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Tag: kerosene subsidy

  • Kerosene subsidy took $1b, says Osinbajo

    Kerosene subsidy took $1b, says Osinbajo

    The Federal Government spent $1 billion on kerosene subsidy last year, the Vice President, Yemi Osinbajo, has said.

    Osinbajo, who  spoke yesterday at the Domestic LPG Implementation Stakeholders Workshop in Abuja, organised by the Office of the Vice President, Ministry of Petroleum Resources and the Nigerian Liquefied Natural Gas (NLNG),  lamented the low usage of Liquefied Petroleum Gas (LPG) also known as cooking gas in the country.

    He said although Nigeria’s total domestic LPG grew from a low of 50,000 metric tonnes per annum (MTPA) to approximately 400,000 MTPA last year due to NLNG’s intervention, Nigeria’s per capital consumption of 2.5 kilogrammes (KG) remained low compared to its peers in Africa.

    “The low level of LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuels in majority of approximately 36 million Nigerian households,” he said.

     

  • Federal Govt ‘spent $1b on kerosene subsidy in 2015’

    Federal Govt ‘spent $1b on kerosene subsidy in 2015’

    •Osinbajo decries low usage of cooking gas

    Vice President Yemi Osinbajo said yesterday that the Federal Government spent $1 billion on kerosene subsidy in 2015.
    He lamented about the low usage of Liquefied Petroleum Gas (LPG), also known as cooking gas in Nigeria.
    He spoke at the ‘Domestic LPG Implementation Stakeholders Workshop in Abuja, organised by the Office of the Vice President, Ministry of Petroleum Resources and the Nigerian Liquefied Natural Gas (NLNG).
    The vice president noted that although Nigeria’s total domestic LPG grew from 50,000 metric tonnes per annum (MTPA) to approximately 400,000 MTPA in 2015 due to NLNG’s intervention, Nigeria’s per capital consumption of 2.5 kilogrammes (KG), remains low compared to its peers in Africa.
    His words: “The low level of LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuels in majority of approximately 36 million Nigerian households.
    “This reliance on kerosene and firewood has substantial economic effect. Government has had to take in huge subsidies, with over $1 billion spent in 2015 on kerosene subsidy. A significantly high rate of deforestation continues to be recorded as over 95.76 million metric tonnes of firewood was used in 2015.”.
    Osinbajo said ironically, most of the LPG produced in Nigeria today is exported, declaring that despite the huge export and the fact that the consumption level is low, over 40 per cent of domestic consumption in 2015 was imported.
    He maintained that the huge importation of LPG for domestic consumption impacts negatively on the country’s foreign exchange outlay and limits domestic supply of LPG.
    The vice president added that LPG has considerable benefits, which include being more cost-effective and provides better health benefits than firewood and kerosene, both of which have been identified has the cause of more than 50 per cent of over 93,000 deaths.
    He highlighted the need to culminate all the various gas and LPG policies with the regulatory framework that would boost the business environment.
    He added that a successful implementation of the intervention strategies would require an investment of up to $25.2 billion over the next couple of years, adding that the investment would be used in providing infrastructure among others.
    Minister of State for Petroleum Resources Ibe Kachikwu said there was need to harmonise all the various gas and LPG policies with the regulatory framework that would boost the business environment.

  • ‘LPG use ‘ll save govt $1b yearly kerosene subsidy’

    ‘LPG use ‘ll save govt $1b yearly kerosene subsidy’

    The Federal Government could save $1billion yearly in subsidy spent on cooking fuel, dual purpose kerosene (DPK) or kerosene if it introduces and implements a policy that is strong enough to encourage more Nigerians to use Liquefied Petroleum Gas (LPG), Kano State Governor, Alhaji Abdullahi Umar Ganduje and the President, Nigerian Liquefied Petroleum Gas Association (NLPGA), Mr Dayo Adesina, have said.

    Speaking at the LPG conference in Lagos at the weekend, they said the government could also encourage state governments to adopt an LPG policy to protect the health of their people, and enact laws that would stop deforestation and its cutting  of trees for cooking.

    The event had as theme: LPG: The future is now.

    They argued that LPG remains the cleanest cooking fuel with little or no impact on the environment.

    Ganduje, who was represented by the Secretary to the State Government, Rabiu Sulaimon, urged the Federal Government to come out with a policy the would encourage the use of LPG.

