EXECUTIVE SUMMARY
Following the removal of subsidy on PMS on the 1st day of January,
2012 by the Federal Government of Nigeria and the attendant spontaneous
social and political upheavals that greeted the policy, the House of
Representatives in an Emergency Session on the 8th of January, 2012 set
up an Ad-hoc Committee to verify and determine the actual subsidy
requirements and monitor the implementation of the subsidy regime in
Nigeria.
The Federal Government had informed the nation of its inability to
continue to pump endless amount of money into the seemingly bottomless
pit that was referred to as petroleum products subsidy. It explained
that the annual subsidy payment was huge, endless and unsustainable.
Nigerians were led to believe that the colossal payments made were
solely on PMS and HHK actually consumed by Nigerians. Government
ascribed the quoted figures to upsurge in international crude price,
high exchange rate, smuggling, increase in population and vehicles etc.
However, a large section of the population faulted the premise of the
Government subsidy figures, maintaining that unbridled corruption and
an inefficient and wasteful process accounted for a large part of the
payments. To avert a clear and present danger of descent into
lawlessness, the leadership of the House of Representatives took the
bold and decisive action of convening the first ever Emergency Session
on a Sunday (8th January, 2012), and set up the Ad-hoc Committee to
verify the actual subsidy requirements of the country.
The Committee decided that the scope of this investigation should be for three years 2009 -2011 for the following reasons:
•The actual budget expenditure on subsidy for both PMS and HHK was
tolerable, being N261.1b in 2006, N278.8b in 2007 and N346.7b in 2008.
5 companies including NNPC were involved in 2006, 10 in 2007 and 19 in
2008 contrasted to 140 in 2011.
•Secondly, in line with accounting practice, the Committee decided to investigate three years activities of the scheme.
•The Committee could have chosen to limit the investigation to 2011
alone given the scale of escalation of subsidy in that year alone but
decided to take three years to establish a trend. The Ad-Hoc Committee held Public Hearings from 16th of January, 2012
to 9th of February, 2012, taking sworn testimonies from 130 witnesses,
receiving information from several volunteers, and receiving in
evidence over 3,000 volumes of documents.
In the course of the investigations the Ad-Hoc Committee was able to establish the following:
1. Contrary to statutory requirements and other
guidelines under the Petroleum Support Fund (PSF) Scheme mandating
agencies in the industry to keep reliable information data base, there
seemed to be a deliberate understanding among the agencies not to do
so. This lack of record keeping contributed in no small measure to the
decadence and rots the Committee found in the administration of the
PSF. This is evident also in the budget preparatory process by MDAs
where adequate data is not made available to the National Assembly. The
Committee had to resort to forensic analysis and examination of varied
and external sources (including the Lloyds List Intelligence) to verify
simple transactions. In this regard, the PPPRA is strongly urged to
publish henceforth, the PSF accounts on quarterly basis to ensure
transparency and openness of the subsidy Scheme.
2. We found out that the subsidy regime, as
operated between the period under review (2009 and 2011), were fraught
with endemic corruption and entrenched inefficiency. Much of the amount
claimed to have been paid as subsidy was actually not for consumed PMS.
Government officials made nonsense of the PSF Guidelines due mainly to
sleaze and, in some other cases, incompetence. It is therefore apparent
that the insistence by top Government officials that the subsidy
figures was for products consumed was a clear attempt to mislead the
Nigerian people.
3. Thus, contrary to the earlier official figure of
subsidy payment of N 1.3 Trillion, the Accountant-General of the
Federation put forward a figure of N1.6 Trillion, the CBN N1.7
Trillion, while the Committee established subsidy payment of N2,587.087
Trillion as at 31st December, 2011, amounting to more than 900% over
the appropriated sum of N245 Billion. This figure of N2,
587.087Trillion is based on the CBN figure of N844.944b paid to NNPC,
in addition to another figure of N847.942b reflected as withdrawals by
NNPC from the excess crude naira account, as well as the sum of
N894.201b paid as subsidy to the Marketers. The figure of N847.942b
quoted above strongly suggests that NNPC might have been withdrawing
from two sources especially when the double withdrawals were also
reflected both in 2009 and in 2010.
