NNPC paid self N2.592trn subsidy in 2017 — Senate

Posted by Ahmed Musa | 27 April 2018 | 1,157 times

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•NNPC GMD, Dr. Maikanti Baru

The Senate on Thursday said the Nigerian National Petroleum Corporation (NNPC) paid itself the sum of N216 billion monthly, amounting to N2.592 trillion, as subsidy in 2017.

Consequently, the upper legislative chamber ordered the corporation to stop the illegal payment of subsidies on petroleum products without appropriation.

The Senate also directed that the NNPC should, through the president, make formal request to the National Assembly for appropriation for the illegal payments already made.

These directives were contained in the report of the Senate ad-hoc committee on the “investigation of illegal payment of N1.4 trillion subsidy on petroleum products by the NNPC’, which was considered by the committee of the whole on Thursday.

Among the recommendations of the Mathew Urhogidhe-led 26-member ad-hoc committee was “for the Federal Government to pay oil marketers the outstanding arrears of subsidy owed them prior to 2017”.

Also recommended was the need for the payment of maximum attention to local refineries to enable them function at full capacity.

The Senate, while considering the report for adoption, also directed the NNPC to, as a matter of economic imperative, decentralise the importation of petroleum products with a view to reducing subsidy burden and fuel pump price.

The corporation had, in the body of the report, told the panel that it undertook to import the products in order to ensure national security for energy needs of the country and to meet the demands of Nigerians who were “groaning as a result of shortage of premium motor spirit (PMS)”.

While noting that it imported over 9.8 billion litres of petrol at the cost of $5.4 billion, the corporation said the difference between the actual cost of importing those volumes and what was recovered from selling them in the market amounted to N216.9 billion.

According to the NNPC, “This differential was absorbed by the corporation as part of its operating costs as a loss.

“There were no claims for subsidy by the corporation and it did not receive any reimbursement for same.”

The panel thus found that the NNPC had been the sole importer of petroleum products as almost all the major marketers had stopped importation due to the negative difference in the landing cost and selling pump price.

It said while the approved pump price for PMS was pegged at N145 per litre, the landing cost was about N171, inclusive of all charges, giving a negative difference of N26.

The findings further revealed that the N26 difference borne by the NNPC as a loss amounted to the sum of N216 billion monthly.

It also said that the N216 billion monthly differentials were actually taken by the NNPC as operational cost.

The panel recalled that “in the previous years, all importers, including the NNPC, had collected subsidy for differentials.”

It added: “It is, therefore, curious that NNPC will in year 2017, describe the differentials as ‘operational cost’ and a loss but will not demand a refund.” (INDEPENDENT)

Source: News Express

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