Subsidy scam: Nigeria spent N13.7trn between 2005, 2020 ― NEITI report

Facts emerged on Thursday that the sum of N13.7 trillion ($74.386 billion) was spent on the payment of fuel subsidy between 2005 and 2020, according to the data computed by the Nigeria Extractive Industries Transparency Initiative (NEITI) to the House of Representatives revealed.

The NEITI’s Executive Secretary, Ogbonaya Orji, to the Ad-hoc Committee investigating subsidy regime between 2013 and 2021, chaired by Hon Ibrahim Aliyu.

According to the report, the subsidy payments in 2005 stood at N351 billion ($2.66 billion), N219.72 billion ($1.70 billion) in 2006, N236.64 billion (1.89 billion) in 2007, N360.18 billion (3.03 billion) in 2008, N198.11 billion ($1.60 billion) in 2009 and N416.45 billion ($2.76 billion) in 2010.

The report also showed that subsidy payments for 2011 stood at N1.9 trillion ($12.18 billion), N690 billion ($4.34 billion) in 2012, N495 billion ($3.11 billion) in 2013, N482 billion ($2.92 billion) in 2014, N316.70 billion ($1.62 billion) in 2015, N99 billion ($0.39 billion) in 2016, N141.63 billion ($0.44 million) in 2017, N722.30 billion ($2.36 billion) in 2018, N578.07 billion ($1.88 billion) in 2019 and 134 billion ($0.37 billion) in 2020, respectively.

Mr Orji who observed that the cost of crude oil and exchange rate determine the cost of imported premium motor spirit (PMS), lamented that while all the oil-producing countries are smiling to banks, Nigeria has continued to be burdened with the fluctuation of the crude price at the international market.

While stressing that the country must reach at national consensus to end subsidy in line with the NEITI and other international partners.

While expressing grave concern over the geometric increase in the subsidy payment especially pre and during election years, Hon. Sergius Ogun (PDP-Edo) said: “Remember in 2011 there was an election and when the Supreme Court gave judgement to the then President, by January he said he’s going to remove subsidy. You remember that was the Ojota protest in January and there was a case in court then when it was reported that people were just cooking documents, they didn’t supply a single product but they will just cook the documents and were making claims.

“I was part of the Committee – Swap, then some of them that the government paid billions in demurrage. All the past MDs all came in then and I don’t want to go into the answers they gave us then. So, if you look at it, 2011 going into 2012 were election years.

ALSO READ FROM NIGERIAN TRIBUNE

• Awolowo Dosumu: ‘I Did Not Speak With Any Journalist On Tinubu/Shettima Ticket’

• Kaduna Train Hostage Negotiator Now In Our Safe Custody ― DSS

• We’re Losing Wives To Okada Riders, Police Officers Allege, Protest 18 Months Unpaid Salaries In Osun

“On our own side, I think it has to do with the theft, the opaqueness with subsidy payments. Some of these monies are used for elections. Because look at 2018, 2019 again, it was high! What’s the price of crude oil in the market? Anybody can google it. I am from the industry but anybody can google it here. Average price of crude oil, you can google it daily. You can get from it since 1960. You can get it.

“So, that is why we need NEITI because I’m a bit disappointed, I also know you are limited in what you can do. You are relying on NNPC data. We want independent data because if you rely on their own you also need to go and verify what they are giving you is correct. For me, NEITI can help us to further expose this but we would put it down that when the risks are high, the year before the election and the election years, this money goes into elections, whichever government is in power. 2011 it’s not this current government that is in power. But I can state here categorically that this money goes into elections and in 2018, 2019 you can see it’s very high,” Hon Ogun stated.

By May 2016, being the only importer of PMS, NNPC began to deduct from proceeds from the sale of domestic crude without recourse to the PPPRA during periods of under-recovery. This has continued to date.

Apart from the subsidy, deductions made by NNPC consist of: pipeline maintenance and management, crude oil and product losses and Government priority projects.

He observed that the NNPC’s ongoing deductions from Federation crude sales have over the three years covered by NEITI’s last Audit Reports, NNPC’s domestic crude oil sales and deductions.

According to the report, total due from NNPC for 2018 stood at N2.294 trillion including subsidy of N722.257 billion, N138.945 billion for pipeline repairs and management cost, N28.329 billion for crude and product losses and N998.285 billion being balance that NNPC should have remitted; actual remittance stood at N897.922 billion leaving outstanding (unremitted fund) of N100.363 billion for 2018.

Similarly, the total due from NNPC for 2019 stood at N2.145 trillion comprising of subsidy of N518.074 billion, N126.664 billion for pipeline repairs and management cost, N31.844 billion for crude and product losses and N1.498 trillion being balance that NNPC should have remitted; actual remittance stood at N821.563 billion leaving outstanding (unremitted fund) of N170.675 billion for 2019.

The 2020 records however showed the payment of subsidy worth N133.74 billion, N54.49 billion for pipeline repairs and management cost, N133.06 billion for crude and product losses while there was no computation for total due from NNPC and balance that NNPC should have remitted, as well as actual remittance and outstanding (unremitted fund).

According to the report, Domestic Crude Allocation for 2018 was 107.63 million barrels, out of which 13.581 million barrels (13 per cent) was delivered to the refineries and 94.045 million barrels (87%) was exported under the DSDP arrangement. DSDP allocation increased by 32.19 per cent from 72.828 million barrels in 2017 to 94.054 million barrels in 2018.

From the total crude oil volume of 255.546 million barrels lifted by NNPC in 2018, actual sales were 255.313 million barrels valued at $18.184 billion. The difference of 233,000 barrels between volume lifted and actual quantities sold has been explained as sales accounted for in 2019. Furthermore, DSDP accounted for the highest, contributing 36.03 per cent to the total value.

While speaking further on the issues identified by NEITI in the Audit Reports, Orji observed that: “Within the transaction rules, NNPC is expected to comply with the 90 days payment terms in remitting the proceeds of federation crude. NEITI’s report examined the pattern and consistency of remittance of sales proceeds into the designated bank account (CBN/NNPC crude oil and gas revenue Naira account) by the NNPC. It was evident that the NNPC consistently defaulted on the sales terms of 90 days. The delays ranged from 21 to 55 days. The opportunity cost of these monthly delayed remittances by NNPC was N17.5 billion.

“NNPC deducts from the sales proceeds of domestic crude oil for under-recovery (subsidy on PMS), payments for pipeline repairs and maintenance and payments for crude and product losses. Although amounts were appropriated for these expenditures in the approved budget for the year, however, the amounts deducted by the end of the year were over and above-appropriated sums.”

In its recommendations, NEITI called for “A periodic audit by the federal government to verify the utilization of amount deducted for pipeline maintenance and repairs should be undertaken. The government should consider the following options: Allocating specific crude volume to NNPC to cater for their Operational costs.”

While ruling, Hon. Aliyu who presided over the session resolved to invite the Central Bank of Nigeria (CBN), Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigerian Ports Authority (NPA) to appear before the Committee before October 6, 2020.

He also issued a final invitation to some of the oil marketers including Trafigura, Duke Oil, Barbidos, Petrogas Energy, Atlantic Mainland Oil & Gas, North West Petroleum, Petrocan, Total, Ditol, Eterna Plc, who benefitted from the fuel subsidy to appear between the 7th and 8th October 2020 to explain the level of their participation in the subsidy regime within the period under review.