However, it should be noted that as at the time the public hearing
was concluded, there were outstanding claims by NNPC and the Marketers
in excess of N270billion as subsidy payments for 2011. Whereas the mandate of the Committee was necessitated by the removal
of subsidy, the Committee found out that subsidy payment on kerosene
formed an Integra part of the total sum.
4. On its part, NNPC was found not to be
accountable to any body or authority. The Corporation, in 2011,
processed payment of N310.4 Billion as 2009 – 2011 arrears of subsidy
on Kerosene, contrary to a Presidential Directive which removed subsidy
on Kerosene in 2009. The Corporation also processed for itself, direct
deduction of subsidy payment from amounts it received from other
operations such as joint venture before paying the balance to the
Federation Account, thereby depleting the shares of States and Local
Governments from the distributable pool. Worse still, the direct
deduction in 2011 alone, which amounted to N847.942 Billion, was
effected without any provision in the Appropriation Act.
5. While NNPC feasted on the Federation Account to
bloat the subsidy payable, some of the marketers were involved in
claiming subsidy on products not supplied. PPPRA laid this foundation
by allocating volumes of products each quarter to the marketers which
it knew were not in conformity with its own guidelines for
participation.
6. Our investigation further revealed that certain
marketers collected subsidy of over N230.184 Billion on PMS volume of
3,262,960,225 litres that from the records made available to us were
not supplied. Apart from proliferation and non-designation of bank
accounts for subsidy payment, PPPRA and the OAGF were unable to manage
in a transparent manner the two accounts they chose to disclose. There
were indications that PPPRA paid N158 Billion to itself in 2009 and
N157 Billion in 2010. When confronted, the OAGF was unable to submit
details of the bulk payments arrogated to PPPRA and the account from
which the bulk sums were disbursed to the supposed beneficiaries.
7. Curiously too, the particular Accountant-General
that served during the period 2009 was found to have made payments of
equal instalments of N999 Million for a record 128 times within 24
hours on the 12th and 13th of January 2009, totalling N127.872 Billion.
The confirmed payments from the CBN records were made to beneficiaries
yet to be disclosed by the OAGF or identified by the Committee. We
however discovered that only 36 Marketers were participants under the
PSF Scheme during this period. Even if there were 128 marketers, it was
inconceivable that all would have imported the same quantity of
products to warrant equal payments.
8. In order to arrive at a probable figure of daily
consumption of PMS, the Committee took the entire volume of
14,787,152,340 litres imported by marketers and NNPC in 2011 as
recorded by PPPRA and then deducted what we suspected as over-invoiced
volume of 3,262,960,225. Thus, the actual volume imported for year 2011
was 11,510,202,347. This manifested into an average daily PMS
consumption of 31.5 million litres.
9. However, in 2012 marginal increment of 1.5
million litres a day is recommended in order to take care of unforeseen
circumstances, bringing it to 33 million litres per day. And to
maintain a strategic reserve, an additional average of seven (7)
million litres per day(or 630million litres per Quarter) for the first
quarter of 2012 only is recommended. Thus, PPPRA is to use 40 million
litres of PMS in the first quarter as its maximum ordering quantity per
day. In subsequent quarters PMS daily ordering quantity should be 33
million litres per day. For Kerosene, the Committee recommends a daily
ordering quantity of 9 million litres.
10. On the issue of kerosene subsidy, the Committee
strongly advocated for a Government policy to immediately recommence
subsidy payment on the product by urging withdrawal of the 2009
Presidential Directive.
11. We also proposed a budget amount of N806.766billion for the 2012 fiscal year for payment of subsidy on PMS and Kerosene.
