued that there would be scarcity of products if the process is delayed and the vessels are not allowed to discharge at private jetties.

“Most of the time, no documents are attached to the vessels. Most of the petrol consignments imported by the NNPC have no documents attached to them; only the private marketers make declaration to Customs. The NNPC, till date, does not make any declaration to Customs and no LGDs are made.”

Nwogu stated that the agency gave up the fight after the Ministry of Finance wrote a letter asking it to hands off the issue of documentation and compliance with due process.

“They told us that insisting on the rules will cause crisis in the supply of products,” he informed the committee members.

Nwogu also revealed that despite being a member of the board of the PPPRA, the Customs was not involved in the “process of verification for payment of subsidies.”

“The NCS is not involved in the verification, vis-à-vis payment of subsidies. We don’t know the documents used to make the claims,” he said.

The committee also heard that NNPC was importing crude for refining at the Kaduna Refinery and was not paying duty to government for such transactions.

“The Kaduna Refinery does not use local crude; the NNPC imports crude for this refinery through the Warri Port. They don’t pay a penny as duty on this operation,” he stated.

Nwogu suggested that a way out of the problem was for the Nigeria Extractive Industry Transparency Initiative to carry out a forensic audit of all the vessels that bring refined petroleum products into the country in order to establish the exact records of transactions.

NEITI, which made a presentation to the committee, did not spare the NNPC, as it described its operations as lacking “transparency and due process.”

The Chairman, NEITI, Prof. Asisi Asobie, told the committee that the corporation regularly flouted the procedure for subsidy payments.

He noted that the guideline required that payments should be made “only on the approval of the Accountant-General of the Federation based on claims approved by PPPRA.”

But, he said NNPC chose to unilaterally “estimate the subsidy entitlements and deduct the estimated amounts directly from the domestic crude proceeds before remitting the rest to the Federation Account.”

Asobie disclosed that its audit of crude oil lifting by the corporation between 2006 and 2008 showed a drop in the quantity supplied to refineries as against the quantity originally lifted by NNPC.

“For domestic use, the NNPC received 155mbbls (2006); 157 million barrels (2007); and 164 million barrels (2007).

“But the refinery supply was only as follows: 42mbbls (27.1 per cent); 18mbbls (11.5 per cent); and 41mbbls (25 per cent)”, he disclosed.

Earlier, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had defended the N1.3tn subsidy payment up to September 2011, as against the N245bn approved by the National Assembly for the year.

She claimed that the N245bn was meant to cover claims for only two months and not the entire year.

According to the minister, the government had planned to remove fuel subsidy in March 2011, a reason it made provision for only two months.

She, however, said that the idea was later shelved by government.

After the government shelved the idea, the minister said that her ministry had to continue to coordinate the importation of petrol in order to avoid scarcity of the product.

She noted that in the process, subsidy claims accumulated and the Ministry of Finance had to authorise payment following verification by PPPRA.

She explained that if N245bn was multiplied by six, it would have brought the total subsidy claims to N1.5tn.

However, the minister stated that about N300bn of the N1.3tn spent on subsidy was actually for kerosene.

The committee members still raised questions on the sharp rise in subsidy claims in 2011, especially when compared with previous years.

of petrol was 33 million litres, the government paid N630bn as subsidy.

He recalled that in the same year, the price of crude was $100 per barrel compared to 2011 when the country consumed 35 million litres, while crude sold at about $100, yet the country paid over N1.3tn in nine months.

Alison-Madueke attributed the difference to exchange rate fluctuations among other variables.

On why the NNPC deducted its subsidy claims at source, the minister claimed that the 2011 Appropriation Act and the NNPC Act empowered it to do so.

Reacting, the Group General Manager, Group Public Affairs, NNPC, Dr. Levi Ajuonuma, said, “NNPC complies with all statutory requirements on importation of products. T

 

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