House of Reps summons Ibe Kachikwu, Maikanti Baru, others over N24 billion monthly subsidy payment

The House of Representatives has again queried the N24bn which the Nigerian National Petroleum Corporation claim it incurs monthly on payment of subsidy on imported Premium Motor Spirit popularly known as petrol.

The lower chamber described the expenditure as “an act of illegality” as the funds are allegedly paid without appropriation by the National Assembly.

The landing cost of a litre of PMS is said to be N171, leaving a difference of N26, but the government-approved pump price is N145.

The price differential and other challenges, including allegations of smuggling by syndicates, leave a monthly subsidy bill of N24bn.

The Chairman, House Committee on Petroleum Resources (Downstream), Mr. Joseph Akinlaja, said that a full-scale investigation into the “back-door return” of subsidy payment would start this week.

Akinlaja also confirmed names of officials that had been summoned to appear before the House probe panel.

He said the Minister of State, Petroleum Resources, Dr. Ibe Kachikwu; the Group Managing Director of the NNPC, Dr. Maikanti Baru; and the heads of the Pipelines and Products Marketing Company and the Petroleum Products Pricing and Regulatory Agency had been summoned to appear at the session.

Akinlaja reiterated the National Assembly’s stance that subsidy was neither captured in the 2017 budget nor in the 2018 budget still awaiting passage by the legislature.

He said, “What they (NNPC) is doing is illegal. We don’t know where the management got the approval to make the payments.

“They did not approach the National Assembly for any approval. That is why we say they have questions to answer. They need to tell Nigerians whether subsidy is back?

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“We have an investigation to conduct and it will start next week (this week) for stakeholders to come and talk about this subsidy and other renewed challenges in our oil industry, particularly the supply chain in the downstream sector.”

Akinlaja recalled that the NNPC, a government corporation, had been the sole importer of products for several months after private importers boycotted importation.

He said reports at the disposal of the committee suggested that the Independent Petroleum Marketers Association of Nigeria; the Depot and Petroleum Products Marketers Association; and the Major Oil Marketers Association of Nigeria were collectively owed N800bn by the government for previous importation.

He added that as a result of the mounting debts, IPMAN, DAPMAN and MOMAN stopped importing products, leaving the NNPC alone to handle the challenge.

The lawmaker added that the “surprise” now was whether the NNPC was paying subsidy to itself, “but essentially doing so without authorisation by the National Assembly.”

He disclosed that the position of the committee had been that the executive should forward a supplementary budget, covering the N800bn, to offset the debts so that the marketers could resume importation.

Akinlaja also said that the supplementary budget had yet to come while the NNPC hadn’t sought any approval from the National Assembly.

Also, some members of the Senate, who spoke to newsmen, described subsidy payments by the NNPC as illegal as it was without the approval of the National Assembly.

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Some of them however noted that there was no way the corporation could have maintained the official pump price of PMS at N145 per litre when the landing cost of the commodity had risen to N171 per litre.

A member of the Senate Committee on Petroleum (Gas), Senator Adesoji Akanbi, stated, “We all know that the landing cost is more than the regulated pump price. It means that the government must bear the cost of the differentials. And for the fact that the general election is approaching, the current administration will not want to raise the pump price.”

Another senator, who spoke on condition of anonymity, however, faulted the corporation for not seeking legal backing for the payments. “They just don’t want to do it,” he said.

The lawmaker asked why it was difficult for the Federal Government to use the differentials between the appropriated oil benchmark and the increasing crude oil prices to augment the gap between the landing cost and the pump price.

“It is indeed illegal and they should have quickly sought the approval of the National Assembly. I agree that it should not be illegal; there should be a way to go around it without breaking the law,” the senator said.

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