12. For the 2012 Appropriation Act, the Committee’s recommendation is based on the following follows:
| PMS | 33,000,000 Litres x N44 (subsidy) x 365 days | N529,980,000.00 |
| Provision for strategic reserve for 1st Quarter of 2012 | 7,000,000 x N44 (subsidy) x 90 days | N27,720,000.00 |
| HHK | 9,000,000 Litres x N101 (subsidy) x 274 days | N249,006,000.00 |
| Total |
N806,766,000,000.00
|
Note: Commencement of kerosene subsidy is as from the second quarter
of 2012, since the Committee is of the opinion that the product is
still not under the subsidy regime.
Therefore, the Committee recommends the sum of N806.766billion as subsidy for year 2012.
13. With regards to the 445,000 bpd allocation to
NNPC, the Committee believes that with the current refining capacity of
53% and the SWAP/Offshore processing arrangement of the balance of 47%,
it is sufficient to provide the nation with the following products:
a. 40 Million Litres Per Day (MLPD) of PMS,
b. 10 MLPD of Kerosene (HHK)
c. 8.97 MLPD of Diesel (AGO),
d. 0.62 MLPD of LPG and
e. 2.31 MLPD of FO
It is only AGO whose average daily consumption of 12 million Litres
per day will not be achieved in full. Since AGO has been deregulated,
other marketers can make up for the 3.03 MLPD AGO shortfalls. The
implication of this finding is that if NNPC properly manages the
allocation of 445 bpd efficiently, the availability of the products can
be achieved by the NNPC alone. This contrasts the situation where in
2009-2011 NNPC got the daily allocation of 445,000bpd and the nation
still had to import through Marketers.
Curiously, although NNPC confirmed that it makes some savings of
about =N= 11.00 per litre refining locally than import, it could not be
established that the Corporation reflects this cost differential in its
claims to subsidy.
The Committee recommends that NNPC be unbundled to make its
operations more efficient and transparent and this we believe can be
achieved through the passage of a well drafted and comprehensive PIB
Bill.
All those in the Management and Board of the NNPC directly involved
in the infractions identified for the years 2009-2011 should be
investigated and prosecuted for abuse of office by the relevant
anti-corruption agencies.
14. Part of the funding sources of the PSF Account
is over-recovery from marketers. This accrues when product landing cost
is lower than the Ex-Depot price. The Committee observed that:
i. In 2009, there was an over-recovery of N2.766 Billion. This was
expected to have been credited to the PSF Account but was not traceable
to the official PSF Account disclosed, ii. Furthermore, in the
presentation made by Akintola Williams Deloitte it was claimed that the
sum of NGN5.27Billion was established as over-recovery in 2009,
however, there was no evidence that this money was credited to the PSF
Account.
15. It is our view that the Guidelines of the
PSF Scheme, even as watered down by the Board in 2009, could have
salvaged the Scheme if they were observed and enforced. Had the staff
of various agencies and government officials not compromised and
colluded with certain marketers, the level of corruption would have
been minimal. The Committee viewed this fact with serious concern and
has suggested measures to ensure that impunity is no longer condoned.
Therefore, marketers that had short-changed Nigerians were identified
and recommended to make refunds within a time-frame of three months;
civil servants were to be sanctioned in accordance with the Civil
Service Rules as well as under extant Laws; management staff and top
government officials were, based on the gravity of their offences, to
be reprimanded, re-deployed, dismissed and, in specific cases,
prosecuted for abuse of office and fraudulent practices.
16. The Committee recommended the refund to the
treasury the sum of N1, 067,040,456,171.31 trillion from the under
listed for various violations.
| i.) | NNPC (Kerosene Subsidy) |
N310,414,963,613.00
|
| ii.) | NNPC (Above PPRA recommendation) |
N285,098,000,000.00
|
| iii.) | NNPC (Self discount) |
N108,648,000,000.00
|
| iv.) | Marketers (Total violations of PSF) |
N8,664,352,554.00
|
| v.) | Companies that refused to appear |
N41,936,140,005.31
|
| vi.) | PPPRA excess payment to self |
N312.279.000.000.00
|
| TOTAL |
N1.067,040.456,171.31
|
The Committee believes that if the PSF scheme was properly managed,
this sum of N1.070trillion would have been available to the three tiers
of Government for budget enhancement.
