The Nigerian National Petroleum Corporation (NNPC) paid $196 million at an average of $6.6 million per month for demurrage on imported fuels between 2007 and 2009, lawyer activist, Femi Falana has said.
Falana said that landing cost of imported petroleum product could be less than the Petroleum Product Pricing and Regulatory Agency (PPPRA) template.
He also said that the Petroleum Equalisation Fund (PEF) should account for over N500 billion it spent between 2006 and 2011) from equalisation of prices of petroleum products and marine transportation.
Falana, who appeared before the House of Representatives ad hoc committee probing the management of subsidy regime, said both NNPC and the Central Bank of Nigeria (CBN) and other agencies in their category have continually flouted the constitution by not subjecting their budget to the National Assembly.
He said that the government ought to have earned huge revenues from local refining of petroleum products rather than wasting over N4 trillion on fuel subsidy due to ‘reckless importation’. He said what this amounted to was that Nigeria subsidising incompetence, corruption, mismanagement and inefficiency that have characterised the importation by the so-called oil cartel.
Falana said the NNPC is in the thick of the corruption, “NNPC collected not less than 59 per cent of the total subsidy fund of over N4 trillion while 41 per cent was paid to other marketers from 2006 to 2011.
Variations between NNPC claims and the verifications by PPPRA led to over deductions of several billions of naira. For instance, over deductions made in 2007, 2008 and 2009 were over N35 billion.
“The sum of $136 million at an average of $6.6 million per month was paid by NNPC for demurrage on imported fuel products from 2007 to 2009. Whereas payment for import of petroleum products was to be effected within 45 days of the submission of Notice of Readiness (NOR). This was deliberately delayed for upward of 250 days leading to payment of huge interests by the NNPC,” he said.
Falana noted that rather than use its storage faculties of 18,000 cubic metres that were in good condition, NNPC preferred to lease third party facilities, which for five years it paid colossal amount of money for.
The activist also indicted the NNPC for refining millions of litres of fuel in Nigeria and Cote d’Ivoire only to collect subsidy claims as if they were imported from Europe.
He also regretted that the NNPC could have short-changed the nation through allocation of 445,000 barrels of crude per day to Warri refinery, Port Harcourt refinery and Cote d’Ivoire through swapping to Duke Oil, owned by the NNPC and 60,000 barrels to Tranfigura of the United Kingdom.
Falana who noted that fuel is sold beyond the official price in many parts of the country, which is illegal according to the PEF Act, implored the committee to direct the PEF to refund over N500 billion it ‘spent illegally’ .
While urging the committee to be courageous by unraveling the intrigues associated with the subsidy issue, Falana pointed out that Nigerians are skeptical of the probe as it may go the way of others.
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Falana flays NNPC’s $196m demurrage payment