Senate Committee Gives NNPC Two Weeks to Account for $1.05bn Fuel Subsidy

Deji Elumoye in Abuja

The Senate Ad-hoc Committee investigating the alleged $3.5 billion petroleum subsidy by the Nigeria National Petroleum Corporation, NNPC, has given a two- week ultimatum to the NNPC to account for $1.05billion it reportedly spent on fuel subsidy within the last one year.

The Senate had on October 16 set up the ad-hoc committee following allegations by Senate Minority Leader, Senator Biodun Olujinmi, that NNPC was unilaterally running an illegal $3.5 billion fuel subsidy account without a recourse to the National Assembly.

NNPC Managing Director, Mr Maikanti Baru, told the committee at a public hearing Thursday evening that the Corporation spent $1.05billion to defray under recovery cost of Premium Motor Spirit(PMS) from October 2017 to date.

Chairman of the 15- man committee and Senate Leader, Senator Ahmad Lawan, said the Corporation needed to justify the huge amount spent in hard currency to augment the fuel price.

He therefore directed NNPC to get all the necessary details including the fuel landing charges and way bills ready for the Committee within the next two weeks.

Lawan expressed great concern at what government was spending to defray cost of petrol saying” this is a very serious matter which we have to find a means of resolving”

” Government cannot continue with this extra spending whether it is called underrecovery or overrecovery and we must all resolve to address the issue once and for all and our committee which has a limited time will be willing to see result in this regard.”

The Senate Leader canvassed for an all inclusive fuel importation arrangement that will involve not only NNPC ” but oil marketers who will also have the wherewithal to import fuel unlike now that they are not importing because they don’t want to run at a loss”.

NNPC MD had earlier in his presentation before the Committee claimed the Corporation never operated any $3.5billion petroleum subsidy account.

According to him, “there is no provision for fuel subsidy in the Appropriation Act since 2016 so it will be illegal for NNPC to operate any account on subsidy”.

Baru, however, stated that what the Corporation only did in the wake of shortfall in fuel supply between October, 2017 and January, 2018 ” was to devise other means of securing the Premium Motor Spirit, PMS, on the advice of the National Assembly.”

He said NNPC there and then utilised $1.05billion from its investment in Nigeria Liquiefied Natural Gas, NLNG to finance the additional landing and other expenses of PMS.

The Fund, he added, is being administered by both steering and working committees that look at the daily operations of the Fund ” with a view to ensuring strict compliance with the laid down funding rules”.

Members of the committees were drawn from federal ministries of finance, petroleum resources, office of the Accountant General of the federation, Central Bank of Nigeria, Petroleum Products Pricing Regulatory Authority, Department of Petroleum Resources and NNPC.

“What we did was in line with section 7 sub section 4b of the NNPC Act which mandates NNPC to defray its cost from its revenue of operation which is NLNG that the Corporation is a shareholder”

Baru stated particularly that NNPC, which is the sole importer of petroleum products since the oil marketers backed out since last year, now subsidises a litre of PMS with N40.

He suggested additional funds for the project if not it may have to be discontinued by 2019 saying ” we will need to get more funds into that account so as to defray underrecovery from next year so that there wont be problem”.

Most government departments like the CBN, office of Accountant- General, NIMASA, DMO, NPA invited to the public hearing were conspicuosly absent and set no apology.

The public hearing continues on Tuesday, November 6 by 2.30pm when all stakeholders will be expected to attend.