17. The Committee recommends that the following
transactions be further investigated by the relevant anti-corruption
agencies and determine their level of culpability with a view to making
further recoveries;
i. Payment of N999m to unnamed entities 128times to the tune of N127.872b
ii. Companies who collected Forex to the tune of $402.610b whose utilization is questionable to the Committee.
iii. The 72 Companies listed under the financial forensics are
hereby recommended for further investigation by the relevant
anti-corruption agencies with a view to establishing their culpability
and recovering the sums indicated against their names totalling N230,
184,605,691.00.
iv. The Over recoveries of N2.766b and N5.27b which were not
accounted for by the office of the Accountant General of the
Federation, v. The cases of double deductions by the NNPC for
subsidy payments in 2009,2010 and 2011 mentioned in this Report.
GENERAL RECOMMENDATIONS
Based on the facts, issues and investigative interactions, the
Committee hereby makes the following recommendations for the
consideration and approval of the House.
1. From the findings of this Committee the
consumption level for 2011 is estimated at 31.5 million litres per day.
However, in 2012 marginal increment of 1.5 million litres a day is
recommended in order to take care of unforeseen circumstances, bringing
it to 33 million litres per day. And to maintain a strategic reserve,
an additional average of seven (7) million litres per day (or
630million litres per Quarter) for the first quarter of 2012 only is
recommended. Thus, PPPRA is to use 40 million litres of PMS in the
first quarter as its maximum ordering quantity per day. In subsequent
quarters PMS daily ordering quantity should be 33 million litres per
day. For Kerosene, the Committee recommends a daily ordering quantity
of 9 million litres.
2. With regards to the 445,000bpd allocation to
NNPC to refine for local consumption, the Committee established that
the allocation is sufficient to provide the nation with forty million
litres per day for PMS and Ten million litres of HHK.
The above can be achieved conveniently through;
• SWAP arrangement,
• Offshore processing,
• Outright sale of the 445,000bpd and or partial sale of the excess from the local refining capacity of 53%.
Therefore there is no reason for government to grant subsidy importation to any other marketer.
Even though we have quoted 40 million litres as a liberal figure, in
the course of monitoring the implementation of the subsidy regime the
actual daily consumption will then be determined.
3. The NNPC should refund to the Federation
Account, the sum of N310,414,963,613 (Three hundred and ten billion,
four hundred and fourteen million, nine hundred and sixty three
thousand, six hundred and thirteen naira only) paid to it illegally as
subsidy for kerosene contrary to the Presidential Directive of July
29th, 2009 withdrawing subsidy on the product.
4. The Committee recommends that the NNPC should be
unbundled to make its operations more efficient and transparent, and
this we believe can also be achieved through the passage of a well
drafted and comprehensive Petroleum Industry Bill. The
Committee therefore urges the speedy drafting and submission of the
bill to the National Assembly.
5. The Committee wishes to recommend that the House
do direct for the auditing of the NNPC to determine its solvency. This
was as a result of plethora of claims of indebtedness and demands for
payments by NNPC’s debtors which, if not well handled, will not only
affect the entire economy of Nigeria, but also the supply and
distribution of petroleum products.
Examples:
| Nigeria Customs Service | N46 billion |
| Nigeria Ports Authority | N6 billion |
| Trafigura et al | $3.5 billion |
6. The House should direct the NNPC to stop any
form of deduction not captured in the Appropriation Act before
remittance to the Federation Accounts, and the Corporation should
submit its transactions to the operational Guidelines of the Subsidy
Scheme.
7. NNPC Retail, Independent Petroleum Marketers
Association of Nigeria (IPMAN) and Major Oil Marketers Association of
Nigeria (MOMAN) should be the outlets for the distribution of Kerosene
to ensure availability and affordability of the product to Nigerians.
8. The NNPC should also refund to the Federation
Account the sum of NGN285.098Billion being over-deductions as against
PPPRA approvals for 2011. The Relevant Anti- Corruption Agencies should
further investigate the Corporation for deductions for the years 2009
and 2010.
