•Chairman House of Reps on Media,
Zakari Mohammed(left), Chairman House of Reps Ad-hoc committee on the
probe of Fuel Subsidy, Farouk Lawan and Chairman Committee on Public
Accounts, Adeola Solomon Olamilekan during a news conference on the
submissio
Based
on the facts, issues and investigative interactions, the Committee
hereby makes the following recommendations for the consideration and
approval of the House.
1
From the findings of this Committee the consumption level for 2011 is
estimated at 31.5 million liters per day. However, in 2012 marginal
increment of 1.5milion liters a day is recommended in order to take care
of unforeseen circumstances, bringing it to 33 million liters per day.
And to maintain a strategic reserve, an additional average of seven (7)
million liters per day (or 630milllion litres per Quarter) for the first
quarter of 2012 only is recommended. Thus, PPPRA is to use 40 million
litres of PMS in the first quarter as its maximum ordering quantity per
day. In subsequent quarters PMS daily ordering quantity should be 33
million litres per day. For kerosene, the Committee recommends a daily
ordering quantity of 9 million litres.
2
With regards to the 445,000bpd allocation to NNPC to refine for local
consumption, the Committee established that the allocation is sufficient
to provide the nation with forty million litres per day for PMS and Ten
million litres of HHK.
The
above can be achieved conveniently through; SWAP arrangement, *
Offshore processing, *Outright sale of 445,000bpd and or partial sale of
the excess from the local refining capacity of 53%.
Therefore there is no reason for government to grant subsidy importation to any marketer.
Even
though we have quoted 40 million litres as a liberal figure, in the
course of monitoring the implementation of the subsidy regime the actual
daily consumption will then be determined.
3
The NNPC should refund to the Federation Account, the sum of
N310,414,963,613 (Three hundred and ten billion, four hundred and
fourteen million, nine hundred and sixty three thousand, six hundred and
thirteen naira only) paid to it illegally as subsidy for kerosene
contrary to the Presidential Directive of July 29th, 2009 withdrawing
subsidy on the product.
4
The Committee recommends that the NNPC should be unbundled to make its
operations more efficient and transparent, and this we believe can also
be achieved through the passage of a well drafted and comprehensive
Petroleum Industry Bill. The Committee therefore urges the speedy
drafting and submission of the bill to the National Assembly.
5
The Committee wishes to recommend that the House do direct for
auditing of the NNPC to determine its solvency. This was as a result of
plethora of claims of indebtedness and demand for payments by NNPC’s
debtors which, if not well handled, will not only affect the entire
economy of Nigeria, but also the supply and distribution of petroleum
products.
Examples:
Nigeria Customs Service =N46 billion
Nigeria Ports Authority =N6billion
Trafigura et al = $3.5billion
6.
The House should direct the NNPC to stop any form of deduction not
captured in the Appropriation Act before remittance to the Federation
Accounts, and the Corporation should submit its transactions to the
operational Guidelines of the Subsidy Scheme.
7
NNPC Retail, Independent Petroleum Marketers Association of Nigeria
(IPMAN) and Major Oil Marketers Association of Nigeria (MOMAN) should
be the outlets for the distribution of Kerosene to ensure availability
and affordability of the product of Nigerians.
8. The
NNPC should go also refund to the Federation Account the sum of NGN
285.098 billion being over-deductions as against PPPRA approvals for
2011. The Relevant Anti-Corruption Agencies should further investigate
the Corporation for deductions for the years 2009 and 2010.
9. As
postulated earlier in this report, data provided by NNPC and CBN tends
to suggest that for 2009, 2010, and 2011, NNPC deducted subsidy
payments from two different accounts. It is the recommendation of this
Committee that Relevant Anti-Corruption Agencies conduct thorough
investigations into this matter and where it is established that double
withdrawals were made, the extra amounts should be paid back to the
Treasury and thos involved prosecuted.
10. The
Management and Board of the NNPC should be completely and all those
involved in the following intractions be further investigated and
prosecuted byt he Relevant Anti-Corruption Agencies.
a.Payment of N285.098 billion in excess of the PPPRA recommeded figure for 2011.
b. Subsidy deductions of N310,414,613 for kerosene against a presidential directive.
c. Direct deductions from funds meant for the Federation Account in contravention of Section 162 of the Nigerian Constitution.
d.
Illegal granting of price differential (discourse) of crude oil price
per barrel to NNPC to the tune of N108.648 billion from 2009 - 2011.
11.
The relevant Anti-Corruption Agencies should carry out a due-diligence
investigation tio determine the total demurge payments and outstanding
incurred by NNPC for the period 2009 - 2011.
12.
