The Nation Newspaper

Tag: PPMC

  • Fuel queues resurface in Kwara

    Fuel queues resurface in Kwara

    Long queues of vehicles, waiting to buy premium motor spirit (PMS) resurfaced yesterday in Ilorin, the Kwara State capital.

    The development, which was reminiscent of the dark days of fuel scarcity in the country, made many motorists to groan, following the non-availability of petroleum products in most filling stations across the state capital.

    Attendants at most of the petrol stations visited by our reporter said they had no product to sell and blamed the development on their inability to access products from Ibadan since the last few days.

    The development started a day earlier, but was restricted to stations owned by independent marketers, as the major operators were dispensing fuel.

    It was also limited to the state capital then. At that time, the independent marketers were said to have had disagreement with officials of the Pipeline Product Marketing Company (PPMC), which forced most of them to close their gates while they still had products.

    The situation degenerated yesterday, as even the major operators closed their gates and claimed they had no supply. At press time, only two stations, one private and another major, were selling along the popular Murtala Mohammed Road in the metropolis.

    A drive from Stadium  through Oja-Oba indicated that only one private station was attending to customers.

    It was the same situation at stations on Ola-Olu-Gaa-Akanbi Road.  Only two stations sold the product near Odota-Airport Road when our reporter visited.

    A cafe operator at Murtala Mohammed area, Juwon Medaiyese, said his assistant spent three hours in the queue to buy a 10-litre of petrol.

  • Kerosene rot

    Kerosene rot

    The abysmal dysfunction that characterises Nigeria’s petroleum industry has been brought to the fore, once again, by the abnormal and illegal profit being reportedly made on the sale of Dual Purpose Kerosene (DPK) by some marketers. Although the official price of the product is fixed at N50 per litre, it is reportedly being sold to Nigerians above N100 per litre. Thus, since the Petroleum Products Marketing Company (PPMC) supplies 11 million litres of DPK daily to marketers, the latter make excess profit of N550 million, which translates into N16.5 billion monthly and N148.5 billion between January and September, this year.

    Understandably disturbed about this situation, the Department of Petroleum Resources (DPR), has directed that all marketers sell the product at the appropriate price or face sanctions. However, revelations by some marketers indicate that the official price of N50 per litre is unrealistic and defies economic rationality. Going by the template of the PPMC, the cost price of kerosene per litre is supposed to be N42.95, including a five per cent refundable deposit, which is reportedly never refunded. The N50 approved selling price thus accommodates a profit margin of N4.60 per litre for the marketer.

    However, other costs that the official price appear not to have taken into consideration include N3 per litre for transportation of the product to the depot, N3 per litre as depot charges, and another N1 per litre for transportation of the product from the tanks to the petrol stations. There are also allegations that marketers incur additional costs in bribes to petroleum industry officials that result in further cost escalation. If the marketers are in business to make profit and not to engage in charity, they can certainly not sell at the official price. What is at play, therefore, is the gross inefficiency, opacity and graft that continue to be the bane of the industry.

    It is important for the government to let the public know the modality for arriving at the official price of N50 per litre for the product. Is provision made for the payment of subsidy to the marketers to bridge the difference between the actual cost and the regulated price of kerosene? If so, why is the product being sold at the current astronomical price? Ironically, the DPR has threatened sanctions against retail outlets caught selling the product above the approved price. Yet, kerosene is hardly ever available at filling stations, including the ones owned by the Nigerian National Petroleum Corporation (NNPC)! What moral right has the government to sanction private retail outlets when its own filling stations cannot even make the product available to the public in the first instance?

    The Managing Director of the PPMC, Mr Haruna Momoh, sounds helpless and clueless when he laments that “It is the wish of the government to make kerosene available but our research from when we came in is a totally different picture to compare with the good intention of the government. The product is diverted to neighbouring countries and also used for production and construction”. It is the responsibility of government to find solutions to problems and turn good intentions into effective public policy. The failure of government to bring to book so far those indicted in last year’s fuel subsidy fraud illustrates its tolerance of the massive corruption in the petroleum industry partly responsible for the current astronomical price of kerosene. If the potential of the industry had been more effectively and transparently managed, gas would have replaced kerosene by now as a cheaper, safer and healthier source of energy for most Nigerians. Until that is possible, the government has a duty to make kerosene available and affordable to Nigerians.

