The House of Representatives unanimously adopts the report of its ad hoc committee on the monitoring of fuel subsidy regime and asks President Goodluck Jonathan and the Economic and Financial Crimes Commission to act on it
There were both excitement and apprehension in the air when the House of Representatives resumed for plenary last Tuesday. The chamber was full and unusually boisterous as many absentee members turned up for the day’s sitting. A full chamber is usually a sign of trouble or an indication that a sensitive matter is on the day’s agenda.
The House had fixed the day to begin consideration of the report of its Ad hoc Committee on the Monitoring of Subsidy Regime. The Farouk Lawan-led committee was set up by the House to verify and determine the actual subsidy requirement and monitor the implementation of the subsidy regime following nationwide protest against the removal of fuel subsidy in January. It had made 62 far-reaching recommendations including the prosecution of ministers and other top government officials for their role in the subsidy scam.
There had been speculations that vested interests in the oil sector were bent on killing the report by discrediting it the way other sensitive legislative reports had been killed in the past. On the day the House was to start debate, a rented crowd of youths claiming to represent the civil society group stormed the National Assembly carrying placards denouncing the subsidy report as an “ethnic agenda” against the South-south.
They alleged that the report was targeted at Diezani Alison-Madueke, minister of petroleum, and that members of the House should not allow it to be debated on the floor of the House. Ali Ahmad, a member of the committee, further raised public apprehension when he alleged plans by some interest groups to sponsor the impeachment of Aminu Tambuwal, speaker, House of Representatives, all in an effort to kill the report. But Ahmad promised that the plot would fail. And he was right.
The House, perhaps for the first time, proved its critics wrong that it could not stand on principle. The House broke its own record when it unanimously adopted the report of the Lawan committee last Wednesday. The sign of unanimity came early in the day when Tambuwal asked for a vote on whether or not the House should consider the report. Not a single member objected to the discussion of the 62 recommendations listed in the order paper for the day.
Tambuwal, in a speech before the consideration of the report, warned his colleagues that the probe of the subsidy regime had challenged “entrenched interest” in the oil sector, who would not only fight back, “but fight dirty.” He said the sector had operated like a secret society for long, and any attempt to expose the rot there would, expectedly, be resisted.
When the House dissolved into a committee of the whole House for the consideration of the report, Emeka Ihedioha, deputy speaker, chaired the debate. The House picked the clauses one after the other, but the legislators wasted no time on many of the recommendations and simply shouted, “carried” as Ihedioha called out each clause by its number.
On the first day of debate, 35 clauses were adopted within three hours of sitting, leaving the remaining 27 for the next day. Contrary to speculations, the House not only adopted the entire recommendations, it also amended some recommendations considered too lenient. For instance, while the committee recommended that the chairman of the Board of Petroleum Products Pricing Regulatory Authority, PPPRA, from 2009 and 2011 and the entire members of the board during the period be “reprimanded” for their role, the House made the amendment that they should be “prosecuted.”
The Lawan Committee found that PPPRA had during the period abused the Petroleum Support Fund, PSF, in several ways and made the country lose billions of naira. It was discovered that payments were made to beneficiary marketers without due diligence, and many false claims for payment were made in connivance with PPPRA officials.
The agency itself was said to have substantially abused the regulatory process and made illegal payments to itself in the name of administrative charges. Within the period also, there was proliferation of beneficiary marketers from only six in 2006 to 140 in 2011. Although the increase in the number of marketers was ostensibly to make petroleum products readily available in the country, it became avenues for stealing government funds.
The report said the PPPRA paid itself the sum of N156,455 billion in 2009, N155,824 billion in 2010 and N312,279 billion in 2011. The committee recommended that the agency be made to refund the amounts and the officials involved in the scam investigated and prosecuted. It further recommended that all staff of PPPRA and the Department of Petroleum Resources, DPR, involved in the processing of applications by importers, and verification, confirmation and payment for imported products by importers and the Nigerian National Petroleum Corporation, NNPC, should be investigated and prosecuted. Also, those who served as the executive secretaries of PPPRA from January 2009 to October 2011 were recommended for further investigation and prosecution.