Under the PSF Scheme, importers especially NNPC should be mandated to
patronize Nigerian Flagged vessels provided they produce the standard
safety and sea-worthiness certificates in tune with International best
practices.
13.
All the payments which the PPPRA made to itself from the PSF account in
excess of the approved administrative charges wihich were due to it
under the Template should be recovered and paid back into the fund. The
officials involved in this infraction shlould be further
investigated/prosecuted by the relevant Anti-Corruption Agencies. These
confirmed illegal payments were the sum of NGN 156.455 billion in 2009,
and the sum of NGN155.824 billion in 2010, a total sum of NGN312,279
billion.
14. All staff of PPPRA and DPR involved in the
a. Processing of Applications by importers, and
b.
Verification, confirmation and payment for imported products by
|Importers and NNPC should be investigated/prosecuted by Anti-Corruption
Agencies for neglience, collusion and fraud.
15.
The Executive Secretaries of the PPPRA of the PPPRA who were the
accounting officers, and under whose watch these abuses were perpetrated
that led to the Government losing billions of naira, should be held
liable. Therefore, we strongly recommend that those who served as
Executive Secretaries of PPPRA from January 2009 to October 2011 should
be further investigated/prosecuted by relevant Anti-Corruption Agencies.
This should also include GM Field Services, ACDO/Supervisor-Ullage Team
1, and ACDO/Supervisor-Ullage Team 2 within the same period, for their
roles in the management of the ullaging under the subsidy scheme.
16. The
Chairman of the Board of PPPRA from 2009 - 2011, and the entire Membes
of the Board during the period are hereby reprimanded and their decision
which opened the floodgate for the Bazaar is condemned in the strongest
terms.
17. It
is hereby recommended that Mr. President should reorganized the
Ministry of Petroleum to make it more effective in carrying out the much
needed reforms in the oil and gas sector.
18.
Given the large and complex nature of the Ministry of Petroleum
Resources, the Committee recommends that two ministers should be
appointed to take charge of the upstream and downstream.
19.
the current template being used by PPPRA in computing and paying PSF is
full of in-built prices for wastages and inefficiencies (eg. Lightering
exercise, demurrage) that could be plugged to save the nation’s scarce.
We therefore recommend the revision of the template.
20.
Henceforth the PPPRA margin of error on the payment Template for
ascertaining allowable volumes on imported products should not be more
than +/5% as against the current +/-10%
21.
The PPPRA should provide the Nigerian Navy and NIMASA advance copies of
allocation and vessel arrival notification documents to enable the Navy
Monitor, track and interdict vessels seeking to avoid Naval
certification.
22.The
Executive Secretary of PPPRA 2009- February, 2011 should be
investigated and punished for the official recklessness he exhibited in
the implementation of the Board decision to reverse the qualification
for participation in the scheme. The allocation/approvals to import
products given to thirty-five (35)
Companies
before their formal registration with PPPRA testify to this, Companies
that lack the require competence and expertise to import petroleum
products and even those who did not meet up with the agreed standards
were also awarded large chunks of the allocation, an act that culminated
in huge loss of resources to the nation. Many Companies under his
watch who had neither depots nor through-put agreement were allowed to
participate in the Scheme contrary to the revised eligibility
guidelines.
23.The
practice whereby PPPRA as a regulator in the petroleum downstream
sector being supervised by the Ministry of Petroleum Resources whose
Minister is the Chairman of the Board of NNPC (a major
Importer/participant in the PSF scheme) negates the principles of checks
and balances and international best practices. The Committee therefore
recommends that the regulatory capacity of PPPRA be strengthened and the
National Assembly should commence the process of amending the Act to
make the Agency autonomous.
24. The
PPPRA should, within two weeks of the adoption of this Report, conduct a
performance assessment of All Companies involved in the PSF scheme and
publish such reports.
25. The Committee is firm in its view that if any petroleum products is deserving of subsidy, HHK should enjoy a pride of place.
It
therefore recommends the immediate reinstatement of subsidy for
kerosene not later that second quarter, 2012 at pump price of N50 per
litre.
26.The
Committee recommends that the sum of NGN5557.70 billion should be
provided for as subsidy in the 2012 Appropriation Act, while the sum of
N249.0006B should be provided as subsidy for HHK (Kerosene).
Evidently,
445,000 bpd allocation to NNPC is sufficient to provide the nation with
40 MPPD PMS, 10 MLPD HHK, 8.97 MLPD LGO, 0.62 MLPD LPG and 2.31 MLPD of
FO at the current NNPC refining capacity of 53%. It is only AGO that
daily consumption in full could not be achieved. Since AGO has been
deregulated, other marketers can make up for the 3.03 MLPD shortfall.