  • FG loses N376.6b to vandalism in 6 years

    FG loses N376.6b to vandalism in 6 years

    •Targets 6250MW generation

    THE federal government said it lost over N376.6 billion in six years (2008 – 2013) to vandalism of oil and gas pipelines by crude and product thieves.

    The Managing Director, Products and Pipeline Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Prince Haruna Momoh, disclosed this during a capacity building workshop for media practitioners in Uyo, the Akwa Ibom State capital.

    Momoh, who was represented by the company’s Executive Director, Commercial, Mr. Frank Amego, said that incidents on the company’s pipelines caused by vandals rose from over 400 in 1999 to 3571 by end of 2013, while adding that the activities of vandals has been very difficult to stem.

    In his analysis of the implication of the revenue losses, the Group Coordinator, Corporate Planning and Strategy of NNPC, Dr. Timothy Okon, described the act as economic sabotage, adding that the amount would have been enough for annual budget allocations for Akwa Ibom and Borno States.

    The cost of securing and maintaining the pipelines, he noted, has no budgetary allocation but unknown to so many Nigerians, NNPC incurs the expenses. “We are required to provide services but there are no provisions or mechanism for the cost we incur to be addressed,” he said.

    While urging the saboteurs to desist from their act, Okon stressed such incidents does not augur well for a country that aspires to be among the 20 largest economies of the world by 2020.

    He said: “If you vandalise gas pipeline, it is not as if you can just put a jerry can and take it, so vandalisation of gas pipeline is pure sabotage.”

    The Group Executive Director, Gas and Power, NNPC, Dr David Ige, who was represented by the Manager, Trans Nigeria Gas Pipeline, Engr. Alfred Amadi, in his presentation, disagreed with the claim of the Minister of Power, Prof. Chinedu Nebo, that low price is responsible for the shortage of gas to power.

    Ige said that it takes an average of five years to complete a 100-kilometre pipeline project, adding that meeting the pipeline infrastructure need may not be achieved in the short term.

     

  • How NNPC, PPMC violated shipping laws – Ex- NIMASA boss

    The Nigerian National Petroleum Corporation (NNPC) and the Pipelines and Products Marketing Company (PPMC) on Wednesday urged the Federal High Court in Lagos to strike out a suit accusing them of violating the Cabotage Act.
    A former Nigerian Maritime Administration and Safety Agency (NIMASA) Director-General, Mr Raymond Omatseye, through his firm Polmaz Limited, is seeking an order directing NNPC and PPMC to cancel all contracts with foreign flagged vessels operating in Nigeria’s coastal waters without licence.
    The plaintiff is also urging the court to direct the defendants, except NIMASA, to pay fines stipulated in the Cabotage Act for their alleged violation of the law.
    Polmaz said NNPC and PPMC engaged the vessels in domestic coastal trade without requisite licenses being issued or any waivers granted to them as stipulated in the Act.
    It urged the court to determine whether Nigeria’s shipping laws have not restricted foreign flagged vessels, or vessels not owned or built by Nigerians and registered in Nigeria from engaging in domestic coastal trade within the country’s territorial waters.
    Joined in the suit as third to ninth defendants are NIMASA and the vessels’ operators, namely Olimpex Nigeria Limited, Unibros Shipping Corporation, Africulti Limited, Marika Investments Limited, Nidas Marine Limited and Prometheus Maritime Limited.
    The plaintiff, in its originating summons, sought a declaration that the operation of the foreign flagged vessels operated by the fourth to ninth defendants and their engagement by NNPC and PPMC in domestic coastal operations are in clear violation of Section 5 of the Merchant Shipping Act and several sections of the Coastal and Inland Shipping (Cabotage) Act, No. 5 of 2003.

     

  • SSS summons PPMC, NUPENG over fuel scarcity

    Following the lingering fuel scarcity in the country, the Director General of the State Security Service (SSS) Thursday summoned the Managing Director, Pipeline , Product Marketing Company (PPMC) Prince Haruna Momoh and the leadership of the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) with a viewing to resolving the  leadership crisis in Independent Marketers Association Nigeria (IPMAN), it was learnt Friday.

