On their resumption from Easter break last Tuesday, members of the House of Representatives received the report of the Farouk Lawan-led ad hoc committee which probed the management of fuel subsidy by the Federal Government. In this report, Adesuwa Tsan and Edegbe Odemwingie, present highlights of the recommendations of the report and what becomes of the report.
As expected, the report was loaded with weighty recommendations, chief among which was that over 1 trillion naira should be refunded to the treasury of the Federal Republic of Nigeria by some agencies that, according to the report, illegally collected the money for subsidy on imported fuel which was not delivered.
The categories of organisations which were recommended to refund billions of naira to the national treasury are three: first is the Nigeria National Petroleum Corporation which was indicted twice. The first set of refund to be made by the NNPC is N310 billion for subsidy collected on kerosene even after subsidy on kerosene had been removed by the government; the second is for N285 million higher rate collected on subsidy than what the PPPRA template stipulates and the third is N108.6 million.
The second category are the oil companies who refused to appear before the committee to give account of their involvement in the PSF but who were found to have collected funds from the scheme. They are to refund N41.9 million while the marketers are to refund N8.6 million.
The PPPRA was not left out. The committee recommended that it refunds N312.279 billion which it paid in excess. All refunds were recommended by the committee to be made within three months. At the end of the calculations of the committee, it was discovered, that the total subsidy payment was not N1.3 trillion as popularly known or the N1.6 stated by the accountant general of the federation, nor the N1.7 said by the CBN but an estimated N2.58 trillion as at 31st December, 2011.
The PPPRA was directed in the report to provide the Nigeria Navy and NIMASA with advance copies of allocation and vessel arrival notification documents to enable the navy monitor, track and interdict vessels seeking to avoid naval certification. In order to strengthen its regulatory capacity, an amendment process of the PPPRA Act was sought by the committee to make the agency autonomous.
The Petroleum Pricing Marketing Company, PPMC, and its management were also recommended for an overhaul.
It also went further to add that because of the complex nature of the ministry of Petroleum Resources, two ministers should be appointed to take care of the upstream and downstream sectors.
The report also asked the executive to overhaul the Nigerian National Petroleum Corporation and unbundle all the companies, especially the Department of Petroleum Resources, to make it more effective and similarly, called for an audit of the company to determine its solvency especially based on the fact that there are several claims of indebtedness and demands for payment by the company’s debtors.
The committee also recommends for the prosecution of all executive secretaries of the Petroleum Product Pricing Regulatory Agency, PPPRA from 2009 to 2010 for aiding fraud in the Fuel Subsidy Scheme and the general managers of Field Services and ACDO/Supervisors of teams for their roles in managing the subsidy scheme.
On the quantity of the daily consumption of fuel nationwide, the committee said from its findings, in 2011, an estimated 31.5 million litres were consumed per day but in 2012, a marginal increase of around 1.5 million litres per day is recommended in order to take care of unforeseen circumstances, bringing the figure to 33 million litres per day. It also recommended a strategic reserve where an additional average of seven million litres estimated to gulf N806 billion for 2012 fiscal year as subsidy on PMS and kerosene based on projections of N40 million litres consumption per day for PMS and 9 million litres for kerosene.
Turning to marketers, the committee recommended that those without storage facilities and retail outlets should be excluded from participating in the PSF; that the services of the accounting firm of Akintola Williams, Deloitte and Olusola Adekanola and partners should be discontinued with immediate effect for professional incompetence and should be blacklisted from being engaged by any federal ministry, department or agency for a period of three years. Also, those officials in the 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 between 2009 to 2011 should be sanctioned in accordance with civil service rules and the code of conduct Bureau.
To address the current fraudulent system where importers can bring in products from offshore ‘Lome’ or Cotonou to qualify for forex, the panel recommended that the CBN and the Ministry of Finance should critically examine and review the policy guiding payments for importation of petroleum products.
On tax related matters, the committee wants PSF guidelines revised to make tax compliance a mandatory pre-qualification requirement for all participants under the scheme and that FIRS should follow up on the companies listed earlier for tax evasion to pay their taxes with due penalty in line with the provisions of Companies Income Tax Act.
With the investigation over and the findings made public, the most critical part of the exercise which will make it worthwhile is yet to start. Past experience in the legislature showed that consideration of the report of any investigation is usually the point where interests are represented through members who oppose the findings and some are willing tools to be used to discredit a report for the right price.
Not long ago, a similar report on the probe of the power sector was crushed at the consideration stage. The fear of a reoccurrence is very much visible in the body language and on the lips of most Nigerians who want to see this legislature as one which is ready for business.
Subsidy Report: Reps, Executive on collusion course
Last Thursday, the House of Representatives gave a peek into what to expect following the presentation of its ad hoc committee on fuel subsidy probe. Federal lawmakers are already spoiling for a fight with the executive arm of government on the next line of action.
The lower House fired the first salvo by threatening to arm twist the executive to ensure total implementation of recommendations of the report, after its adoption by the lawmakers.
Typically, resolutions of the National Assembly are routinely ignored by the Executive since they don’t carry the force of law. Lawmakers say not this time.
Last Wednesday, House Speaker, Aminu Waziri Tambuwal, while receiving the report, fixed today for the consideration of the 61 recommendations made by the Farouk Lawan led panel.
“What we have done is a report and our resolution does not have the force of law. But when the executive will come to us, we’ll say if you don’t do this, we will not do that” House spokesman, Zakari Mohammed threatened in a joint press briefing of the House committee on Media and Publicity and the Farouk Lawan Committee on the subsidy probe.