27.
The Committee recommends that FIRS should follow up on the companies
listed earlier to pay their taxes with due penalties in line with the
provisions of the Companies Income Tax Act.
28.
The PSF Guidelines should be revised to make Tax compliance a
mandatory pre-qualification requirement for all participants under the
Scheme.
29. Marketers
who obtained FOREX but did not import petroleum products should be
referred to the relevant Anti-Corruption Agencies with a view to
verifying what they used the FOREX for: (SEE TABLE 1)
30. The
following Companies that participated in the Scheme and refused to
appear before the Committee and never submitted the required documents
as was repeatedly announced during the hearing are to refund the various
sums against their names. It is believed that these companies
deliberately refused to appear because they had something to hide. The
relevant Anti-Corruption Agencies should ensure full recovery: (see
TABLE 2)
31.
Payments for PMS with effect from the second quartr of 2012 should be
based on certified truck outs at depots confirmed at the retail outlets
and no longer on discharges from vessels into tank farms. Consumption
should be defined in a way to exclude what I s imported but only what is
put in the tank.
32.
The markets of opportunity situated within Nigerian territorial waters
which are designated “offshore Cotonou” or “offshore Lome” to quarlify
for FOREX payment and to evade payment of appropriate levies, due and
taxes to the Nigerian government should be discontinued forthwith.
33.
A Marine Transportation System should be put in place that is safe,
secure, reliable, cost effective and efficient to reduce the present
high cost of doing business in Nigeria.
34.
Any importation without permit or where the difference is above
approved quota should not be entitled to any amount on the Template.
35.It
is strongly recommended that Marketers without storage facilities and
retail outlets should be excluded from participating in the PFS Scheme
as this will end the bazaar that constituted a serious drain on the
nation’s economy and created room fro abuses.
36.The
services of the accounting firm of Akintola Williams, Deloitte and
Olusola Adekanola & Partners should be discontinued with immediate
effect for professional incompetence on this particular assignment.
(MDA’s) for a period of three years.
37. This
Ad-Hoc Committee shall in its monitoring state conduct extensive and
thorough investigation into the operations of the PEF (MB) in order to
ascertain the management of the bridging funds under the subsidy regime.
38. Penalties should also be indicated for non-compliance and promptly imposed to ensure the smooth operation of the Scheme.
39.
The Nigerian Ports Authority (NPA) should be encouraged within a time
frame to improve on the draught level of the Nigerian waters to
encourage the berthing of ALL types of vessels so as to eliminate the
present ship-to-ship (STS) transfers by importers of petroleum products.
40.
All those in the Federal Ministry of Finance, Office of the
Director-General Budget, and the Office of the Accountant General of the
Federation involved in the extra budgetary expenditure under the PSF
Scheme (2009-2011) should be sanctioned in accordance with the Civil
Service Rules and the Code of Conduct Bureau.
41.
The payment of N999,000,000 in 128 times within 24 hrs (12th & 13th
January, 2009) by the Office of the Accountant-General of the
Federation should be further investigated by relevant Anti-Corruption
Agencies.
43.The National Assembly should enact an Act to criminalise extra budgetary expenditure.
44.CBN
and the Federal Ministry of Finance should critically examine and
review the policy guiding payment for importation of petroleum products
to avoid the current fraudulent system that allows importers to bring in
products from off-shore “Lome” or “Cotonou” to qualify for forex
payment.
45.The
Committee notes that several alarms were raised by the CBN on the
escalation of subsidy figure but these early warning signals were
ignored by relevant agencies. The Committee wishes to encourage whistle –
blowing by regulatory agencies on threats to the economy with the hope
that proactive measures could be taken.
46.The
Committee recommends that the PPMC Management be overhauled. In
furtherance to above recommendation of the committee, institutional
mechanism be urgently developed to ensure the monitoring of actual
delivery of kerosene to the Nigeria masses
47.The
PPMC should deploy modern sate-of-the-art devices to protect its
facilities and pipeline to eliminate wastage arising from vandalism. In
the short-term, however, PPMC should establish a surveillance system
which should incorporate Community-protection and using part of the
bridging funds on the PSF Template to finance this.
48.All
the extant circulars preventing the Nigeria Customs Service from
carrying out its statutory functions be immediately withdrawn by the
Central Bank of Nigeria and the Federal Ministry of Finance.
49.The
Committee recommends that NNPC takes immediate action to pay N46billion
owed the Nigeria Customs Service and the N6billion owed to the Nigeria
Ports Authority.