9. As postulated earlier in this report, data
provided by NNPC and CBN tends to suggest that for 2009, 2010, and
2011, NNPC deducted subsidy payments from two different accounts. It is
the recommendation of this Committee that Relevant Anti- Corruption
Agencies conduct thorough investigations into this matter and where it
is established that double withdrawals were made, the extra amounts
should be paid back to the Treasury and those involved prosecuted.
10. The Management and Board of the NNPC should be
completely overhauled and all those involved in the following
infractions be further investigated and prosecuted by the Relevant Anti
-Corruption Agencies:
| a | Payment of N285.098 Billion in excess of the PPPRA recommended figure for 2011 |
| b | Subsidy deductions of N310,414,963,613 for kerosene against a Presidential Directive |
| c | Direct deductions from funds meant for the Federation Account in contravention of Section 162 of the Nigerian Constitution |
| d | Illegal granting of price differential (discounts) of crude oil price per barrel to NNPC to the tune of N108.648Billion from 2009-2011 |
11. The relevant Anti- Corruption Agencies should
carry out a due-diligence investigation to determine the total
demurrage payments and outstanding incurred by NNPC for the period 2009
-2011.
12. Under the PSF Scheme, importers especially NNPC
should be mandated to patronize Nigerian Flagged vessels provided they
produce the standard safety and sea-worthiness certificates in tune
with international best practices.
13. All the payments which the PPPRA made to itself
from the PSF account in excess of the approved administrative charges
which were due to it under the Template should be recovered and paid
back into the Fund. The officials involved in this infraction should be
further investigated/prosecuted by the relevant Anti- Corruption
Agencies. These confirmed illegal payments were the sum of
NGN156.455Biilion in 2009, and the sum of NGN155.824Billion in 2010, a
total sum of NGN312,279Billion.
14. All staff of PPPRA and DPR involved in the a. processing of Applications by importers, and
b. verification, confirmation and payment for imported products by
Importers and NNPC should be investigated/prosecuted by Anti-
Corruption Agencies for negligence, collusion and fraud.
15. The Executive Secretaries of the PPPRA who were
the accounting officers, and under whose watch these abuses were
perpetrated that led to the Government losing billions of naira, should
be held liable. Therefore, we strongly recommend that those who served
as Executive Secretaries of PPPRA from January 2009 to October 2011
should be further investigated/prosecuted by relevant Anti- Corruption
Agencies. This should also include GM Field Services,
ACDO/Supervisor-Ullage Team 1, and ACDO/Supervisor-Ullage Team 2 within
the same period, for their roles in the management of the ullaging
under the subsidy scheme.
16. The Chairman of the Board of PPPRA from 2009 –
2011, and the entire Members of the board during the period are hereby
reprimanded and their decision which opened the floodgate for the
Bazaar is condemned in the strongest terms.
17. It is hereby recommended that Mr President
should reorganize the Ministry of Petroleum Resources to make it more
effective in carrying out the much needed reforms in the oil and gas
sector.
18. Given the large and complex nature of the
Ministry of Petroleum Resources, the Committee recommends that two
ministers should be appointed to take charge of the upstream and
downstream.
19. The current template being used by PPPRA in
computing and paying PSF is full of in-built prices for wastages and
inefficiencies (eg. Lightering exercise, demurrage) that could be
plugged to save the Nation’s scarce resources. We therefore recommend
the revision of the template.
20. Henceforth the PPPRA margin of error on the
payment Template for ascertaining allowable volumes on imported
products should not be more than +/-5% as against the current +/-10%
21. The PPPRA should provide the Nigerian Navy and
NIMASA advance copies of allocation and vessel arrival notification
documents to enable the Navy monitor, track and interdict vessels
seeking to avoid Naval certification.
