Don't Miss

N543bn kerosene subsidy claims not yet verified – PPPRA

By BusinessNews Staff on February 21, 2014

The Petroleum Products Pricing Regulatory Agency said on Wednesday that about N543.89bn subsidy claims on imported kerosene by the Nigerian National Petroleum Corporation had not been fully verified.

The agency said the subsidy covered importation for 19 months from January to December 2012 and the first seven months of 2013.

The Executive Secretary, PPPRA, Mr. Reginald Stanley, stated that the subsidy claims were for 3.907 billion litres of kerosene imported during the period.

He said this when he appeared before the House of Representatives Committee on Petroleum Resources, which is investigating subsidy payments on kerosene between 2010 and 2013.

The committee is headed by an All Progressives Congress lawmaker from Rivers State, Mr. Dakuku Peterside.

Stanley informed the committee that the verification process involved checking the records of products discharged by bigger vessels into small ones on the high sea and the eventual discharge of the product into tank farms.

Members of the committee were taken aback when he said that it was not necessary for officials of the PPPRA to be at the point of discharge of the product on the high sea to confirm whether the quantity quoted in the accompanying documents was actually discharged.

According to Stanley, the job of the PPPRA stops at confirming that the product gets to the tank farms, where marketers load for downstream distribution.

He explained that the agency’s work was also being aided by the marketers, who would confirm receipt of the quantity discharged on the high sea.

Stanley said, “Our men will not usually be at the point of reception, but we can confirm based on the documents the NNPC presents to the PPPRA.

“We have documents showing that the vessels came in, but when a vessel arrives and anchors in Lagos, we are not there.”

A member of the committee, Mr. Nnana Igbowke, while expressing dismay at the revelation, asked Stanley, “I hope you know the implication of what you are saying? I would have suggested that you go back and consult the relevant documents and return again.”

But Stanley responded that there was nothing strange in his statement because the process of verification involved internationally acclaimed stakeholders, who would use the standard practice applicable in the industry.

He told the committee that it was the responsibility of the Ministry of Finance and the Debt Management Office to effect the payment for the claims on imported petroleum products after the verification had been completed.

Specifically on the N543.89bn, Stanley said the agency merely “advised” for payment based on documents available to it, but had not completed the verification process.

He also told the committee that between 2009 and 2011, the PPPRA under his predecessor, verified kerosene subsidy claims of N331.4bn for 4.229 billion litres of the product.

“My predecessor issued a certificate to the NNPC; that is all I can confirm,” he stated.

The executive secretary also said he was aware that the NNPC was allocated 445,000 barrels of crude oil per day for its swap arrangement and refining by the refineries in the country.

However, he clarified that the corporation paid for the crude at international price.

“The crude is fully paid for by the NNPC; it is not sold at any concessional price; it is important to clarify this,” he said.

Stanley stated that whether the kerosene supplied to the country came from the 445,000 barrels of crude or from direct importation, it would attract subsidy since the NNPC was not taking the crude free of charge from the Federal Government.

Many lawmakers expressed concern that the subsidy verification was being done purely on documents presented to the PPPRA by the importer or supplier.

They sought to know the average landing cost of a cargo of kerosene in the country.

Stanley replied that a standard cargo could carry 30,000 metric tonnes of the product, adding that the price per tonne ranged from $1,085 to $1,115.

He added that this would translate to $34.2m for a cargo of 30,000 metric tonnes.

The PPPRA boss also put the daily consumption of kerosene in the country at 10 million litres, though he said this depended on the season of the year.

He said, “On the average, 10 million litres is the industry figure per day. However, during the wet season, more kerosene is consumed because cooking wood is wet and people use kerosene more to provide energy.”

“In the dry season, the consumption will drop because again, there will be more reliance on dry wood.”

Like the NNPC, and the Pipelines and Product Marketing Company earlier told the committee, the PPPRA boss also blamed the scarcity of kerosene in the country on the government subsidy, diversion, as well as the use of the product in road construction and the aviation sector.

According to him, the competing demands have forced marketers to cut corners and adopt any means at their disposal to sell to the highest bidder as against the recommended N50 per litre.

[Punch]

headline