Don't Miss

$10.8bn spent on kerosene subsidy, others — NNPC

By BusinessNews Staff on January 7, 2014

The Nigerian National Petroleum Corporation has finally admitted that it spent the yet-to-be-reconciled $10.8bn on behalf of the Federal Government.

The sum was meant to be paid into the Federation Account.

The corporation, on Sunday, said the money was spent on kerosene subsidy and other expenses since 2007.

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, had late last year alleged that the corporation failed to remit $49.8bn to the Federation Account between January 2012 and July 2013.

Of this sum, $30bn had been reconciled by the government agencies involved, while $10.8bn is still outstanding.

Explaining that the $10.8bn was not missing, the General Manager, Media Relations, Group Public Affairs Department, NNPC, Mr. Omar Farouk, said in a statement that the corporation was saddled with onerous responsibilities that other oil companies were freed from.

He said, “For instance, as the supplier of last resort, NNPC has the responsibility of ensuring that there is adequate supply of petroleum products, whether the market is favourable or not.

“The yet-to-be-reconciled $10.8bn can be located in the expenses on some of the responsibilities, which the corporation carries out on behalf of the Federal Government with respect to domestic crude oil utilisation.

“One of such issues is the unpaid subsidies on kerosene and Premium Motor Spirit. It will be recalled that Dr. Okonjo-Iweala (Finance minister) was earlier in 2013 reported to have stated that she had not paid any subsidy on kerosene since she assumed office.

“The truth of the matter is that since 2007 when the late President Umaru Yar’Adua reviewed the prices of petroleum products following the general strike in protest against the price hike by his predecessor, the issue of subsidy payment on kerosene was left hanging and the NNPC was mandated to continue to sell the product at a subsidised rate of N50 per litre.”

Farouk said since then, not a dime had been paid to the corporation as subsidy on the product.

He observed that since January 2012, the NNPC had been importing the bulk of the PMS used in the country, adding that the corporation had successfully kept the nation wet with products, especially petrol, in the past two years.

He added, “This can be verified from the absence of queues at petrol stations during the end-of-year festivities. So, the corporation is left to bear these responsibilities on behalf of the Federal Government and these costs are part of the yet-to-be-reconciled balance.”

Farouk further stated that the huge expenditure by the NNPC on behalf of the government was for the maintenance of strategic national reserves for petroleum products.

He said, “At every point in time round the year, the NNPC maintains huge petroleum product reserves in the national territorial waters as a result of pipeline vandalism, which has made access to most of the inland storage facilities impossible. Though all hope is not lost in this regard as the corporation has since launched an aggressive depot rehabilitation and pipeline recovery exercise with amazing results so far.

“However, for the purpose of strategic reserve, at the rate of 40 million litres of PMS national consumption per day, the NNPC maintains about 32 days’ sufficiency of petrol. The cost incurred in this mandate is also part of the $10.8bn yet-to-be-reconciled outstanding figure.”

A third component, according to the spokesperson, is the cost of pipeline vandalism, oil theft and other security issues.

He stated that the volume of vandalism and theft was enormous, stressing that the corporation’s over 5,000-kilometre of pipelines had been prone to incessant attacks.

According to Farouk, the cost of repairs each time the pipelines were hacked was also an issue.

He added, “All these expenses make up the yet-to-be-reconciled balance of $10.8bn.

“All the parties involved in the reconciliation process are aware of these facts and the figures are being thoroughly scrutinised.

“At the end of the day, they will make their findings public as they did last time. It is, therefore, incorrect for anyone or medium to continue to misinform the public that the sum of $10.8bn or $12bn of oil revenue is missing.”

[Punch]

headline