    Addressing journalists in Abuja, the NUPENG President, Comrade Igwe Achise, said that due to the SSS intervention, there is a high hope of resolving the crisis between now and Tuesday.

    Igwe however noted that NUPENG is not on strike.

    He confirmed that “after the intervention of the MD of PPMC, the Directorate of Security Service (DSS)- DG SSS and we have been able to look at these issues critically again, where we have been assured that the lingering crisis in IPMAN will be given the utmost emergency attention needed to resolve those leadership issues as soon as possible and we are believing that between now,  Monday, Tuesday, this issue of the leadership will be resolved.

    “We have also read through the media that Aminu the former president has finally moved out of office and decided to go and form an association that does not have bearing with the judgement given by competent court of jurisdiction.”

    He explained that the crisis in IPMAN was due to the movement by the outgoing President Alhaji Aminu Abdulkadir to continue staying in office despite a court judgement that has pronounced the emergence of his successor.

    According to him,  the union withdrew its services from the Nigeria Independent Petroleum Company (NIPCO) because its owners  Independent IPMAN were involved in fraudulent demand for fuel subsidy claim.

    He noted that: “If that crisis persists, there is no need we keep our services in NIPCO since IPMAN is the  major owner of the investment of the commercial out fit. I think that will be a big way of addressing these challenges.”

    Asked whether NUPENG cannot sanction IPMAN for the allegedly insisting on collecting fuel subsidy money without supply, Achise said :”NIPCO example is part of those sanctions we can take in withdrawing our services from the depot if found that they are having some fraudulent activities at the ongoing in their environment . The allegation is true.”

    Commenting on why it is scarce, the NUPENG boss explained that in as much as petroleum products are imported, products are bound to be scarce.

    He revealed that since the refineries are not functioning, the the nation is at the mercy of the marketers, who also own the private depots to whom the Federal Government has assigned to import petroleum products.

    His words: “Petroleum products are scarce because  Nigeria is still depending majorly on importation of petroleum products. And that importation is mortgaged into the hands of marketers, who are also private depot owners and importers. Our refineries are not  functioning. They are epileptic in production and that cannot sustain this country. And that is why we find ourselves were we are today in term of the scarcity.”

    Asked whether deregulation of the refineries is not the best option, Achise said that to deregulate the downstream of the oil and gas sector is a must.

    He however added a caveat, that the Federal Government would not be fair to the citizenry to deregulate the sector with reliance on fuel importation.

    According to him, “what is affecting our refineries today is because of the system that is surrounding the refinery operations.”

    Continuing, he said “we need to do a turn around maintenance of the refineries for us to make it work effectively. The Port-Harcourt Refineries we  agreed on this last year with the Ministry of Petroleum. It failed. The next one, he said by first quarter of next year picked up. First quarter has gone and it has gone. So, must we continue to remain in this kind of shadow?”

  • Apprehension as PPMC’s office in Warri goes up in flames

    Apprehension as PPMC’s office in Warri goes up in flames

    There was apprehension in some quarters of the oil and gas industry yesterday as a section of the Petroleum Pricing and Marketing Company (PPMC) depot in Warri went up in flames.

    The incident, which started at about 9:30am, also heightened panic among the residents of Ekpan, Uvwie council area of the state, host community to the depot, as they observed flames billowing up from the complex.

    The Nation gathered that the fire incident was sparked by an over-heated stabiliser from the office of the Deputy Depot Manager, leaving furniture and documents in the office destroyed.

    According to sources, though there were no casualties, the fire almost crossed into other offices on the block.

    Fire fighters had to break the louvres and destroy the burglary proof before gaining access into the affected portion to put the fire out and curtail it from spreading to other offices.

    The Nation gathered that it took fire fighters about two hours to bring the situation under control, after which loading of petroleum products, which was initially suspended, resumed again.

    “The fire occurred in the office of the Deputy Depot Manager of PPMC. The stabiliser in that office got overheated and burst into flame which caught some documents resulting in the fire,” the source disclosed.

    Efforts to get official reaction from staff of the depot were unsuccessful, as nobody was willing to volunteer information. Depot Manager, Alhaji Ali’s, mobile phone was not reachable.