Those affected by these recommendations include Ahmadu Ali, former Peoples Democratic Party, PDP, national chairman, who was chairman of the board of PPPRA from 2009 to 2011, A. Ibikunle and Goddy Egbuji, both former executive secretaries of the agency. The report also heavily indicted the management and board of the NNPC for its role in the management of fuel subsidy during the period. The NNPC was also indicted for deducting N310,414,963,613 as subsidy for kerosene in clear violation of a presidential directive. NNPC also received the sum of N285.098 billion in excess of the PPPRA recommended figure for 2011, and the corporation was also found to have made direct deductions from the Federation Account in contravention of Section 162 of the Nigerian constitution.
The report said the NNPC deducted directly the sum of N408,255 billion (in addition to the payment of N81,648 billion by the Central Bank of Nigeria, CBN) in 2009, the sum of N407,801 billion (in addition to the payment of N402,423 billion by CBN) in 2010, and the sum of N847,942 billion (in addition to the payment of N844.944 billion by CBN) for 2011 contrary to constitutional stipulations. The corporation also got crude oil price differential to the tune of N108,648 billion.
The committee therefore recommended that the NNPC be made to refund the amounts to the Federation Account within three months. The management and board of the corporation, it was also recommended, should be “completely overhauled” while all those involved in the stated infractions were to be “further investigated and prosecuted.”
The committee also expressed fear that the NNPC may have become insolvent due to the debts it owes. For instance, the report said that it owed Nigeria Customs Service N46 billion, Nigerian Ports Authority N6 billion, and Trafigura et al $3.5 billion.
It therefore recommended that the office of the auditor-general of the federation should engage a team of independent auditors to audit the accounts of the corporation. The committee stated that the recommendation was “as a result of the plethora of claims of indebtedness and demands for payments by Nigerian National Petroleum Corporation’s [creditors] which, if not well handled, will not only affect the entire economy of Nigeria, but also the supply and distribution of petroleum products.”
It is on the strength of the findings and recommendations of the committee on NNPC that many of the legislators called for the sack of the minister of petroleum resources. Robinson Uwak, a member from Akwa Ibom State, led the call for the sack of the minister. Arguing on the second day of debate, he told his colleagues that people in his constituency and from other parts of the country called him to say that the House was shielding the minister of petroleum by not calling for her sack “in view of the weighty allegations against agencies under her direct supervision.”
Uwak’s remark got a loud ovation from members of the House but Ihedioha ruled him out of order because his suggestion came before the House began consideration of the report, and after the clauses on the role of the management and board of NNPC and PPPRA had been debated for amendment.
But the managements of both the NNPC and the PPPRA have debunked the committee’s allegations as false and reckless. In an advertorial in THISDAY newspapers of April 23, the NNPC said subsidy payments to it were not based on cash remittance and therefore the CBN could not have paid NNPC any cash for subsidy. “When approval certificates are received from Petroleum Products Pricing Regulatory Agency, their values are deducted from domestic crude oil cost due in a given month after due consideration of what is approved,” the statement said.
In addition, said the management of the corporation, all approvals and deductions were regularly copied to other relevant government agencies such as the Federal Ministry of Finance, the Office of the accountant general of the Federation, Budget Office of the Federation, Federation Accounts Allocation Committee, and the Revenue Mobilisation and Fiscal Allocation Commission.
The statement indicated that the conclusion of the committee that NNPC received double payments accounted for what it called the “erroneous and outrageous sum of N2,587,087 trillion” as total subsidy payment for 2011 as stated on page 83 of the report. The corporation, however, did not deny the claims of the committee that it deducted subsidy for kerosene when there was a presidential directive not to do so. It also did not deny taking money beyond the regulated amount due to it. The allegation that NNPC may have become insolvent on account of debts it owed had also not been denied as at press time.
The PPPRA also denied paying itself N312 billion from the subsidy fund as alleged by the committee. In an advertorial in the same newspaper of April 24, the agency said the payment was money due to it from the fund. It said the money was “subsidy and other payments (forex differentials and interest on late payment of subsidy) approved by government based on the report of the Federal Ministry of Finance appointed auditor using the e-payment.”
The PPPRA also reacted to one of the most shocking findings of the Lawan committee, which is the disclosure that the sum of N999 million was signed out of the accountant general’s office 128 times on January 8, 2009. The committee said the recipients of the amounts were unknown. But the agency said the payments represented accumulated debts to 15 marketers in respect of two batches for which payment had fallen due. The agency said the payment was split into 128 because government agencies were not permitted at the time to issue cheque of N1 billion and above.
When the clause on the issue was debated in the House, members called for the prosecution of the then accountant general of the federation, AGF, now the governor of Gombe State. But Lawan drew the attention of his colleagues to a letter from the PPPRA that it (PPPRA), not the AGF, was responsible for the payment. The former AGF was therefore spared from the hammer of the House.