    He said by so doing, the government would stop paying subsidy on kerosene, as well as helping to reduce carbon emission and other dangerous chemicals that were caused by the use of fossil fuels.

    He said Kano government has collaborated with the Federal Ministry of Environment in the area of reducing greenhouse emission, among other initiatives that are threatening the peace of the environment.

    According to him, improvement in the use of LPG in the state was made possible by the state government, adding the government was working hard to further reduce cutting of woods for cooking.

    He said: “We have a two-way approach to the issue of helping the Federal Government save $1 billion spent on kerosene subsidy every year. First, the state is working hard to see that more people use LPG for domestic and industrial purpose. Secondly, we are opposing desertification or deforestation.

    “Once policies are in place to support these initiatives, the patronage of kerosene would reduce and implicitly, the government would not see the need to keep on paying subsidy on the product.’”

     

     

  • ‘Outcome of Senate probe ‘ll determine kerosene subsidy’s fate’

    The Vice-Chairman, Senate Committee on Appropriation, Sen. Sunny Ugbuoji, has said the outcome of ongoing Senate investigation into kerosene subsidy will determine the future of subsidies on petroleum products in the country.

    He told the News Agency of Nigeria (NAN) in Abuja yesterday that the investigation would show whether the masses actually benefited from subsidies on petroleum products or not.

    The senator said “the whopping funds” being expended on subsidising petroleum products would have served better purposes if they were channelled into critical sectors of the nation’s economy.

    “That should not be and that would not be allowed to continue. This also will give us the opportunity to decide if we truly still need subsidy or not.

    “As it stands today, what is being spent on subsidy on petroleum (products) in Nigeria is more than the capital budget of the country.

    “No wonder, the economy is not being stimulated. The masses that actually need this subsidy don’t benefit from it.

    “This is because some few individuals corner this money (subsidies) and use it for their personal gains,” he said.

    Ugbuoji further assured Nigerians that the delay in the passage of the amendment to the Electoral Act would not affect INEC’s conduct of the 2015 general elections.

    He stressed that it was legal for INEC to continue working with the existing electoral law which empowered it to conduct elections, anytime, without having to wait for the passage of the amendments.

    “(If) INEC is asking for any amendment whatsoever in the existing Electoral Act, they are not supposed to just stay there without doing anything.

    “Suppose that the National Assembly is unable to conclude this bill and the National Assembly thinks otherwise that the extant laws are good enough to conduct the 2015 elections?

    “So, it is good that they are asking for amendment and it’s also good that they are saying that it is better not to be taken unawares.”

  • Senators oppose N700m daily withdrawal for kerosene subsidy

    Senators oppose N700m daily withdrawal for kerosene subsidy

    Senators were outraged yesterday, following the alleged illegal deduction of N700 million daily as kerosene subsidy by the Nigerian National Petroleum Corporation (NNPC).

    This was after a motion by Senator Babajide Omoworare (Osun East), titled: Urgent Need to Stop N700 million a day Illegal Kerosene Subsidy, was adopted.

    Senators Ayogu Eze, Abdul Ningi, George Akume, Isa Galadu, Emmanuel Paulker, Olubunmi Adetunmbi, Abubakar Saraki, Ahmed Makarfi and Victor Ndoma-Egba said the Senate should halt the anomaly.

    In his lead debate, Omoworare said he was concerned about the investigation by the Senate Committee on Finance on the alleged non-remittance of public funds by the NNPC into the federation account.

    The lawmaker also said he learnt, from the admission of the Petroleum Products Pricing and Regulatory Agency (PPPRA), the Ministry of Petroleum Resources and Ministry of Finance as well as verified findings from the Finance Committee’s investigation, that the kerosene subsidy scheme was illegal, unconstitutional and a brazen breach of the Appropriation Act passed by the National Assembly.

    He said there had been expenditures of public funds in contravention of sections 80 and 162(1) of the 1999 Constitution (as amended) and attendant appropriation acts.

    Omoworare said he was disturbed that less than 10 per cent of filling stations in the country sold kerosene at the alleged subsidised rate of N50 per litre, while the general price was not less than N150 per litre.

    He expressed worry that kerosene subsidy had failed to ameliorate the suffering of the masses because the beneficiaries were being defrauded while the process was being used to enrich the oil cabal and its collaborators in the corridors of power.