  • An elitist sermon

    An elitist sermon

    The NNPC GMD’s call to use gas instead of kerosene  sounds like what triggered the French Revolution

    The wife of Louis XVI, Marie Antoinette, wondered why the protesters on the streets of Paris clamoured for bread when they could have cake. It infuriated them, and led to a rabble that torched the city and the French monarchy.

    Similar language came from the leadership of Nigerian oil. We know that there are advantages in switching from kerosene to Liquefied Petroleum Gas (LPG). These include the provision of a cleaner and safer fuel option, especially for lower income households, reduction of indoor air pollution that causes significant health problems and a decline in carbon emissions caused by dirty fuels; but the decision of which to use should be for the consumers to make. It should not be imposed on them in a manner akin to the ‘if you can’t find bread, eat cake’ fashion. That is why it is not a befitting sermon from the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Andrew Yakubu, and the chief executive of the Pipelines and Product Marketing Company (PPMC), Mr. Haruna Momoh, two people who are critical to making kerosene available in the country but have failed to do, to ask Nigerians to switch from kerosene to LPG.

    Messrs Yakubu and Momoh, while testifying before members of the Dakuku Peteside-led House of Representatives Committee on Petroleum (downstream) investigating supply, distribution and subsidy expenditure on kerosene from 2010 – 2013, said the solution to the lingering kerosene scarcity lies in switching over to LPG because this will reduce pressure on kerosene and ultimately lead to a drop in the demand for it. This excuse is full of the usual trappings of public officials who rather than be pragmatic about solutions to our problems sniff for excuses for the easy way out.

    The duo failed to take cognisance of the fact that cooking gas is costly and is beyond the reach of many Nigerians. One reason for this is the absence of a clear-cut policy to drive LPG consumption by the Federal Government. The fact is that deliberate government policies account significantly for the much progress made in countries like Brazil and Morocco, where LPG consumption is high. There is also the fear of gas in our society that would make people prefer kerosene that they perceive as safer and easier to handle. So, unlike Brazil and Morocco, the Federal Government will have to work harder to convince Nigerians to use gas.

    There was nothing new in whatever the duo told the House of Representatives committee members, either from the point of view of economics, or environmental safety. But what they failed to add is that even their own recommendation will come to naught if the same business paradigm they are using in the NNPC, for instance, is transferred to the process of producing the LPG. It is scandalous that Nigeria, a major producer of crude oil imports the bulk of the fuel that is used in the country. And there are reasons for these, including corruption and governmental ineptitude. For these reasons, it will only be a matter of time for the same problems leading to scarcity of kerosene to afflict the production of LPG. This is one ‘Nigerian factor’ that Messrs Yakubu and Momoh, as well as many others who have been making a case for LPG for domestic use in the country appear to be overlooking. If we promote LPG for domestic use, which is the ideal thing to do, a time will come when more Nigerians will demand for it and the question of meeting the demand will surface.

    This is why we think the prescription of the duo is symptomatic of the typical Nigerian public official’s penchant to sidetrack rather than solve problems. Rather than tell Nigerians why kerosene remains scarce, which was the essence of their appearance before the House committee in the first place, they launched into the issue of LPG as solution to the scarcity. How does that explain why kerosene remains scarce despite the humongous amount the government pays as subsidy on the product? Yakubu himself admitted that about N8.49 billion was expended to subsidise a total of 5,015.413.022.06 trillion litres of kerosene in 19 months! So, why is the product still scarce?

    We know as a matter of fact that petroleum products are being smuggled out to neighbouring countries. We are also aware that the activities of pipeline vandals, the state of disrepair of pipelines and depots in the country, and the activities of unscrupulous elements who adulterate kerosene to sell it as automatic gas oil often referred to as diesel, all contribute to the scarcity of the product. All these are issues the government should tackle because they are the reasons why government exists in the first place. For as long as these issues are unresolved, it is immaterial whether Nigerians use kerosene or LPG, there will always be scarcity at some point.

    So, we restate: if cooking gas must be substituted for kerosene, it should be by choice and a deliberate policy on the part of government; it does not lie in the mouths of those who should make kerosene available and have failed in that responsibility to seek to impose gas on Nigerians. That looks to us a subterfuge to cover their shortcomings and the general ineptitude in the country. It is cynicism taken too far.

