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Tag: oil subsidy

  • N11tr subsidy claims paid in six years

    Nigeria has spent N11 trillion on  fuel subsidy in the last six years, the Senate Committee on Petroleum (Downstream) said yesterday.

    But the panel, which was  presenting its report at plenary, did not give details of the payment.

    The report was specifically on “Promissory note programme and a bond issuance to settle inherited local debts and contractual obligations to petroleum marketers.”

    Despite the disclosure, the Senate adopted the report  on the payment of N129 billion subsidy to 67  marketers.

    The panel Chairman Senator Kabiru Marafa told the Senate that the approval had ended the marketers’ claim of subsidy arrears.

    Some of the marketers are AA Rano, Ascon, Aiteo, Total, MRS Oil & Gas Limited, Sahara Energy, Oando Plc, A-Z Petroleum, Masters Energy, Northwest Petroleum, Fresh Energy, Forte Oil and Integrated Oil.

    The Senate on Tuesday approved N69 billion subsidy for Premuim Motor Spirit (PMS) for 19  marketers.

    Marafa said there were differences in the submissions of the Federal Ministry of Finance, Petroleum Products Pricing Regulatory Agency (PPPRA) and marketers.

    The report pointed out that the calims of subsidy arrears were based on three inter-related elements of subsidy, foreign exchange (forex) differentials and bank interests on unpaid claims.

    “That the recent request computation is based on one of the already identified elements (forex differentials).

    That due to scarcity of Forex within the period, oil marketing companies were allowed to source forex outside the Central Bank of Nigeria (CBN) rate to enable them meet the country’s petroleum products demand.

    “That the Nigerian National Petroleum Corporation (NNPC) Retail get their petroleum product allocation directly from the Petroleum Products Marketing Company (PPPMC) at already subsidised rate and so does not require forex to transact its business,” the report said.

    Read also: Senate okays N58.120b subsidy for 19 oil marketers

    Some of the marketers and the amount approved for them are Total Nigeria Plc (N13.7 billion), Northwest Petroleum (N11.4 billion), Masters Energy (N10 billion), MRS Oil Plc (N8.8 billion) and Sahara Energy (N8.4 billion).

    Others are MRS Oil & Gas Limited (N6.3 billion), NIPCO Plc (N4.2 billion), Forte Oil (N3.9 billion), DEEJONES Petroleum & Gas (N4.1 billion), Emadeb (N4 billion), among others.

    Before the report was adopted, some senators complained that the country was bleeding paying outstanding subsidy claims.

    For them, the continuous payment of subsidy claims would hurt the economy.

    The lawmakers urged the Federal Government to build new refineries to end subsidy payment.

    Senate Committee on Public Accounts Chairman Senator Matthew Urhoghide expressed concern that more subsidy claims would come up in the Ninth Assembly because “the computations were not properly done”.

    Deputy Senate President Ike Ekweremadu, who presided, said NNPC charged subsidy claims on the Consolidated Revenue Fund of the Federation describing as unconstitutional.

    Ekweremadu said: “I am also happy to note that we are coming to a closure on the issue of this outstanding payment on subsidy claims. We should begin to think of the best way to deal with the subsidy issues.

    “The frightening aspect of it is that the NNPC now charges subsidy on the Consolidated Revenue Fund of the Federation. What they do is that the issue of subsidy is now in the first-line charge on our oil revenue, which is extremely dangerous because that is completely unknown to our Constitution.

    “But the implication therefore is that those expenditures are never appropriated. So it is a possible area of conflict between the executive and the parliament.

    “I do hope that the next assembly will be able to sit down with the executive in order to address this issue without creating unnecessary tension.

    “NNPC needs to also caution itself in that respect so that they don’t encroach on the appropriation responsibilities of the National Assembly”.

  • VP Debate: Why we can’t remove oil subsidy

    Vice President Yemi Osinbajo on Friday explained why the Federal Government cannot afford to remove the oil on fuel subsidy.

    He spoke at the Vice Presidential debate of the 2019 election held in Abuja.

    He said the pump price of fuel could go up to as much as N220 if the subsidy is removed.

    He said, “If petroleum subsidy is removed, the price of fuel could go up as high as N220 per litre. There is no country in the world that does not run one subsidy or the other. If you have a petrol subsidy, and I am not saying that it must be there forever, but petrol subsidy helps because the moment you remove the subsidy, prices go up. For example, America subsidises agriculture, subsidises production, subsidise all sorts of things.  We experienced it earlier on in the regime. Prices went up from 86 to 145 naira per liter”.