    The All Progressives Congress (APC) senator regretted that “less than 10 per cent of Nigerians benefit from this heartless massive scheme that drains the nation’s treasury, more than double the average annual budget for Education, Health, roads, Security, and Agricultural sectors, while the majority wallow in abject poverty at the expense of this few mindless rich cabal network.”

    Omoworare noted that since the kerosene subsidy scheme was outside the national budget, its impact was dangerous to the fiscal stability of the nation’s collective economic well-being and the country’s future.

    The senator said Nigerians should be concerned that the committee’s investigation showed that N4.2 billion was being spent every six days mon kerosene subsidy.

    He prayed the Senate to resolve that the minister of Petroleum Resources and other agencies of government charged with the regulation of petroleum products stop the illegal kerosene subsidy until the legal status of the scheme was determined.

    Omoworare said this would check the financial haemorrhage of the nation’s purse through the subsidy regime.

    Although several senators supported the motion, some asked the Senate to take a position on the matter: whether it should be retained or removed.

  • Kerosene subsidy: Senators reject N700m daily deductions

    Senators on Thursday kicked against alleged illegal deduction of N700 million daily as kerosene subsidy by the Nigeria National Petroleum Corporation (NNPC).

    The development followed the adoption of a motion by Senator Babajide Omoworare (Osun East) entitled: “Urgent Need to Stop N700 million a Day Illegal Kerosene Subsidy.”

    Senators Ayogu Eze, Abdul Ningi, George Akume, Isa Galadu, Emmanuel Paulker, Olubunmi Adetunmbi, Abubakar Saraki, Ahmed Makarfi and Victor Ndoma-Egba all said the Senate should take steps to halt the anomaly in the interest of the country.

    Omoworare in his lead debate said that he noted with utmost concern and keen interest the ongoing investigation by the Senate Committee on Finance regarding the alleged unremitted and unaccounted public funds by the NNPC into the Federation Account.

    The lawmaker also said that he noted through admission by the Petroleum Products Pricing and Regulatory Agency (PPPRA), the Ministry of Petroleum Resources and Ministry of Finance as well as verified findings emerging from the ongoing Finance Committee investigation, that current kerosene subsidy scheme is manifestly illegal, unconstitutional and a brazen breach of the Appropriation Act passed by the National Assembly as there have been expenditure of public funds in contravention of Sections 80 and 162(1) of the 1999 Constitution (as amended) and attendant Appropriation Acts.

    Omoworare said that he is disturbed that less than 10 per cent of petroleum products outlets in the country sell kerosene at the alleged subsidized rate of N50 per litre, while the general price is not less than N150 per litre.

    He said the kerosene subsidy scheme had woefully failed to ameliorate the living condition of the suffering masses of the country who are the targeted beneficiaries but has rather been transformed into an “engine of fraud and conduit for enriching the ever manipulative super rich oil cabal and its collaborators in the corridors of power.”

     

  • Kerosene subsidy: Alison-Madueke, NNPC, PPMC shun Reps’ probe

    Kerosene subsidy: Alison-Madueke, NNPC, PPMC shun Reps’ probe

    The House of Representatives proposed investigation into the Kerosene subsidy did not hold on Monday due to the absence of the Minister of Petroleum Resources, Mrs. Diezani Alison- Madueke, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Andrew Yakubu and the Pipeline and Products Marketing Company (PPMC).

    The House had through a resolution mandated the Dakuku Peterside- headed Committee on Petroleum (Downstream) to investigate issues surrounding kerosene supply, distribution and subsidy payments from 2010 to 2013.

    After a long wait for Alison-Madueke, Yakubu and the PPMC representative to arrive, the meeting was eventually postponed to February 18 by the committee chairman.

    It would be the second time the investigation has been pushed forward.

    The committee had in its letters to the three principal actors in the sector requested for the provision of all relevant detailed information as it relates to approvals on kerosene subsidy, source of money for payment of the subsidy, budgetary approvals, kerosine import details, PFI allocation and product distribution chart, PPPRA authorization and validations, auditors approval and reports, relevant shipping documents and all other documents that will assist the committee in discharging its responsibility.

    However, a letter from the Office of the Permanent Secretary, Ministry of Petroleum Resources, dated February 7, but received in Peterside’s office a few minutes before the commencement of the probe gave reasons for the minister’s absence and requested for a rescheduling of the hearing.

    It partly reads: “I wish to inform you that the Honourale Minister together with the top management of the ministry and its agencies will be participating in the International Summit on Power Financing starting today, 10th February, 2014.