50.The
failure of NPA to provide this Committee the vital vessel data
particularly the IMO numbers is an indication that either NPA has a very
poor record keeping system or that it was a deliberate poly to cover up
the collusion between its officials and importers. We recommend an
investigation into the operations and activities of this Authority.
51.The
port operations of the Nigerian Port Authority be investigated with a
view to determining the extent to which its officials are complicit in
the classification of maritime areas for reception of Nigerian bound
petroleum products as “offshore Cotonou” and “offshore Lome” in the face
of evidence that these vessels never did lighter at those Ports,
includuing the use of the data from Llyods List Intelligence resulting
in the cases so far reported. However given the scale of connivance and
collusion by government officials involved in the certification process,
the Committee believes that further investigation will reveal more
cases. It is therefore recommended that all the data obtained in the
course of this investigation, especially from the Llyods List
Intelligence be forwarded to relevant anti-corruption agencies for a
more detailed investigation.
53.
The present management of PEF (M) B should be overhauled and the Board
when constituted should comprise of persons of impeccable integrity who
should be knowledgeable in aspects of its mandate. This is without
prejudice to the coming into force of the Petroleum Industry Act.
54.
PEF (M) B should establish a tracking system on all trucks from point
of discharge (retail outlets) and direct that all trucks involved with
transportation of products should install approved tracking devices on
them.
55.
It is hereby recommended that the regulatory capacity of the DPR be
strengthened. The National Assembly should commence the process of
amending the Act to make the agency autonomous.
56.
The DPR should take immediate steps to bring all facilities and depot
owners into compliance with international best practices by ensuring the
installation of modern metering gadgets and sealable and non-return
valves, to eliminate the rampant cases of round-tripping.
57.
The DPR should brace up to its role of repulation and compel the
NNPC/PPMC to comply with all the regulations issued to ensure
transparency and accountability.
58.
In order to reduce and gradually eliminate lightering, associated
inefficiency and cost, Government should invest in the provision of
Single Point Mooring (SPM’S). This provision should be followed up by
instituting regulations to compel owners to develop pipeline throughput
availability to facilitate direct delivery of imported products by heavy
vessels, in-shore Nigeria.
59.
There should be deliberate policy by government to encourage the
utilisation of gas in automobile, domestic (cooking), and industrial
facilities.
60.
As a matter of urgency and in furtherance of our national security
requirements, a national strategic reserve should be immediately be
enhanced so as to accommodate a 90-day stop-gap strategic reserve.
61.
We strongly recommend that relevant Standing Committees of the
National Assembly should be more proactive in their oversight
responsibilities to forestall future occurrences.
NAMES OF MARKETERS 2010 2011
$ $
1.Business Ventures Nig. Ltd. 22,927,339.96
2.East Horizon Gas Co. Ltd. 20,735,910.81
3.Emadeb Energy 6,606,094.30
4.Pokat Nig. Ltd. 3,147,956.19
5.Synopsis Enterprises Ltd. 51,449,977.47
6.Zenon Pet & Gas Ltd. 232,975,385.13
7.Carnival Energy Oil Ltd. 51,089.57
8.Crownlines- 4,756,274.94
9.Ice Energy Petroleum Trading Ltd 2,131,166.32
10.Index Petroleum Africa 6,438,849.64
11.Ronad Oil & Gas W/A 4,813,272.00
12.Serene Greenfield Ltd. 4,813,360.75
13.Supreme & Mitchelles 16,947,000.00
14.Tridax Energy Ltd. 15,900.000.00
15.Zamson Global Res.- 8,916,750.00
TOTAL 337,842,663.86 64,767,763.22
Marketers To Make Refund
NAME OF COMPANY AMOUNT
1. Mut-Hass Petroleum Ltd 1,102,084,041.30
2. Nepal Oil and Gas Service 2,353,911,979.10
3. Oilbath Nigeria 1,019,644,138.97
4. Techno Oil Ltd. 1,036514,387.08
5. Somerset Energy Services 3,015,221,487.94
6. Stonebridge Oil Limited 1,784,158,258.14
7. Mobil Oil Nigeria 14,934,371,661.76
8. Ax Energy Limited 1,471,969,643.31
9. Cah Resources Association Limited 1,052,466,415.28
10. Crust Energy Limited 1,192,651,581.76
11. Fresh Synergy Limited 1,417,029,059.70
12. Ibafon Oil Limited 4,687,730,540.46
13. Lottoj Oil and Gas Limited 1,427,429,910.95
14. Oakfield Synergy Network Limited 988,920,219.15
15. Petrol Trade Energy Limited 1,471,027,874.73
16. Prudent Energy & Service Limited 1,360,898,638.10
17. Rocky Energy Limited 1,620,110,167.58
TOTAL 41,936,140,005.31
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