  • NNPC saves $565m through swap regime

    NNPC saves $565m through swap regime

    • Why kerosene subsidy persists

    The Nigerian National Petroleum Corporation (NNPC) has saved the country over $565 million through the crude swap and offshore processing arrangement since the business model commenced in 2010.

    A document obtained by The Nation from a top official of NNPC, showed that the average premium paid per metric tonne (MT) on premium motor spirit (PMS) under the swap/crude exchange arrangement has remained stable at $81.28 through 2010 to 2013 while under the open account regime; PMS average premium paid per metric tonne has continued to increase. Under the open account regime, PMS average premium paid per metric tonne in 2007 was $70.02, which rose to $85.14 in 2008 and in 2009 to $87.50 and further to $116.50 in 2010.

    The data showed that in 2010, $141,266,580.77 was saved from products import through swap/crude exchange arrangement. Under the open account regime, the premium was systematically growing every year due mainly to the variable market conditions that NNPC was exposed to. As a result of the development, the corporation has saved over $565,066,320 since the inception of the swap arrangement four years ago.

    The document reads: “Under SWAP/Crude Exchange arrangement, NNPC allocates crude oil to reputable oil trading companies in exchange for the delivery of PMS, dual purpose kerosene (DPK) or any other petroleum product as may be required by Products and Pipeline Marketing Company (PPMC).

    “The contract is based on the international market value of the petroleum products against the prevailing International market value of the Crude Oil. This is value for value arrangement; crude oil lifted versus products supplied. The value for value philosophy enshrined in the SWAP contracts is validated and tested on a regular basis, when reconciliation meetings are held between NNPC and the trading companies.

    “Offshore Processing Arrangement (OPA/SWAP) arrangements enjoy presidential approval and their operations are governed by contractual agreement. Furthermore, the entire activities under OPA/SWAP were recently subjected to scrutiny by the House of Representatives Committee on Downstream with a verdict of clean bill of health returned.”

    The most common means of pricing petroleum products internationally is by Platts European Marketscan Oil Publication. NNPC procures petroleum products cargoes mainly on free on board (FOB) basis; as a result, the supplier provides all necessary logistics for loading and delivery of the product on behalf of NNPC. Therefore, the basic components that are taken into consideration in deciding the premium are as follows: freight, insurance, financing (letter of credit L/C administration charges), port dues, interest, demurrage, trader’s margin.

    The document also explained why the NNPC is continuing with kerosene subsidy despite claims by the Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi of having evidence of presidential directive to its stoppage. The directive Sanusi refers to, according to the document, was not gazetted.

    It said: “Household kerosene (HHK) inclusive and the statutory provision remains un-amended. Such approval must be through the means of a Gazette, the Honourable Minister of Petroleum Resources cannot change prices of petroleum products without a Gazette. Meanwhile, the directive was that “public announcement of this measure should be avoided” in direct contravention of the provision of Section 6 of the Petroleum Act.

    “The directive on kerosene subsidy was never received in NNPC as posited by Mr. Sanusi. Rather the directive was communicated to the former Honourable Minister of Petroleum Resources – Dr Rilwan Lukman who could not communicate the directive to NNPC.

     

    “There was also an intervening factor, the House of Representative Resolution in July 2011 barred the Honourable Minister of Petroleum Resources from deregulating the price of HHK even with the best of intentions and directed an increase in volume of HHK for the market and the sale of HHK at N50 per litre.”

     

     

  • Again, NNPC, ministry scuttle kerosene probe

    Again, NNPC, ministry scuttle kerosene probe

    Officials of the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and the Pipeline and Products Marketing Company (PPMC) yesterday again scuttled the House Committee on Petroleum (Downstream) investigative hearing on kerosene subsidy, with last minute excuses, writes OLUKOREDE YISHAU

    Dakuku Peterside, who chairs the House of Representatives Committee on Petroleum (Downstream), and members of his committee were upbeat on Sunday. They had put in place everything for the investigative hearing on the kerosene subsidy and were looking forward to a good outing. 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.