  • Senate approves N348bn oil subsidy payment

    The Senate on Wednesday approved the payment of over N348 billion outstanding oil subsidy claims to 74 petroleum marketers.

    The upper chamber gave the approval following the adoption of the interim report of its Committee on Petroleum (Downstream) on the Promissory Note Programme and Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.

    The breakdown of the payment, according to the report, showed that out of the N348 billion, 55 oil marketers are to receive N275,750,415,108 while 19 others will get N73,452,639,866.

    The committee recommended that 55 oil marketers should be paid 100 percent of their claims while 65 percent claims should be paid to 19 marketers due to irregularities in their claims.

    The Senate asked the committee to continue its engagement with the Ministry of Finance, oil marketing companies, Petroleum Products Pricing Regulatory Agency (PPPRA) and other stakeholders in order to update all the outstanding liabilities and clear all outstanding debts, interests accrued and forex differential once and for all.

    Chairman of the committee, Senator Kabir Marafa, said although marketers made claims to the tune of N670,497,543,15 as at June 30, 2017, the PPPRA verified and approved the sum of N429,054,203,228 to the Federal Ministry of Finance.

     

     

  • Fed Govt not paying oil subsidy, says Adeosun

    Fed Govt not paying oil subsidy, says Adeosun

    •FEC okaysN2.328b to check rice smuggling, others

    •Elizade wins N1.128b vehicle supply contract

    Minister of Finance Mrs Kemi Adeosun yesterday said the Federal Government is not paying subsidy on oil.

    She spoke at the end of the Federal Executive Council (FEC) meeting chaired by President Muhammadu Buhari at the Presidential Villa, Abuja.

    She was with the Minister of Information, Lai Mohammed, Minister of Power, Works and Housing, Babatunde Fashola and the Minister of Mines and Steel, Kayode Fayemi.

    According to her, the Nigerian National Petroleum Corporation (NNPC) is directly bearing the loss, which also has impact on what goes to the Federation account.

    Speaking onsubsidy, she said: “On the question of subsidy, the price of oil for Nigeria today is a double-edge sword. So, every dollar that goes up we get more revenue but also because we are importing refined petroleum increases the landing cost of fuel.”

    The council also approved N2.338 billion for the purchase of operational vehicles for anti-smuggling task force and for acquiring staff accommodation.

    Mrs Adeosun said N1.2 billion was approved for acquiring bedroom units at Life Camp in Abuja for Customs and N1.128 billion for 50 operational vehicles for anti-smuggling task force.

    She said: “The second approval was for the purchase of 50 operational vehicles that are going to be deployed for anti-smuggling or anti-rice smuggling task force that is being put together, which Customs will be leading.

    “We felt that it is important that we don’t want Customs going to seize rice in the markets. Customs should actually stop rice coming in at border points and Customs indicated that they need additional vehicles, additional resources as well as more information driven measures that will be taken. But what was approved today was the purchase of 50 vehicles as part of these efforts. The contractor is Elizade and the value is N1.128 billion.”

    Asked to explain why Nigeria cannot fully fund its budget with the series of internally generated revenues declared by many government agencies, Mrs Adeosun said: “On the funding of the budget, Customs will report that they made a trillion, FIRS and so on, that is absolutely correct. But if you also follow those who cover the FAAC accounts, you will know that that money is shared every month among the three tiers of government. That is what makes up the FAAC. The FAAC is made up of Customs revenue, FIRS revenue and NNPC revenues.”

    Fashola said  his ministry presented a report to the Council on approvals it obtained from the FEC in the  last two years.

  • ‘Oil subsidy scammers nurturing vandalism, militancy, crude oil theft’

    The oil subsidy scammers, who benefited immensely from fake importation of petroleum products, are nurturing vandalism, militancy, crude oil theft and the unwarranted disruptions in the sector, to the level being witnessed, especially in the Niger Delta.

    The disclosure was made Wednesday in Port Harcourt, the Rivers State capital, by the Convener of the Second Edition of the Save Nigeria Oil and Gas Industry (SNOAGI) Roundtable, Dr. Brown Ogbeifun.

    The roundtable was organised by the African Initiative for Transparency, Accountability and Responsible Leadership (AFRITAL).