    “As a result we regret to inform you of our inability to honour your invitation. We area so currently engaged with the Senate Committee on Finance and it is not clear when their hearing will end. ”

     

  • Time for hard questions on kerosene subsidy payments

    Time for hard questions on kerosene subsidy payments

    On Monday, the House of Representatives Committee on Petroleum (Downstream) will begin a public hearing on kerosene subsidy. It is coming at a time the dust is yet to settle on Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi’s claim that the kerosene subsidy regime is a racket, writes OLUKOREDE YISHAU

    Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi is expected to return to the National Assembly on Monday or Tuesday. He will be appearing before the House of Representatives Committee on Petroleum (Downstream). Last Tuesday, Sanusi appeared before the Senate Committee on Finance and deplored the management of the country’s oil revenue. One of the issues Sanusi raised bordered on kerosene subsidy payments, which, he described as illegal, given a presidential directive stopping any form of subsidy on the product. His expected appearance before the Dakuku Peterside-led House Committee on Petroleum (Downstream) will focus on the issue of kerosene subsidy, which the committee is probing.

    The public hearing is sequel to resolution HR84/2013, directing the committee to establish the actual amount spent on kerosene subsidy from 2010 to December last year; establish the source of the money used in financing kerosene subsidy and the relevant budgetary approval; determine the companies benefiting from kerosene subsidy; establish the extent (if at all) to which the subsidised kerosene gets to the consumers at the regulated price; and investigate all incidental issues relating to kerosene supply and distribution.

    Sanusi queried the Nigerian National Petroleum Corporation’s (NNPC) kerosene subsidy payments. He described kerosene subsidy as a racket.

    He said: “NNPC, in paying what it calls kerosene subsidy, is confessing to a number of serious infractions. First, I have shown, based on Nigerian Bureau of Statistics (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 the late 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 authorisation to purchase kerosene at N150/litre from Federation Funds and sell at about N40/litre, knowing full well that this product sells in the market at N170-N220/litre. At what point was the presidential directive reversed? The Nigerian Ports Authority (NPA) records would suggest that NNPC imports about four to six 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 five vessels a month, the Federation Account loses $100m every month to this racket.”

    Reacting to Sanusi’s claims, the NNPC said: “Regarding the subsidy claim on kerosene, it is important to note that NNPC as the supplier of last resort is the only company supplying this product in Nigeria for the benefit of the citizenry. If kerosene has been deregulated, why are the independent marketers not supplying this product in line with what is applicable to diesel (AGO)? NNPC owes a duty to Nigerians to ensure that there are adequate products in the country. This mandate has without question been accomplished in the past four years. NNPC deserves to be commended rather than battered, for ensuring adequate supply of kerosene at regulated price of N50. NNPC cannot be held responsible for any differential pricing from non-NNPC retailers. This is the basis for NNPC’s claim on kerosene subsidy.”

    Aside Sanusi, Minister of Petroleum Mrs Diezani Alison-Madueke, the Accountant-General of the Federation, Jonah Otunla, the Petroleum Products Pricing Regulatory Agency (PPPRA), the NNPC and kerosene marketers are expected to also shed light on the matter, which has become an open sore.

    As Sanusi noted, the late President Umaru Yar’Adua abolished kerosene subsidy and the decision was not publicly reversed. The late Yar’adua in a memo dated June 17, 2009 to the Minister of Petroleum Resources, directed that subsidy on kerosene be removed, as the continued payments by government did not get to the intended beneficiaries.

    Despite this directive, subsidy payment was reinstated. Yet, the targeted consumers benefited less from the scheme known as Kero-Direct initiated by the NNPC in July 2011 to help distribute household kerosene (HHK) to consumers nationwide.

    The House Adhoc Committee on Fuel Subsidy Probe said the scheme may have been a scam to defraud Nigerians and extort money from the Petroleum Support Fund (PSF). Under the scheme, the Pipelines and Products Marketing Company (PPMC), a subsidiary of the NNPC, provided the product sold to end users at N50 per litre, using the facilities of an independent marketer, Capital Oil and Gas Industries Limited. But the committee said the scheme was designed in a way the product would not get to the target beneficiaries at the approved price.

    The committee found that the product sold only at the 36 NNPC mega stations out of the over 24,000 retail outlets across the country. The committee said there was massive diversion of the product, which made consumers to get the product at between N130 and N150 per litre in the market.