But perhaps the most controversial recommendation of the committee was the decision to ask 17 marketers to refund various sums of money allegedly collected for fuel importation that was never delivered. The committee alleged that the companies refused to appear before it during the public hearing and never submitted the required documents. The committee concluded that the companies “deliberately refused to appear because they had something to hide.”
The companies are: Mut-Hass Petroleum Limited; Nepal Oil and Gas Service; Oilbath Nigeria; Techno Oil Limited; Somerset Energy Services; Stonebridge Oil Limited; Mobil Oil Nigeria; AX Energy Limited; and CAH Resources Association Limited. Others are Crust Energy Limited; Fresh Synergy Limited; Ibafon Oil Limited; Lattoj Oil and Gas Limited; Oakfield Synergy Network Limited; Petro Trade Energy Limited; Prudent Energy & Service Limited; and Rocky Energy Limited.
But nearly all the affected companies issued statements claiming they did not receive any invitation from the committee, and were surprised to read the recommendations asking them to refund the amounts of money they collected. After a debate on the issue, the House resolved that since the companies claimed they did not receive the invitation of the House, they should be given a fear hearing. So, all the affected 17 marketers would now appear before the committee within two weeks to defend themselves, and if they fail to appear, the initial recommendation would be re-invoked on them.
The resolution did not, however, affect the other 13 companies said to have collected Forex but did not import any petroleum product. The companies which were recommended for investigation by the anti-corruption agencies are: Business Ventures Nigeria Limited; East Horizon Gas Company Limited; Emadeb Energy; Pokat Nigeria Limited; Carnival Energy Oil Limited; Crownlines, Ice Energy Petroleum Trading Limited; Index Petroleum Africa, and Ronad Oil & Gas W/A. Others are Serene Greenfield Limited, Supreme & Mitchelles, Tridax Energy Limited and Zamson Global Res. Zenon Petroleum and Gas Limited, and Synopsis Enterprises Limited, initially listed among companies that allegedly received Forex without importing fuel, were exonerated by the committee. Making the clarification on the floor of the House during the debate, Lawan said the two companies were listed in error, as they never benefited from the subsidy fund. The committee advocated tighter measures and stricter regulations for the sector to block wastage. The report also asked the PPPRA to conduct a performance assessment of all companies involved in the PSF within two weeks and publish their findings.
The committee also recommended that the sum of N557.70 billion should be provided as subsidy for PMS and N249.006 billion for kerosene in the 2012 Appropriation Act, making a total of N806.7 billion. This recommendation was based on the findings of the committee that the 445,000 barrels per day allocation of crude oil to NNPC was enough to meet the domestic need of the country, and that there was no need to engage any other marketer to import fuel into the country.
The House resolved, after adopting the recommendations of the committee, that the report be sent to President Goodluck Jonathan, the Senate and all the anti-corruption agencies for their “notice and necessary action.” The clause was deliberately added to push Jonathan to act on the report. The speaker had alleged at the opening of debate on the report that anti-graft agencies said they would not act on the report until a “harmonised version” of it is released. But the speaker said there would be nothing like a harmonised version, and that the anti-graft agencies should do their jobs. He wondered that if the agencies could act on petitions sent by individuals, why would it refuse to act on a report of the House?
The Senate is also conducting a similar probe of the oil sector, while the Economic and Financial Crimes Commission, EFCC, is also currently investigating the sector at the invitation of the minister of petroleum resources. Thus, it is feared that many of the issues raised in the House committee’s report may be buried in the report of the Senate or the EFCC.
Expressing similar fears as the speaker, Lawan said after the adoption of the report: “I hope that the effort of the committee and this House would not be in vain.” But Joy Emordi, special adviser to the President on National Assembly matters, has allayed the fears of the House and those of many Nigerians. She denied insinuations that Jonathan planned to shield indicted public officials, and promised that the President would not spare anyone found to have abused his office. She said the President was prepared to partner with the National Assembly to tackle the rot in the oil sector and sanitise the system.
Many Nigerians are already calling on the President to act on the report in the interest of the country. Lamido Sanusi, the governor of CBN, also wants those involved in the fuel subsidy fraud prosecuted. He told the Financial Times of London that there must be a moral basis for removing fuel subsidy, and this can be provided when those found to have been involved in fraud are not only made to pay back, but also sent to jail.