Reps Panel Release Subsidy Investigation Report 11 Months Later
After being tasked with the investigation for 11 months, the House of Representatives Ad Hoc Committee on the Need to Investigate the Petroleum Products Subsidy Regime in Nigeria eventually presented its findings.
Ibrahim Aliyu, the committee’s chairman, presented the report to the group on Wednesday.
The House decided on June 29, 2022, to look into payments for subsidies on petroleum goods, particularly Premium Motor Spirit, often known as gasoline, under the previous administration presided over by Muhammadu Buhari.
The group, whose investigation encompassed the years 2017 to 2021, had been established by the House Speaker, Femi Gbajabiamila, with the instruction to provide a report to the House within eight weeks for additional legislative action.
The investigation was based on a proposal that Sergius Ogun, a member of the House, proposed and the lawmakers unanimously approved on Wednesday. The motion was headed “Need to Investigate the Petroleum Products Subsidy Regime in Nigeria from 2017 to 2021.”
According to Ogun, the Nigerian National Petroleum Company Limited (formerly the Nigerian National Petroleum Corporation) was buying 445,000 barrels of crude oil per day at prices set by the world market in order to supply petroleum products for domestic use.
“The House is concerned that as of 2002, Nigeria’s local refineries had an installed capacity of 445,000 barrels per day, but that due to the inefficiency and alleged corruption of key stakeholders in the value chain, their capacity utilisation began to nosedive and eventually fell completely to zero,” he had stated.
Ogun stated that the NNPCL considered it more practical to export domestic oil in return for petroleum products on a trade-by-barter basis, otherwise known as a Direct Sales Direct Purchase agreement, due to the fall in the output capacity of the refineries.
The legislator noted that the component costs in the petroleum products subsidy value chain claimed by the NNPC are “highly over-bloated,” while the transfer pump price per litre used by the NNPC regarding PPMC is under-quoted as N123-N128, instead of N162-N165, and “and this fraudulent under-reporting of N37-N39 per litre translates into over N70bn a month or N840bn a year.”
The House is concerned that PMS is being used at a rate of 40 million to 45 million liters per day, he said. However, as can be seen from the NNPC’s monthly filings to the Federal Allocation Committee, the NNPC utilizes 65 million to 100 million liters per day to calculate subsidies.
The House is particularly concerned that the NNPC and other important stakeholders have used the subsidy system dishonestly to divert over $10 billion in crude oil revenue for the country. Records indicate that as of 2021, over $7 billion in over 120 million barrels have been so diverted.
