Nigeria Customs indicts NNPC over non compliance

*Says NNPC didn’t follow due process on fuel importation

Ben Agande
& Emman Ovuakporie

18 January 2012, Sweetcrude, ABUJA —THE Deputy Comptroller of the Nigerian Customs, Mr Ndubuisi Nwaogu, Tuesday alleged that all importations made in connection to subsidised fuel by the Nigerian National Petroleum Corporation, NNPC, never went through the Nigeria Customs Services but were discharged into smaller vehicles in the high seas to Nigeria by the corporation.

Similarly, chairman of the Nigeria Extractive Industries Transparency Initiatives, NEITI, Prof. Asisi Asobie, said payments made in respect of fuel subsidy by the NNPC lacked transparency and due process as they were not made from the Central Bank through the Petroleum Fund as stated by law.

The duo spoke at the on-going investigation by the House of Representatives Ad Hoc Committee on the use of subsidy funds.

But the Minister of Petroleum, Mrs. Diezani Allison-Madueke who also appeared before the committee denied the existence of a cabal in the NNPC, adding that the process of deducting monies meant for subsidy at source by the corporation was in line with the provisions of the law even as she confirmed that no cabal exists in the corporation.

She, however, admitted, “there have been manipulations in the sector; there is no question about it. Yes, we are looking into it very, very aggressively and we have made certain changes and once we have taken time to look at the situation on ground to begin to institute those aggressive changes which are already reaping rewards for us”.

Mr Nwaogu, who represented the Comptroller General of Customs, Mr Abdulahi Dikko said all documentations bordering on all the transactions involving the importation of Premium Motorised Spirit (PMS) or petrol was shielded from the customs by the NNPC.

The customs officer said the problem of the custom became more compounded courtesy of a 2002 waiver given to the NNPC by the Federal Government.

He disclosed that the NNPC owed the Customs the sum of N46billion before the waiver and has deliberately refused to pay till date.

Nwaogu also said “any time they try to enforce the rules they are politely advised to stay action to enable free flow of petrol in the country, particularly the products imported by the NNPC.”

He said, the customs was only allowed to enforce the law on the products imported by the independent marketers, adding that this was done once in a while, not all the time.

He also alleged that all necessary documentations of the importation, including invoices are not passed through the customs.

The Deputy CG further alleged that despite the fact that the Customs Service is a member of the Petroleum Product Pricing Regulatory Agency, PPPRA, they are never allowed to be part of major decisions reached.

He said there was no time the Customs was allowed to carry out any verification exercise on all the transactions of the oil corporation.,

Earlier, the Minister of Petroleum, Mrs. Diezani Allison-Madueke yesterday denied the existence of a cabal in NNPC just as she explained that the process of deducting monies meant for subsidy at source by the Corporation was in line with the provisions of the law, even as she confirmed that no cabal exists in the corporation.

The minister also explained that the Federal Government spent N1.3 trillion instead of N245 billion appropriated by the National Assembly for subsidy because the appropriated amount was meant for only two months (January and February, 2011).

Although, the minister confirmed that she was not in the know of the approving authority for the NNPC’s deduction, she maintained that deductions were in compliance with the provisions of the law as embedded in the 2011 Appropriation Act, where it is stated that deductions be made on domestic subsidy and joint venture cash calls. The minister also argued that section 5 (80) (3) of the 1999 constitution as amended empowers the corporation to deduct from source.

“I need to say clearly that we have done nothing unconstitutional as a ministry particularly regarding deducting at source. We do not take money from the federally appropriated revenue”

Explaining further how the subsidy grew from N245 billion to N1.3 trillion, the minister said ‘let me just say that the N245 billion was put in the budget for the period of two months and because at that time it was calculated that deregulation was going to take off but thereafter it did not happen.

When asked if there is a cabal operating in the subsidy regime at the NNPC, the minister replied: “I think I have to say at this time that I’m under oath and it will be most improper to speculate on the existence or not of the purported cabal.

“Let me say for the purpose of records that I think that we cannot afford as a country to criminalize either a certain group with one fell swoop or just as we cannot afford to criminalize the policy of subsidy itself.

“The policy on subsidy, I believe was enacted at a time when the government, which was trying to do the best thing for the people of Nigeria, I believe it was the best of intentions at the beginning”.

The minister continued: “When you have a pool of marketers, many of whom are bonafide marketers, who do very legal job for this country, and I say this because I have been severally taken to task and called all sort of names for saying this, but as minister of petroleum resources, I think I have the courage to say.

“Yes, there have been manipulations in the sector; there is no question about it. Yes, we are looking into it very, very aggressively and we have made certain changes and once we have taken time to look at the situation on ground to begin to institute those aggressive changes which are already reaping rewards for us”.

Affirming the resolve of the federal government to combat corruption in the sector, the minister stated: “I will continue to do that as I am sure the entire country can see that a lot of things are happening that we will continue to harp on until we are able to wrought out those who have actually corrupted the system and manipulate the system to their own advantage to the detriment of the entire country and the economy as a whole.

“So many of them were not found to do that, there are elements who have not done so and who have gained a lot from manipulating the system and we expect to find them in the soonest possible time. But I think we should not criminalize the actual act or legal marketing or the concept of fuel subsidy”.

Also, Chairman NEITI, Prof. Asisi Asobie said payments made in respect of fuel subsidy by the NNPC lacked transparency and due process.

Asobie said that subsidy payments should be made from the Central bank through the Petroleum Fund.

He said that payment could only be effected on the Approval of the Accountant-General of the Federation (AGF) with approval of the Petroleum Products Pricing Regulatory Agency (PPPRA).

“Payment should be made only on the approval of the AGF based on claims approved by PPPRA,”he said.

He accused NNPC of deducting from estimated amounts directly from the domestic crude proceeds before remitting the rest to the federation Account.

The NEITI boss maintained that NNPC, like other petroleum product importers should draw claims for subsidy from —after verification of its claims by the PPPRA and approval by the NNPC.

He said that during the audit of the oil and gas sector for 2006 and 2008, NEITI discovered inadequacies that complicated the problem of accurate determination of volume of imported petroleum products into the country.

According to him, in 2006 to 2008, the total oil lifted from the country was 8.8 million barrels, while NNPC lifted 4.8 million barrels.

He said that from 2002, NNPC lifted domestic crude at market price, providing incentive for export of domestic crude rather that domestic refining of all crude.

Asobie said that the measurement methods used by PPMC and DPR are not in line with international best practice and cannot be rellied onand that the systems used for recording the movement of refined products through the PPMC pipeline system were outdated, paper-based and subject to errors.