Panel: waste disposal firm got N1.9b fuel subsidy

Farouk ... yesterday

MORE sordid details of the multi-billion naira petrol subsidy bazaar emerged yesterday.

A waste disposal firm got N1.9b subsidy for products it never supplied, according to the report of the House of Representatives Ad-Hoc Committee which probed the controversial subsidy.

More than 126 oil marketers and top officials of the Petroleum Products Pricing and Regulatory Agency (PPPRA) should be investigated and prosecuted by anti-graft agencies – if the authorities accept the recommendations of the Committee.

They are to be probed by the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC). 

But the panel cleared three firms of misconduct. These are: Conoil Plc, AMG Petroleum Energy Ltd and Rainoil Ltd.

The committee discovered that about 3, 171,644, 336 litres of petrol, allegedly subsidised, never got to the market. 

But the committee reprimanded a former Chairman of the PPPRA, Senator Ahmadu Ali, and the board members (2009-2011) for their “decision which opened the floodgate for the bazaar” in the agency. 

It did not recommend any sanction against Ali, a former National Chairman of the ruling Peoples Democratic Party (PDP), and the erstwhile board members. 

These highlights are contained in the report of the committee that was made available to the media yesterday in Abuja. 

The report reads: “The PPPRA is expected to assign independent inspectors interchangeably referred to as Independent Monitors/ and or Industry Consultant to measure and certify the quantity of products imported and supplied by the importer-companies. They are also required to analyse the quality specifications of the products and ascertain the quantity of Bunker Fund in the Vessel to avoid adulteration and volume distortions. 

“The committee could not confirm the presence or the identity or even the existence of this category of participants under the PSF Scheme. 

“It appears to the committee unlikely that this category of stakeholders exists, especially in the light of the following: 

•the widely reported many cases across the country of domestic fire as a result of adulterated HHK and the vehicle engine knocks attributed to the availability of adulterated fuel in Nigeria; and 

•the inability of any of the government agencies to produce incontrovertible evidence of or even present any consistent data on the quantity of products imported into Nigeria provides a firm basis to conclude that these Independent Inspectors are non-existent. 

“The Committee tasked itself to specifically identify marketers and the transactions that gave rise to claims to subsidy on products that may not have been brought in. 

“The Committee identified that the marketers were often awarded superfluous quantities of products to supply but often did not meet the target. 

“In 2009, PPPRA approved a supply of 11,341,507,500 litres of PMS for the marketers. However PPPRA confirmed the marketers discharged only 5,085, 206, 983 litres or 55.16% under-discharge. 

“Despite being aware of the under-performance by the marketers in 2009 or the defect in its procurement process and management, PPPRA increased the 2010 Approved Deliverables to 12,410,955, 000 litres. The marketers delivered only 6,226,586,543, that is 49.8% under performance. In spite of the under performance, there were no crises of product availability throughout 2011. 

“This same ugly trend was maintained by PPPRA in 2011 during which it increased its approved quantity to 13,589,510,000 litres but, however, confirmed a delivery of 9,317,145,231 litres, an under performance by 31.4%. 

“(i) By PPPRA’s representation, the marketers received N680.982billion as subsidy for supplying 9,317,145,275 litres of PMS in 2011. (ii)Curiously, PPPRA made another presentation that the marketers were paid N975.896billion for supplying 12,488,789,611 litres of PMS in 2011. 

“Between (i) and (ii) above, PPPRA has confirmed that N294, 914billion was paid on 3,171,644,336 litres of PMS that might not have been supplied. 

“The anomaly is hereby referred to the relevant anti-corruption agencies for further investigation. 

“The situation in 2011 wherein it was deduced that PPPRA may have paid subsidy higher than what the bank reflected, is a pointer to the fact that the official bank accounts disclosed by CBN may not be the only ones used by PPPRA during the subsidy regime. PPPRA was identified to have received payments from PSF account in 2009 and 2010. 

“It is clear that PPPRA had no good understanding of effective procurement procedures and management and may have adopted incremental budgeting process in determining Approved Quantity without recourse to the performance in preceding periods. 

“The PPPRA staff in charge of procurement between 2009 to 2011 should be reprimanded and punished according to Civil Service rules. 

“We established that subversion of the PSF guidelines propelled by unashamed urge to swindle and defraud government were the real reasons the subsidy claims rose dramatically.” 

