NNPC ‘Spends N8.49b On Subsidy In 19 Months’

The Nigerian National Petroleum Corporation (NNPC) stated yesterday why it did not obey the presidential directive stopping subsidy on kerosene in 2009.

According to the NNPC, which initially obeyed the late President Umar Yar’Adua’s directive for almost two years and then continued the practice in 2011, the corporation jettisoned the directive because it was not published in any official gazette.

This position was maintained by Group Managing Director of the NNPC, Mr. Andrew Yakubu while speaking at the hearing organised by the Dakuku Peterside-headed House Committee on Petroleum (Downstream). The committee is investigating the supply and distribution of kerosene as well as the subsidy expenditure on kerosene from 2010 to 2013.

NNPC Company Secretary Anthony Madichie corroborated Yakubu’s stance by citing the Petroleum Act’s Section 6 subsection 1, when speaking on the legality of kerosene subsidy.

According to Madichie, only the Minister of Petroleum Resources has the authority to fix petroleum product prices. If a presidential directive is given and not gazetted, such directive will not be effective.

But Yakubu failed to disclose how much was spent on subsidy between 2010 and 2013.

He also could not provide the authority on which the subsidy deductions were made or how the funds for obtaining the product were sourced.

He, however, said he was aware that N8.49 billion was spent on subsidising 5,015.413.022.06 trillion litres of kerosene as well as 15,177,76,123 trillion liters of fuel imported into the country within 19 months.

Both Yakubu and the Managing Director, Petroleum Products and Pipeline Marketing Company (PPMC), Mr Haruna Momoh, gave reasons for consistent shortfall in the supply of kerosene.

Yakubu said situations whereby the product is diverted to neighbouring countries and used for Industrial purposes, painting, adhesive, chemical and allied products cause scarcity.

He also said the adulteration of diesel to kerosene and its use for aviation fuel, pipeline vandalisation and sharp practices of middlemen also contribute to non-availability of the product.

He added: “There are quite a number of competing demands for kerosene and until these are addressed by other relevant agencies, the issue of kerosene not being readily available for domestic use will continue to reoccur every now and then.

“The way out is for this committee to collaborate with the NNPC to encourage the sale of liquefied petroleum gas, otherwise known as cooking gas.”

The NNPC boss said the corporation has increased the supply of LPG from 65,000 metric tonnes in 2011 to 250,000 metric tonnes in 2013. The ultimate target, he said, is to grow the consumption of the product to 500,000 metric tonnes by the end of this year.

According to him, the improved consumption of liquefied petroleum gas or cooking gas will surely reduce the demand for kerosene.

Momoh expressed the same opinion, saying that PPMC would ensure that pipelines and the depots are fixed as part of ongoing efforts to bridge the gap in supply of kerosene.

According to him, by the time the 800,000 metric tonnes on the use of domestic gas is attained, kerosene use will reduce significantly.

House of Representatives Speaker Aminu Tambuwal, while opening the hearing, flayed the secrecy engulfing the subsidy of kerosene.

Tambuwal, who was represented by the Deputy Speaker, Emeka Ihedioha, said despite the fact that the government has spent about N1 trillion to subsidise the product, kerosene was still beyond the reach of Nigerians.

He said: “This is just unacceptable and certainly not in the best interest of our people. It is important to note that the country has spent at least one trillion naira over the past four years to subsidise kerosene, yet the product is neither available nor is it sold at the official NNPC pump price whenever it is found and wherever.

“Things are not helped by the fact that nobody has been able to tell us what our kerosene consumption volume is per annum. This attitude by government officials who continue to treat the issue of kerosene consumption volume as if it were a national secret is quite deplorable. Transparency and accountability are things that we should by now take for granted in 21st Century democratic Nigeria.

“Moreover, the people, who are the only true justification for spending such huge subsidies on kerosene, have in no way benefited from the arrangement. Curiously, since there were no budgetary provisions for subsidy on kerosene, the people of Nigeria will obviously be interested in knowing the source of funding of kerosene subsidy and on whose authority such monies were appropriated.

“These and several other issues warrant a full scale investigation into the mysteries surrounding the subsidy so that we can at last unravel the truth. Nigerians need to know to what extent kerosene subsidy is actually serving their vital interest.”

The House has also adopted the recommendations of the report of an ad hoc committee that investigated the deal between Malabu Oil Limited and the Federal Government.

The recommendations contained were adopted despite the observation of Rep Simon Arabo (PDP, Kaduna) who condemned the contents of the report.

Arabo noted that the recommendations contained in the report were unconstitutional and out of the mandate given to the committee.

He cited sections 4 and 6 of the constitution, stating that the report arrogated the role of the judiciary to the National Assembly. “This report is an embarrassment to this House. It’s unconstitutional for us to have such a report. We’re not part of the judiciary; so, we can’t play their role,” he said.

The report was adopted as majority voted in its support.

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