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Okonjo-Iweala decries N232bn fraudulent subsidy claims

By on August 17, 2013

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, has decried the N232bn ($1.5bn) overpayments made to “fraudulent” oil marketers.

Okonjo-Iweala, who is also the Coordinating Minister for the Economy, made the plan known at the meeting of the National Council of Finance and Economic Development in Minna, Niger State on Thursday.

She said in 2006, the total petroleum subsidies paid to oil marketing firms amounted to N256bn (about $1.6bn) and by 2011, the bill had risen sharply to nearly N2.10tn.

“Even more striking was the increase in the number of oil marketing firms. While most countries have few well-organised fuel importers, Nigeria had a total of 143 such firms as of 2011. The certification process to verify the actual delivery of imported fuel was also very lax, resulting in widespread fraud in the operation of the scheme,” the News Agency of Nigeria quoted Okonjo-Iweala as saying.

The minister said there were cases where some firms submitted payment invoices for fuel deliveries in Nigeria when their stated cargo ships were actually berthed elsewhere in South America on the same dates.

She said the subsidised prices for petroleum products consumed domestically also created arbitrage opportunities and resulted in widespread smuggling to neighbouring countries.

To this effect, she said the Federal Government embarked on a comprehensive reform of the downstream petroleum sector by appointing the Aigboje Aig-Imoukhuede-led committee, which discovered lapses in the payment processes.

Okonjo-Iweala said, “Following the discoveries, the Federal Government put in place a number of remedial measures to combat fraud in the subsidy scheme.

“First, a tighter payment regime was introduced with new auditors and stricter guidelines for disbursement of subsidy payments. The increased scrutiny has slowed down the payment process somewhat, but also greatly reduced the likelihood of fraudulent payments.

“Second, we published the names of fraudulent oil marketing companies in the national press, and are in the process of prosecuting these fraudulent marketers to reclaim the stolen funds.”

To prevent further fraudulent payment claims, she said the government was introducing three electronic payment systems and oversight platforms.

The minister said, “The new Integrated Personnel and Payroll Information Systems will allow direct payment of government workers based on biometrics data. This has so far saved the government over N119bn through the elimination of ‘ghost’ workers.

“Also, a Government Integrated Financial Management Information System electronically links the treasury to other government departments and enables faster and more transparent movement of funds.”

Okonjo-Iweala said all these were the government’s way of providing checks and balances and ensuring the prudent management of public funds.