22. The Executive Secretary of PPPRA 2009 –
February, 2011 should be investigated and punished for the official
recklessness he exhibited in the implementation of the Board decision
to reverse the qualification for participation in the scheme. The
allocation/approvals to import products given to thirty-five (35)
Companies before their formal registration with PPPRA testify to
this. Companies that lack the required competence and expertise to
import petroleum products and even those who did not meet up with the
agreed standards were also awarded large chunks of the allocation, an
act that culminated in huge loss of resources to the nation. Many
Companies under his watch who had neither depots nor through-put
agreement were allowed to participate in the Scheme contrary to the
revised eligibility guidelines.
23. The practice whereby PPPRA as a regulator in
the petroleum downstream sector being supervised by the Ministry of
Petroleum Resources whose Minister is the Chairman of the Board of NNPC
(a major importer/participant in the PSF scheme) negates the principles
of checks and balances and international best practices. The Committee
therefore recommends that the regulatory capacity of PPPRA be
strengthened and the National Assembly should commence the process of
amending the Act to make the Agency autonomous.
24. The PPPRA should, within two weeks of the
adoption of this Report, conduct a performance assessment of ALL
Companies involved in the PSF scheme and publish such reports.
25. The Committee is firm in its view that if any petroleum product is deserving of subsidy, HHK should enjoy a pride of place.
It therefore recommends the immediate reinstatement of subsidy for
Kerosene not later than second quarter, 2012 at pump price of N50 per
Litre.
26. The Committee recommends that the sum of
NGN557.70Billion should be provided for as Subsidy in the 2012
Appropriation Act, while the sum of N249.006B should be provided as
subsidy for HHK (Kerosene). Evidently, 445,000 bpd allocation to NNPC is sufficient to provide
the nation with 40 MLPD PMS, 10 MLPD HHK, 8.97 MLPD AGO, 0.62 MLPD LPG
and 2.31 MLPD of FO at the current NNPC refining capacity of 53%. It is
only AGO that daily consumption in full could not be achieved. Since
AGO has been deregulated, other marketers can make up for the 3.03 MLPD
shortfalls.
27. The Committee recommends that FIRS should
follow up on the companies listed earlier to pay their taxes with due
penalties in line with the provisions of the Companies Income Tax Act.
28. The PSF Guidelines should be revised to make
Tax compliance a mandatory pre-qualification requirement for all
participants under the Scheme.
29. Marketers who obtained FOREX but did not import
petroleum products should be referred to the relevant Anti- Corruption
Agencies with a view to verifying what they used the FOREX for:
THOSE WHO OBTAINED FOREX BUT DID NOT IMPORT PETROLEUM PRODUCTS
S/N
|
NAMES OF MARKETERS
|
2010
|
2011
|
| 1 | BUSINESS VENTURES NIG LTD |
22,927,339.96
|
|
| 2 | EAST HORIZON GAS CO. LTD |
20,735,910.81
|
|
| 3 | EMADEB ENERGY |
6,606,094.30
|
|
| 4 | POKAT NIG. LTD. |
3,147,956.19
|
|
| 5 | SYNOPSIS ENTERPRISES LTD |
51,449,977.47
|
|
| 6 | ZENON PET & GAS LTD. |
232,975,385.13
|
|
| 7 | CARNIVAL ENERGY OIL LTD |
-
|
51,089.57
|
| 8 | CROWNLINES |
-
|
4,756,274.94
|
| 9 | ICE ENERGY PETROLEUM TRADING LTD |
-
|
2,131,166.32
|
| 10 | INDEX PETROLEUM AFRICA |
-
|
6,438,849.64
|
| 11 | RONADOIL&GASW/A |
-
|
4,813,272.00
|
| 12 | SERENE GREENFIELD LTD |
-
|
4,813,360.75
|
| 13 | SUPREME & MITCHELLES |
-
|
16,947,000.00
|
| 14 | TRIDAX ENERGY LTD |
-
|
15,900,000.00
|
| 15 | ZAMSON GLOBAL RES. |
-
|
8,916,750.00
|
TOTAL
|
337,842,663.86
|
64,767,763.22
|
30. The following Companies that participated in the Scheme and
refused to appear before the Committee and never submitted the required
documents as was repeatedly announced during the hearing are to refund