    Project SNOAGI was launched last year, as a veritable platform for bringing stakeholders together to interact, brainstorm and make prescriptions on how to improve the efficiency of the oil and gas operations, thereby assisting government in bringing sanity to the sector.

    Ogbeifun said: “Most of the motherless US Dollars, British Pounds, Euro and Naira found in wardrobes, farms and soak-away pits are definitely primary or secondary products of mismanaged oil funds, which might explain why the oil industry has witnessed gross underdevelopment.

    “The revelations emanating from the Malabu oil deal, the brazen cash withdrawals from oil money accounts to pursue non-value addition to the good of our hydrocarbon development are indeed very sad.

    “There is no doubt that there has been lack of investors’ confidence in the oil industry, as policies and laws that would have protected their investments are not seriously addressed.

    “The issues of over regulation through multiple regulatory agencies, multiple taxation, global and local oil politics have made it an intractable possibility for Nigeria to reach it’s optimum productivity.”

    The convener also stated that Nigeria was ripe enough to be self-sufficient in producing all the necessary derivatives from crude oil.

    Ogbeifun noted that compounding the parlous state of the oil and gas sector came the sabotaging of the pipelines by the militants, which he insisted almost crippled operations in the sector.

    He said: “Paradoxically, we export our crude oil and create refining capacities for other economies, at the detriment of the Nigerian state. Why must we continue to export our mineral resources in exchange for finished products in the oil and gas industry?

    “Our leaders have consistently displayed lack of political will to drive the transformation imperatives to a logical conclusion. That is why we are still talking of the Petroleum Industry Bill (PIB), 17 years after it started its journey.

    “No country treats its critical reforms the way we do. Not passing the PIB has led to losses in trillions of naira, loss of investment opportunities, inability to realise our optimum capacity utilisation and the inability to end gas flaring, which was to have ended in 2008.

    “The PIB might not be a perfect document, just as it is all over the world. All we need is an enduring dialogue process and the will of steel by government to drive the process to its logical conclusion. No matter the drawbacks, the PIB contains many sections that would have greatly enhanced the hydrocarbon potential of Nigeria.”

    The convener also stated that mediation was very effective in the resolution of knotty conflicts, while pleading that the ongoing dialogue process between top officials of the Federal Government and Niger Delta militants/leaders should be sustained.

    He noted that while government was seeking solutions to all the challenges in the Niger Delta, all parties should sheathe their swords,  show good faith and respect for one another, declaring that no meaningful development would take place in an atmosphere of chaos and anarchy.

    Ogbeifun added that the pronouncements of the Federal Government’s top officials on the setting up of modular refineries in the Niger Delta and the open confession that the crude oil and gas-rich region deserved a better deal, showed that there were still honourable men in the corridors of power in Nigeria.

     

  • Oil Subsidy: Enugu residents call for overhaul of refineries

    Oil Subsidy: Enugu residents call for overhaul of refineries

    A cross section of Enugu residents have called for proper overhaul of the refineries before the proposed removal of oil subsidy.

    Some of the residents, who spoke with the News Agency of Nigeria (NAN) in Enugu on Monday, decried the current state of refineries in the country.

    A civil servant, Mr Emeka Nebo, advised the government to ensure that the refineries were functional before the removal of subsidy on petroleum products.

    “If at all the government is insisting on removing oil subsidy, all our refineries must be put in good shape so as to serve the people effectively.

    “I strongly believe that if the Warri, Port-Harcourt, and Kaduna refineries are working as they ought to, we will not be complaining about fuel scarcity,” he said.

    Another civil servant, Mr Donald Odenigbo, urged the government to be ready to increase workers’ salaries as soon as it removed the subsidy.

    “You cannot remove oil subsidy without increasing salaries of workers to cushion the negative effect.

    “There is no palliative measure than that, because prices of everything in this country will definitely increase,” he said.

    Mrs. Phina Nwosu, a lawyer, said that the government should not discuss anything on subsidy removal because it would pose a serious threat to the people.

    “Government should not discuss removal of oil subsidy now because it will increase the suffering of the people.

    “The past administration wanted to do that but it received knocks from labour and the opposition. Why now?” she queried.

    Nwosu joined the call on the Federal Government to urgently put the refineries in order for sustainability.

    A petroleum dealer, Mr Solomon Amalu, said that he believed that the removal of oil subsidy would make fuel available in every filling station.

    Uju Okoye, a student complained that removal of oil subsidy would amount to increase in prices of goods and services.