The committee condemned the subsidy bazaar in the PPPRA where novices and unregistered firms were allowed to import fuel. 

It cited an example of two promoters from a waste disposal company in the US who came into the country with a different proposal but got N1, 984,141,091.10 as subsidy for products not supplied. 

It said 121 oil marketers should be investigated by anti-graft agencies. 

They are as follows:  

•17 marketers that did not obtain FOREX but claimed to have imported petroleum products. 

•15 marketers who obtained FOREX but did not import petroleum products.

•71 oil marketers to face probe and refund N230.1billion

•18 oil marketers benefited from the fuel subsidy but failed to appear before the committee. They also refused to submit relevant documents

The report added: “The PPPRA Board Chairman (2009-2011), Senator Ahmadu Ali (GCON, fss) admitted before the committee that the Board under his chairmanship decided to proliferate importers to allegedly break the stranglehold which major marketers had on system. 

“He also explained that the increase in number was meant to flood market with the products as a result of the scarcity at that time. 

“This was done without setting a target volume, leading to supply glut in the quarter and throughout the year. The figure then became a baseline which was increased at every successive year. 

“This carte blanche for entrants was the singular most devastating decision of the Agency. The PSF guidelines on prequalification and monitoring completely broke down and the Scheme became an avenue for all forms of patronage. The number of importers increased from an initial figure of six in 2006, 36 in 2007, 49 in 2009, and 140 in 2011. 

“A representative example was that of two promoters who allegedly received an e-mail and came in from the USA with a proposal of waste management with NNPC. Instead, the two promoters came together and incorporated Eco-Regen Ltd. on 3rd August 2010 with corporate address as 3rd Floor, UAC Building Central Business District Wuse Abuja, applied for PPPRA registration on 11th September, 2010, got its first allocation of 15,000 mt on 20th January, 2011 and was paid N1, 984,141,091.10 as subsidy for products not supplied.” 

The committee recommended sanctions for some PPPRA chiefs. 

• Ex-PPPRA Executive Secretaries, Mr. A. Ibikunle (August 2009 to February 2011) and Mr. Goddy Egbuji(February to August 2011) for further probe and trial by the EFCC, ICPC

•PPPRA’s GM Field Services, ACDO/Supervisor-Ullage Team 1 and ACDO/Supervisor-Ullage Team 2

•All staff in Procurement Unit of PPPRA between 2009 and 2011.

The report added: “All staff of PPPRA involved in the processing of applications by importers, and verification, confirmation and payment of imported products and NNPC should be investigated/prosecuted by the relevant anti-corruption agencies.

“The Executive Secretaries, 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.

“We strongly recommend that the Executive Secretaries, who served from January 2009 to October 2011 should be investigated and prosecuted by the relevant anti-corruption agencies.”

On the NNPC, the report said: “It became apparent to the committee that the operations of the NNPC were opaque and not transparent. The implication on this is that it created room for abuses, inefficiencies and manifest lack of accountability.

“Although NNPC confirmed that it makes some savings of about N11 per litre refining locally than importing, it could not be established that the corporation reflects this cost differential in its claims to subsidy.

“The implication of this is that NNPC may have been collecting excess subsidy on locally refined products as the corporation appears to collect the same amount of subsidy on both the locally refined and imported products.

“Thus, NNPC acted as importer, marketer, claimant, payer and payee. Simply NNPC was not accountable to anybody or authority.

“The Committee recommends that the accounts of the Corporation be audited to determine its accounts profits and solvency. NNPC’s petroleum products processing of 445,000 barrels of domestic crude should be subjected to further inquiry by the committee during its monitoring exercise.

“The Committee recommends that NNPC be unbundled to make its operations more efficient and transparent and this we believe can be achieved through the passage of a well-drafted and comprehensive PIB Bill.

“All those in the Management and Board of the NNPC directly involved in all the infractions identified for the years 2009-2011 should be investigated and prosecuted for abuse of office by the Code of Conduct Bureau.”

The report recommended that “Mr. President should reorganise the Ministry of Petroleum Resources to make it more effective in carrying out the much needed reforms in the oil and gas sector.”

Regarding the Pipelines Products Marketing Company Limited, the report said: “The management of PPMC appeared not to be alive to its responsibilities and on top of its duties. A case in point is the embarrassing failure of the Managing Director to provide the Committee with the retail market price of Kerosene, even though the nation solely depends on the company for the supply and distribution of the product.”