the various sums against their names. It is believed that these
companies deliberately refused to appear because they had something to
hide. The relevant Anti- Corruption
Agencies should ensure full recovery:
| S/N | NAME OF COMPANY | AMOUNT N |
| 1. | Mut-Hass Petroleum Ltd |
1,102,084,041.30
|
| 2. | Nepal Oil and Gas Service |
2,353,911,979.10
|
| 3. | Oilbath Nigeria |
1,019,644,138.97
|
| 4. | Techno Oil Ltd |
1,036,514,387.08
|
| 5. | Somerset Energy Services |
3,015,221,487.94
|
| 6. | Stonebridge Oil Limited |
1,784,158,258.14
|
| 7. | Mobil Oil Nigeria |
14,934,371,661.76
|
| 8. | AX Energy Limited |
1,471,969,643.31
|
| 9. | CAH Resources Association Limited |
1,052,466,415.28
|
| 10. | Crust Energy Limited |
1,192,651,581.76
|
| 11. | Fresh Synergy Limited |
1,417,029,059.70
|
| 12. | Ibafon Oil Limited |
4,687,730,540.46
|
| 13. | Lottoj Oil and Gas Limited |
1,427,429,910.95
|
| 14. | Oakfield Synergy Network Limited |
988,920,219.15
|
| 15. | Petro Trade Energy Limited |
1,471,027,874.73
|
| 16. | Prudent Energy & Service Limited |
1,360,898,638.10
|
| 17. | Rocky Energy Limited |
1,620,110,167.58
|
| TOTAL |
41,936,140,005.31
|
31. Payments for PMS with effect from the second
quarter of 2012 should be based on certified truck outs at depots
confirmed at the retail outlets and no longer on discharges from
vessels into tank farms. Consumption should be defined in a way to
exclude what is imported but only what is put in the tank.
32. The markets of opportunity situated within
Nigerian territorial waters which are designated “offshore Cotonou” or
“offshore Lome” to qualify for FOREX payment and to evade payment of
appropriate levies, dues and taxes to the Nigerian government should be
discontinued forthwith.
33. A Marine Transportation System should be put in
place that is safe, secure, reliable, cost effective and efficient to
reduce the present high cost of doing business in Nigeria.
34. Any importation without permit or where the
difference is above approved quota should not be entitled to any amount
on the Template.
35. It is strongly recommended that Marketers
without storage facilities and retail outlets should be excluded from
participating in the PFS Scheme as this will end the bazaar that
constituted a serious drain on the nation’s economy and created room
for abuses.
36. The services of the accounting firm of Akintola
Williams, Deloitte and Olusola Adekanola & Partners should be
discontinued with immediate effect for professional incompetence on
this particular assignment.
37. In view of the above the 2 firms should be
blacklisted from being engaged by any Federal Ministry, Department or
Agency (MDA’s) for a period of three years.
38. This Ad-Hoc Committee shall in its monitoring
stage conduct extensive and thorough investigation into the operations
of the PEF(MB) in order to ascertain the management of the bridging
funds under the subsidy regime.
39. Penalties should also be indicated for non-compliance and promptly imposed to ensure the smooth operation of the Scheme.
40. The Nigerian Ports Authority (NPA) should be
encouraged within a time frame to improve on the draught level of the
Nigerian waters to encourage the berthing of ALL types of vessels so as
to eliminate the present ship-to-ship (STS) transfers by importers of
petroleum products.
41. All those in the Federal Ministry of Finance,
Office of the Director-General Budget, and the Office of the Accountant
General of the Federation involved in the extra budgetary expenditure
under the PSF Scheme (2009-2011) should be sanctioned in accordance
with the Civil Service Rules and the Code of Conduct Bureau.
42. The payment of N999,000,000 in 128times within
24hrs (12th& 13th January, 2009) by the Office of the Accountant
-General of the Federation should be further investigated by relevant
Anti-Corruption Agencies.