    According to her, if it is done, school fees, prices of books, transportation, food and everything will increase astronomically and people will suffer.

    “I am calling on all Nigerians to get ready for hard times,” she said.

  • Why FG should remove oil subsidy – NNPC

    Why FG should remove oil subsidy – NNPC

    The Nigerian National Petroleum Corporation on Thursday called on the Federal Government to scrap the Petroleum Support Fund (PSF) otherwise known as petroleum subsidy because government should not guarantee the price of crude oil that it does not control.

    In his presentation during the 2015 Oloibiri Lecture and Energy Forum of the Society of Petroleum Engineers (SPE) in Abuja,  the corporation’s Group Executive Director, Corporate Strategy and Planning, Dr. Timothy Okon, described subsidy as the difference between the landing cost of petroleum products and the price for which it is sold.

    The theme of the lecture was: “Global Oil Price Dynamics: Impact and Strategic Solution for Nigeria.

    He explained that since government does not control the prices of crude oil, its fluctuation creates a fiscal instability in the country.

    “The manner in which the prices were result in government becoming the payer, fiscally guaranteeing the price which we do not control. That created fiscal instability,” he said.

    According to him, because of nature of oil prices, the government has now become the payer who guarantees the price that is not within its control.

    Okon also posited that the oil subsidy is a first line charge removed from the revenue before it is shared among the three tiers of government.

  • Group tackles shady oil subsidy regime

    THE Africa Network for Environment and Economic Justice (ANEEJ) and other stakeholders in the industry have gathered in Lagos to drive increased monitoring of the oil subsidy regime to ensure transparency and accountability in the business.

    At a town hall meeting tagged Advocacy against impunity in the oil subsidy regime in Nigeria,held in  Lagos, the group’s Executive Director, Rev. David Ugolor, said the purpose of the project iwas to raise public awareness about corruption and malpractices in the sector and mount pressure on the government to do more to hold perpetrators and government to account.

    He also said the project was a major effort to end impunity in the management of oil subsidy funds, where contractors acting in connivance with some ‘unseen persons’ in the government collect huge sums from the government as subsidy to import refined products.

    Ugolor said: “This project is to promote greater enforcement of anti-corruption laws, public awareness of enormity of the problem, reduce corruption among citizens and government agencies, greater transparency and accountability in oil subsidy regime.”

    He said in January 2012, the Ad hoc Committee of the House of Representatives found out that payment of fuel subsidy to oil marketers was inflated and several marketers got paid for doing nothing and expenses charged to the subsidy account. The Nigerian Extractive Industries Transparency (NEITI) audit report 2009-2011 made more startling revelations as it uncovered a disparity of N175.9 billion between the subsidy claims paid from the Federation Account and the one made by the Petroleum Product Pricing Regulatory Agency (PPPRA).

    The Accountant-General of the Federation reported to NEITI auditors a total subsidy payment of N2.825 trillion while the PPPRA disbursed N3 trillion to marketers during the period. While some marketers disagreed with the amount ascribed to them by the PPPRA, especially in 2010, when a marketer claimed N2.56 billion. The PPPRA recorded payment of N1.5billion, leaving an un-reconciled difference of N1.04billion. These are serious issues that nobody is being punished for and the impunity appears to be soaring with latest kerosene subsidy saga for which key agencies of the government have been trading words to the detriment of the ordinary Nigerians, Ugolor said.

    He also noted that when fuel price was increased, it was talked everywhere and there were a lot of comments from the public but with time people suddenly forgot about it. I expect people to speak up to the government because it is our right, in fact, it is a God’s given right. I also expect the media to help inform the public and act on it so that the government will take actions, he added.

    “It is not clear whether any of the suspects charged to court relating to fuel subsidy corruption has been convicted and most Nigerians appear to have forgotten about the issue in their parking lots. The corrupt characters are the major donors anytime there is fund raising. We hope that this project will be used to reawaken our memories and put pressure on our government to ensure that those subsidy cases and other related corruption cases in the oil sector are given due attention and concluded with those found wanting duly punished to serve as deterrent to others,” he said.

    The meeting reviewed how the anti-corruption agencies and the Judiciary have failed in the prosecution of indicted suspects in the fuel subsidy regime and also reviewed the implications of fuel subsidy malpractice on livelihoods of Nigerians.

    They agreed to put pressure on the Federal Government to bring indicted persons and firms to justice.