House Probes Petroleum Subsidy Regime
Udora Orizu in Abuja
The House of Representatives at plenary Wednesday resolved to set up an ad hoc committee to investigate the petroleum products subsidy regime in Nigeria from 2017 to 2021.
The resolution of the lawmakers was sequel to the adoption of a motion sponsored by Hon. Sergius Ose Ogun.
Earlier, Hon. Osita Chidoka had appealed to the Speaker, Hon. Femi Gbajabiamila, that the prayer of the motion is in tandem with the ongoing probe by the ad hoc committee investigating assets and liabilities of NNPC, hence should be stepped down or directed to that already existing ad hoc committee.
However some other lawmakers countered his assertion, saying that the motion is entirely different from the one he made reference to.
Moving the motion, the sponsor, Ogun, noted that Section 32 of the Petroleum Industry Act, 2021 saddles the Petroleum Midstream and Downstream Regulatory Authority with the task of regulating and monitoring technical and commercial midstream and downstream petroleum operations in Nigeria.
He said that as of 2002, the NNPC’s purchase of crude oil at international market prices stood at 445,000 barrels per day in order to enable it to provide petroleum products for local consumption.
He also said the House is aware that due to the decline in the production capacity of the refineries, NNPC found it more convenient to export domestic crude in exchange for petroleum products on trade by barter basis described as Direct Sales Direct Purchase (DSDP) arrangement.
He expressed concerns that the consumption rate of petrol is 40 million to 45 million litres per day, adding that the NNPC uses 65 million to 100 million litres per day to determine subsidy as discoverable from NNPC’s monthly reports to the Federal Accounts Allocation Committee (FAAC).
Ogun said: “Also aware that component costs in the petroleum products subsidy value chain claimed by the NNPC Limited is highly over-bloated, while the transfer pump price per litre used by the NNPC Limited in relation to PPMC is underquoted as N123-N128 instead of N162-N165 and this fraudulent under-reporting of N37-N39 per litre translates into over N70 billion a month or N840 billion a year.
“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 $10 billion with records showing that as at 2021, over $7 billion in over 120 million barrels have been so diverted. Disturbed that there exists evidence that subsidy amounts are being duplicated, thus subsidy is charged against petroleum product sales in the books of NNPC, as well as against crude oil revenue in the books of NAPIMS to the tune of over N2 trillion action.”
Adopting the motion, Speaker Gbajabiamila said that the ad hoc committee, whose members will be announced at plenary Thursday, will be given eight weeks to carry out the assignment and report back to the House for further legislative action.
House Probes Petroleum Subsidy Regime
Udora Orizu in Abuja
The House of Representatives at plenary Wednesday resolved to set up an
ad hoc committee to investigate the petroleum products subsidy regime in Nigeria from 2017 to 2021.
The resolution of the lawmakers was sequel to the adoption of a motion sponsored by Hon. Sergius Ose Ogun.
Earlier, Hon. Osita Chidoka had appealed to the Speaker, Hon. Femi Gbajabiamila, that the prayer of the motion is in tandem with the ongoing probe by the ad hoc committee investigating assets and liabilities of NNPC, hence should be stepped down or directed to that already existing ad hoc committee.
However some other lawmakers countered his assertion, saying that the motion is entirely different from the one he made reference to.
Moving the motion, the sponsor, Ogun, noted that Section 32 of the Petroleum Industry Act, 2021 saddles the Petroleum Midstream and Downstream Regulatory Authority with the task of regulating and monitoring technical and commercial midstream and downstream petroleum operations in Nigeria.
He said that as of 2002, the NNPC’s purchase of crude oil at international market prices stood at 445,000 barrels per day in order to enable it to provide petroleum products for local consumption.
He also said the House is aware that due to the decline in the production capacity of the refineries, NNPC found it more convenient to export domestic crude in exchange for petroleum products on trade by barter basis described as Direct Sales Direct Purchase (DSDP) arrangement.
He expressed concerns that the consumption rate of petrol is 40 million to 45 million litres per day, adding that the NNPC uses 65 million to 100 million litres per day to determine subsidy as discoverable from NNPC’s monthly reports to the Federal Accounts Allocation Committee (FAAC).
Ogun said: “Also aware that component costs in the petroleum products subsidy value chain claimed by the NNPC Limited is highly over-bloated, while the transfer pump price per litre used by the NNPC Limited in relation to PPMC is underquoted as N123-N128 instead of N162-N165 and this fraudulent under-reporting of N37-N39 per litre translates into over N70 billion a month or N840 billion a year.
“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 $10 billion with records showing that as at 2021, over $7 billion in over 120 million barrels have been so diverted. Disturbed that there exists evidence that subsidy amounts are being duplicated, thus subsidy is charged against petroleum product sales in the books of NNPC, as well as against crude oil revenue in the books of NAPIMS to the tune of over N2 trillion action.”
Adopting the motion, Speaker Gbajabiamila said that the ad hoc committee, whose members will be announced at plenary Thursday, will be given eight weeks to carry out the assignment and report back to the House for further legislative action.