43. The National Assembly should enact an Act to criminalise extra budgetary expenditure.
44. CBN and the Federal Ministry of Finance should
critically examine and review the policy guiding payment for
importation of petroleum products to avoid the current fraudulent
system that allows importers to bring in products from off-shore “Lome”
or “Cotonou” to qualify for forex payments.
45. The Committee notes that several alarms were
raised by the CBN on the escalation of subsidy figures but these early
warning signals were ignored by relevant agencies. The Committee wishes
to encourage whistle -blowing by regulatory agencies on threats to the
economy with the hope that proactive measures could be taken.
46. The Committee recommends that the PPMC
Management be overhauled. In furtherance to above recommendations of
the committee, institutional mechanisms be urgently developed to ensure
the monitoring of actual delivery of kerosene to the Nigerian masses.
47. The PPMC should deploy modern state-of-the-art
devices to protect its facilities and pipelines to eliminate wastages
arising from vandalism. In the short-term however, PPMC should
establish a surveillance system which should incorporate
Community-protection and using part of the bridging funds on the PSF
Template to finance this.
48. All the extant circulars preventing the Nigeria
Customs Service from carrying out its statutory functions be
immediately withdrawn by the Central Bank of Nigeria and the Federal
Ministry of Finance.
49. The Committee recommends that NNPC takes
immediate action to pay the N46billion owed the Nigeria Customs Service
and the N6billion owed to the Nigeria Ports Authority
50. The failure of NPA to provide this Committee
the vital vessel data particularly the IMO numbers is an indication
that either NPA has a very poor record keeping system or that it was a
deliberate ploy to cover up the collusion between its officials and
importers. We recommend an investigation into the operations and
activities of this Authority.
51. The port operations of the Nigerian Ports
Authority be investigated with a view to determining the extent to
which its officials are complicit in the classification of maritime
areas for reception of Nigerian bound petroleum products as “offshore
Cotonou” and “offshore Lome” in the face of evidence that these Vessels
never did lighter at those Ports.
52. In the course of this investigation, a lot of
efforts were made to establish cases of round tripping and diversion of
products, including the use of the data from Llyods List Intelligence
resulting in the cases so far reported. However given the scale of
connivance and collusion by government officials involved in the
certification process, the Committee believes that further
investigation will reveal more cases. It is therefore recommended that
all the data obtained in the course of this investigation, especially
from the Llyods List Intelligence be forwarded to the relevant
anti-corruption agencies for a more detailed investigation.
53. The present Management of PEF (M)B should be
overhauled and the Board when constituted should comprise of persons of
impeccable integrity who should be knowledgeable in aspects of its
mandate. This is without prejudice to the coming into force of the
Petroleum Industry Act.
54. PEF(M)B should establish a tracking system on
all trucks from point of loading to point of discharge (retail outlets)
and direct that all trucks involved with transportation of products
should install approved tracking devices on them.
55. It is hereby recommended that the regulatory
capacity of the DPR be strengthened. The National Assembly should
commence the process of amending the Act to make the Agency autonomous.
56. The DPR should take immediate steps to bring
all facilities and depot owners into compliance with international best
practices by ensuring the installation of modern metering gadgets and
sealable and non-return valves, to eliminate the rampant cases of
round-tripping.
57. The DPR should brace up to its role of
Regulation and compel the NNPC/PPMC to comply with all the regulations
issued to ensure transparency and accountability.
58. In order to reduce and gradually eliminate
lightering, associated inefficiency and cost, Government should invest
in the provision of Single Point Mooring (SPM’s). This provision should
be followed up by instituting Regulations to compel Owners of Jetties,
depots and storage facility owners to develop pipeline throughput
availability to facilitate direct delivery of imported products by
heavy vessels, in-shore Nigeria.
59. There should be a deliberate policy by
Government to encourage the utilization of gas in automobile, domestic
(cooking), and industrial facilities.
60. As a matter of urgency and in furtherance of
our national security requirements, a national strategic reserve should
be immediately enhanced so to accommodate 90days stop gap strategic
reserve.
61. We strongly recommend that relevant Standing
Committees of the National Assembly should be more proactive in their
oversight responsibilities to forestall future occurrences.
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