Feb. 14, 2014
Alison-Madueke also says Presidential directives not law, can be disregarded and any forensic audit of PPPRA must be stretched back to 2004.
Ngozi Okonjo-Iweala calls for forensic audit, saying they cannot verify NNPC documents.
The Minister of Petroleum Resources, Diezani Alison-Madueke, on Wednesday said presidential directives do not have the force of law and can, therefore, be disregarded.
Mrs. Alison-Madueke said this during the ongoing Senate investigative hearing on the alleged missing $20 billion from the accounts of the Nigerian National Petroleum Corporation, NNPC.
The Ahmed Makarfi-led Senate Committee on Finance has been quizzing petroleum ministry and Central Bank of Nigeria officials over the missing funds.
Confidential memos exclusively published by PREMIUM TIMES showed that NNPC’s claims that it spent over 80 per cent of a controversial $10.8billion (about N1.728trillion) on kerosene subsidy may have been a scam after all.
The memos also showed that the purported subsidy on kerosene was against an extant presidential directive to remove subsidy on kerosene from the Petroleum Support Fund, PSF, template.
On June 10, 2009, late President Umaru Musa Yar’adua, had approved the resolutions of the Presidential Committee on the Deregulation of the Downstream Petroleum sub-sector.
The memo to the President, No. SH/PSP/24/A/812, had, among several prayers, requested the petroleum minister be directed to “eliminate existing subsidy on the consumption of kerosene, taking into account that subsidy payments by government on kerosene do not reach the intended beneficiaries.”
On June 2009, a memo No. SH/PSP/24/A/819, signed by the then Principal Secretary to the President, David Edevbie, conveyed the president’s directive to the Minister of Petroleum Resources.
The memo also directed the minister to avoid public announcement of the new directive.
But in spite of the presidential directive, the NNPC, apparently feigning ignorance, still submitted a request for the payment of subsidy on kerosene.
However, in memo: SH/PSP/24/A/1087 dated October 19, 2009, the President rejected the request, pointing out that based on his earlier directive “the NNPC should not be entitled to make claims from the PSF, in respect of kerosene with effect from the date of Mr. President’s approval.”
It was not clear if the corporation received the subsidy after the demise of the former president.
However, in July 2011, despite the subsisting directive, Alison-Madueke, announced the launch of the Kero-Direct scheme initiated by the NNPC ostensibly to make kerosene available to consumers nationwide at a highly subsidized rate of N50 per litre.
Under the scheme, the Pipelines and Products Marketing Company, PPMC, a subsidiary of the NNPC charged with petroleum products marketing and distribution was directed to deliver kerosene to consumers using the facilities of an independent marketer, Capital Oil and Gas Industries Limited.
But the House of Representatives Adhoc Committee probing the fuel subsidy regime in 2012 had, in its report, described the scheme as “a scam to defraud Nigerians and extort money from the Petroleum Support Fund, PSF.”
The committee had noted that the scheme was not only implemented in defiance of a subsisting presidential directive removing kerosene from the subsidy regime, but also designed in a way the product would not get to the beneficiaries at the approved price.
It further noted that throughout the period, kerosene, which was supposed to be distributed to consumers nationwide at the subsidized rate, sold only at the 36 NNPC mega stations out of over 24,000 retail outlets across the country.
Even then, it said the product was never available to consumers at the subsidised price and as a result of massive diversion; it was resold to consumers at between N160 and N200 per litre in the open market.
But while fielding questions during the investigative hearing, the petroleum minister insisted that the NNPC flouted the presidential directive on kerosene subsidy to save Nigerians the hardship of buying at exorbitant rates.
Mr. Alison-Madueke also insisted that if there must be a forensic audit of the PPPRA documents, it should be stretched to 2004, when the entire process started.
However, when asked why she disregarded the extant presidential directive on subsidy, she said, “I was not in office at that time, but even then, a presidential directive is not law and is not gazetted.”
Her response generated murmurs among members of the investigative panel and other participants.
The CBN Governor, Sanusi Lamido Sanusi, who blew the whistle on the missing funds, had told the committee that the NNPC’s lied that 80 percent of the $10.8 billion it admitted were unremitted to the Federation Accounts was incurred on petrol and kerosene subsidy.
Mr. Sanusi said in spite of the explanations from the finance minister, there is an outstanding $20 billion between what NNPC shipped and what it paid to government.
He also insisted that the outstanding $6 billion given to the NPDC should have gone to the federal government, noting that the CBN had received three legal opinions to support its position on the matter.
Mr. Sanusi said, “PPPRA says subsidy on kerosene is legal and that certain amount was paid. PPPRA is the agency authorised to determine that. But I have a letter from the PPPRA in 2010, telling me that they do not pay kerosene subsidy.
“It is, therefore, left for the committee to determine whether such letter was later withdrawn.”
When Mr. Sanusi went ahead to read a part of the PPPRA’s letter, signed by its former Executive Secretary, Abiodun Ibikunle, stopping kerosene subsidy on the floor, Mr. Makarfi stopped him.
Mr. Makarfi said it is not proper for the CBN governor to delve into the responsibility of other agencies of government.
Also speaking at the hearing, the Minister of Finance, Ngozi Okonjo-Iweala, said NNPC had supplied documents from the PPPRA to show how the initial outstanding $10.8 billion was spent.
She, however, said the finance ministry had no capacity to validate the claims, stressing that there was need for an independent forensic team to examine the documents.
On the missing $20 billion which Mr. Sanusi, said should have been paid into the Federation Accounts but was diverted by the NNPC, through the Nigerian Petroleum Development Company, NPDC, Mrs. Okonjo-Iweala again said there was need for an independent legal opinion to determine the ownership of the funds.
Asked why her ministry had not carried out forensic audit of NNPC documents if it is dissatisfied with its operations, Mrs Okonjo-Iwela said such audits could only be carried based the due process.
“Nothing stops us from carrying out the audit. This thing is a process,” she admitted.
Again, when asked whether there is need for a forensic validation when the PPPRA is vested with the responsibility of signing off subsidy payments, she replied, “These are extraordinary times; otherwise we would not be sitting here. These are not ordinary times.”
On his part, the NNPC’s Group Managing Director, Andrew Yakubu, debunked claims that $10.8 billion had been diverted by the corporation.
The NNPC boss insisted that the money had been spent on subsidy, pipeline maintenance and other losses.
“The impression Nigerians have is that $10.8 billion is seated in the four towers of the NNPC,” referring to the NNPC’s corporate office in Abuja.
“Nigerians believe NNPC is sitting on money. But I want it known that these monies we are taking about are not realizable flows,” Mr. Yakubu said.
A mild drama, however, ensued when a member of the Senate committee, Isa Galaudu, remarked that the state of Nigeria’s finances is “messy.”
As soon as Mr. Galadu made the remark, the finance minister took the floor and rebuked the lawmaker, saying that Nigeria has one of the best budgets in the world.
She insisted that Nigeria is one of the few countries that allowed its citizens to know, “how much is spent on forks and spoons in the State House.”