    Some weeks earlier, they had been forced to postpone the hearing after key government officials expected to shed light on the matter bailed out. Peterside and his men were hoping yesterday’s event would not suffer the same fate, especially when none of those invited notified the committee that they would not attend. But as the committee was awaiting the officials, the letters of excuse started coming in. The Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and the Pipelines and Products Company Limited (PPMC) sent letters giving excuses why for the second time the hearing must be postponed.

    All the letters were dated February 7, but were not received until some minutes before the hearing was to start, which did not go down well with the committee. The ministry’s letter reads: “I wish to inform you that the Honourable 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 are also currently engaged with the Senate Committee on Finance and it is not clear when their hearing will end. ”

    The NNPC and PPMC letters also asked for more time. The NNPC said: “I am further directed to appeal to the Chairman to allow NNPC and its subsidiary sufficient time to collate the required documents and reschedule an alternate date for the appearance of our organisation at the hearing, please.”

    Peterside, in a letter to the minister yesterday, faulted the excuses. He said the excuses were unacceptable to the committee. He described the excuses as belated and not justified, adding that the ministry was long aware of the hearing and was even reminded last Friday.

    Peterside said the minister, NNPC GMD Andrew Yakubu and the PPMC must appear before the committee on February 18.

    Others expected are Min

    ister of Finance and Coordi

    nating Minister for the Economy Mrs Ngozi Okonjo-Iweala, Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi, Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Director, Department of Petroleum Resources (DPR), Accountant General of the Federation, Director, Budget Office, all inspection companies working for NNPC and the Controller-General of Customs, among others.

    At a news conference to announce the postponement of the hearing, Peterside said the committee was forced to postpone the hearing.

    “We owe you a duty to carry out the investigation; we will not let you down. We want to apologise once more, we will move on with the hearing February 18th,” he said.

    Of those expected to attend the hearing, many will look forward to the session with Sanusi, who while appearing before the Senate Committee on Finance, described kerosene subsidy as illegal, given a presidential directive stopping any form of subsidy on the product. 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 the CBN governor’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.”

    It also denied knowledge of the presidential directive stopping kerosene subsidy. As Sanusi noted, the late President Umaru Yar’Adua, through 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.

    The NNPC claims subsidy

    through a scheme known as

    Kero-Direct initiated 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 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 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’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 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: “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.”

    The NNPC believes unnecessary dust is being raised over kerosene subsidy. Surprisingly, it is also not forthcoming at a hearing meant to settle the matter once and for all. Will it, the ministry and others keep the February 18 date with the Peterside-led committee or will they give excuses again?

     

  • We’ll ensure kerosene subsidy is accounted for, says Peterside

    We’ll ensure kerosene subsidy is accounted for, says Peterside

    The Chairman, House of Representatives Committee on Petroleum (Downstream), Dakuku Peterside, has said the committee will make sure that kerosene subsidy payments are accounted for.

    He spoke yesterday while announcing the postponement of the committee’s proposed investigation into the kerosene subsidy.

    Peterside said the postponement was 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 hearing will now hold on February 18.

    This is 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, kerosene import details, PFI allocation and product distribution chart, PPPRA authorisation and validations, auditors approval and reports, relevant shipping documents and all other documents that will assist the committee in discharging its responsibility.”

    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 yesterday gave excuses for the absence of the Minister and requested for a rescheduling of the hearing.

    It reads: “I wish to inform you that the Honourable Minister together with the top management if 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 are also currently engaged with the Senate Committee on Finance and it is not clear when their hearing will end. “

    NNPC, in a letter by its General Manager, National Assembly Liaison, Mr. M.B Bamanga and dated February 7, gave the same excuse as the ministry. “I am further directed to appeal to the Chairman to allow NNPC and its subsidiary sufficient time to collate the required documents and reschedule an alternate date for the appearance of our organization at the hearing, please,” the NNPC said.

    The PPMC’s letter, also dated February 7, also followed the same format with the same excuse and request for additional time to collate documents.

    Peterside said: “It is not in the character of the seventh National Assembly to waste people’s time. On behalf of the committee, I want to apologise to you; we are going to be compelled by circumstances to put off this hearing to the February 18.

    “We owe you a duty to carry out the investigation, we will not let you down, we want to apologise once more, we will move on with the hearing February 18th.”