    The committee’s report asked the NNPC to refund the over N310.42 billion deductions it took as subsidy arrears for kerosene supplied in 2009 and 2010, adding that this was made in spite of a presidential directive to the minister, who is also chairman of the NNPC Board of Directors.

    “The Committee could not find any reason why the minister, if convinced on the need to reinstate subsidy on kerosene, did not take any action on that, instead of condoning the illegal payments.

    “When the Ministry of Petroleum Resources discovered that the removal of subsidy on kerosene was not expedient, it should have gone back to the President for the vacation of the directive.

    “Having failed to do that and with the evidence that the product was never sold at N50 (apart from the 36 mega stations) since 2009, there was no basis for seeking any vacation of the order in 2011.”

    The committee also criticised the agreement entered into with Capital Oil & Gas Limited for the use of its tank farm to store about 94,330,030 litres of products, which was later confiscated and sold off by the company to recover a nine-month storage fees debt by NNPC.

    Peterside, while speaking at a function organised by the Lagos Chamber of Commerce and Industry (LCCI), said the Federal Government spent N634 billion as subsidy on kerosene between 2010 and 2012, describing this as a network of corruption and fraud.

    He said Nigeria, the world’s sixth biggest crude exporter, could not move forward with the present arrangement where the NNPC holds the monopoly of kerosene importation.

    Peterside said: “No country that spends most of its funds on consumption will grow. And so that explains why Nigeria is not moving forward. How can we move forward when most of our funds are spent servicing corruption?

    “Kerosene subsidy is a network of corruption; it is a network of fraud. So why are some people blaming the fraud on the monopoly of NNPC? Even when you ask major marketers they will tell you that the monopoly of NNPC is responsible for what we are going through today to access kerosene.

    “The first challenge is that the supply of kerosene is regulated. Everywhere in the world where there is monopoly, people are likely to suffer while the monopolist tries to maximise the situation; this is because NNPC has the monopoly of importing kerosene.

    “In the year 2010, we spent N110,068,533,988 to subsidise kerosene; this is not the cost of kerosene but the cost of subsidising the product alone…In 2012, although we are yet to reconcile this, we spent N200 billion subsidising kerosene.”

    Certainly, a lot of dust will be raised at the investigative hearing on the kerosene subsidy regime. Claims and counter claims will emerge. But it is hoped that the committee will sieve the chaff from the wheat so as to get to the bottom of this matter, which Sanusi believes is nothing other than a racket through which funds are siphoned.

  • Govt spends N634b on kerosene subsidy

    Govt spends N634b on kerosene subsidy

    The Federal Government spent about N634billion to subsidise kerosene in the last three years, the Chairman, House Committee on Petroleum, Downstream,Dakuku Peterside, has said.

    Speaking during a seminar organised by the Lagos Chamber of Commerce and Industry (LCCI), in Lagos yesterday, Peterside said the figure is equivalent of one- third of the nation’s yearly expenditure on capital projects.

    Giving the breakdown of the amount which he said was spent over three years, he disclosed that about N110 billion spent in 2010; N324 billion in 2011 and N200 billion was expended in 2012, arguing that the subsidy has never benefited the masses who have been suffering to get the product at the regulated price.

    He said the nation will continue to experience scarcity of kerosene due to the existence of non-functional refineries, vandalism of crude pipelines, corruption and the multi-purpose usage of the product.

    He said the many usage to which Kerosine is put, has often led to its diversion and hoarding by opeartors and dealers.

    Peterside said kerosene that was supposed to sell for N40.90k per liter, is presently selling for between N110 and N150 per liter, urging that consumers should switch over to the usage of Liquefied Petroleum Gas (LPG), which he said is clean energy that reduces environmental cost and degradation.

    He therefore enjoined governments at all levels to promote the usage of LPG as cooking gas, proving that the subsidy spent of kerosene over the years has not helped matters.

    He said the Nigerian National Petroleum Corporation (NNPC) supplied about 2.92 billion liters of kerosene from September 2012 to August 2013, but the product was not available in the markets.

    “So something is wrong somewhere. How can we be spending on what does not benefit the masses? he queried, saying that we need to be forward looking and encourage gas usage, so that what is spent on subsidy can be used for some other developmental programmes,” he said.

    Peterside, said reliance on kerosene has retarded the expected growth of the country to carbon free economy, compared to other developing countries.