The Group Managing Director, Nigeria National Petroleum Corporation (NNPC), Dr. Maikanti Baru, yesterday, disclosed that the corporation is using $1.05billion from dividends of Liquefied Natural Gas, to augment daily shortages incurred in the pump price of Premium Motor Spirit.
Baru, who made the disclosure while appearing before the Senate Ad- Hoc Committee investigating alleged application of $3.5billion petroleum subsidy by the NNPC, however, denied existence of such fund.
According to him, $1.05billion which is equivalent of N383.2billion taken from the LNG dividends is domiciled in a special account with the Central Bank of Nigeria, called National Fuel Support Fund for the purposes of augmenting losses incurred from petrol pump price of N145 per litre, as against N185 per litre it supposed to be.
“Based on available parameters from landing to transportation costs, the pump price of PMS supposed to be N185 per litre as against the official price of N145 per litre, indicating shortage of N40 per litre.
“Since subsidy is not appropriated for and pump price not adjusted upwardly, NNPC had no other reason than to, in line with its establishment Act, Section 7 sub section 4(b), defray its costs from its revenues,” explained.
The NNPC boss further clarified that the $1.05billion costs augmentation money came into being October last year, when the independent marketers pulled out of the supply chain of importation of PMS into the country as a result of increase in landing cost without corresponding increase in pump price.
He added that the issue of subsidy or pump price increase can best be tackled by the National Assembly and not the NNPC, failure of which he said, will make smuggling of petroleum products across Nigerian borders, lucrative business by smugglers.
“The N145 per litre pump price of PMS in Nigeria is the lowest when compared to N400 it is sold in Cameroon, N350 in Ghana, and N330 in Benin Republic etc.
“As long as the product is sold at the lowest price in Nigeria, so shall it be attractive for smugglers to trade on across the borders,” he complained.
While saying he didn’t know the daily consumption of the product in Nigeria presently, Baru disclosed that the consumption rate as at 2016 was 49million litres per day and 53million litres per day in 2017.
According to him, NNPC presently has 1.9bn litres of PMS in stock which can last the country for 39 days in case of any breakdown in the supply chain.
Why Baru appeared
Baru’s appearance before the committee was sequel to a resolution taken by the Senate on the 16th of last month for probe into alleged warehousing of $3.5billion by the NNPC for fuel subsidy through a motion moved by the Senate Minority Leader, Biodun Olujimi (PDP Ekiti South).
Aside Baru, officials of government from the Ministry of Finance, Office of Auditor General of the Federation etc, also appeared before the committee.
The Committee chaired by the Leader of the Senate, Ahmed Lawan (APC Yobe North), however, adjourned its sitting to Tuesday , November 6, 2018.
Senate queries FG
In a related development, the Senate has queried the federal government over the non-payment of petrol subsidy claims approved for marketers by the National Assembly since July.
Members of the committee, at a meeting in Abuja, accused the government agencies in charge, of slowing down the process of paying petroleum product marketers “what was owed as and when due.”
The Nigerian government has consistently said it has stopped paying subsidy on fuel but rather, pays funds for ‘under-recovery’ for differentials in the importation of fuel by marketers.
The Senate had in July 2018 approved N348 billion for the payment of subsidy claims to oil marketing companies based on a request by President Muhammadu Buhari.
The approval was sequel to the adoption of an interim report by the committee on the promissory note programme and bond issuance to settle inherited local debts and contractual obligations to petroleum marketers.
While approving that 55 oil marketers be paid verified figures totalling N275.8 billion, the upper chamber had asked that 19 marketers “with contentious claims and verified figures” be paid 65 per cent of their claims, amounting to N73billion, pending further investigation and verification by the committee.
At the meeting, Chairman of the committee, Kabiru Marafa (APC, Zamfara), said the essence of the meeting was to know how much of the Senate’s resolution the federal government had implemented, the situation with the 19 marketers with contentious claims and the solution to the continued conflict of subsidy figures between the government and oil marketers.
The Director-General, Debt Management Office, Patience Oniha, however, said while the payments were approved by the Senate in July, “the office did not receive communication from the Clerk to the National Assembly until September.”
She explained that the processes through which the payments would be made were detailed in the request made to the Federal Executive Council, which was passed and forwarded to the National Assembly for approval.
According to her, the processes, which must be followed, are still ongoing and the DMO will engage the marketers by the middle of November.