Nigeria fuel subsidy report 'reveals $6bn fraud'

Nigeria's parliament has discussed a report said to reveal that $6bn (£4bn) has been defrauded from the fuel subsidy fund in the past two years.

The debate, which was televised live, made official findings that have been widely leaked in recent days.

The fuel sector probe was set up in the wake of angry nationwide protests in January after the government tried to remove a fuel subsidy.

Nigeria is a major oil producer but has to import most of its fuel.

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"We are fighting against entrenched interests whose infectious greed has decimated our people," House of Representatives Speaker Aminu Waziri Tambuwal said as he opened the two-day debate.

"Therefore, be mindful they will fight back and they normally do fight dirty."

The 205-page parliamentary report uncovers a long list of alleged wrongdoings involving oil retailers, Nigeria's Oil Management Company and the state Nigeria National Petroleum Corporation.

According to the leaks, a total of 15 fuel importers collected more than $300m two years ago without importing any fuel, while more than 100 oil marketers collected the same amount of money on several occasions.

The leaked report also says that officials in the government of President Goodluck Jonathan were among those who benefited from the subsidy fund.

Many of the people named in the document have denied any involvement in fraud, with some taking out full-page adverts proclaiming their innocence in local newspapers.

The BBC's Bashir Sa'ad Abdullahi in Abuja says at least some of the findings are likely to be adopted by Nigeria's lawmakers because of the huge public anger over the attempt to withdraw the subsidy.

Many Nigerians were livid when they were told by their government that the fuel subsidy was economically unsustainable - only to now find out the scale of fraud in the operation of the fund, our correspondent says.

Despite being a major oil producer, Nigeria has not invested in the infrastructure needed to produce refined fuel, so has to import much of its petrol.

The annual $8bn subsidy means prices are lower than in neighbouring countries - and correspondents say many Nigerians see cheap fuel as the only benefit they get from their country's oil wealth, much of which is pocketed by corrupt officials.

After a week of street protests and a general strike, the government agreed to restore some of the subsidy - and reduce the pump price of petrol to 97 naira (about $0.60) per litre after it had doubled to 140 naira when the subsidy was removed without warning on 1 January.

But President Jonathan defended the subsidy cut, saying Nigeria must either "deregulate and survive economically, or we continue with a subsidy regime that will continue to undermine our economy."

Nigeria: Subsidy indicted firms in brief

The underlisted are part of the companies indicted by the House of Representatives committee probing the misappropriation of the Petroleum Subsidy Fund and have been required by the House to refund N8,664,352,554.00.
IBAFON OIL
Ibafon Oil Limited is a private Limited Liability company incorporated in Nigeria on 10th of March 1998, and commenced business in 1999. Area of core competence over the years has been construction & leasing of tanks.
IBAFON OIL LIMITED presently runs 31 million litre capacity Tank Farm at Ibru Jetty Complex, Apapa, Lagos, Nigeria for the storage and marketing of select petroleum products. It operates service stations in Ibadan, Oyo State and in Kaduna.
Aquitane
Aquitane Oil and Gas Limited was incorporated in April 2005 as a direct response to the emerging trends in the dynamic Oil and Gas industry of the West African sub region. Though a relatively new operating entity, the company is itself an amalgamation of individuals with industry competencies that cut across the various segments of the energy sector.
The company has been able to enter into major products trading transactions with market leaders like Addax, WABECO, Global Fleet, Sahara Energy and Zenon, quickly surpassing all industry benchmarks over a 12 month period.
RAINOIL
Rainoil Limited was incorporated in November 1994 and commenced business as an Oil Marketing Company in the downstream sector of the Oil and Gas Industry in May 1997. From very humble beginnings with one Service Station in 1999 with which we entered into a Bulk Purchase Agreement with NNPC as an Independent Petroleum Products Marketing company, it has grown to a group of subsidiary companies with substantial investments in the following areas of the Downstream Operations: Tank Farm Operations, Jetty Services, Haulage/Distribution and Retail Outlets Operation.
It currently operates twenty services stations strategically located in all geo-political zones in the country and aim to be present in all major towns and cities. GABRIEL OGBECHIE – MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER; GODREY OGBECHIE – EXECUTIVE DIRECTOR; KENNETH NDABAI. – GENERAL MANAGER, RAINOIL BULK STORAGE LIMITED.
TECHNO OIL
Techno Oil, a leading Indigenous Integrated energy group opened shop in 1997 as a downstream Petroleum Marketing Company marketing “ESSO” blended lubricants . Over the years, the company has grown and deployed capital investments and technological innovation in its various business concerns.  Dr. John C. Nnadi is the Chairman of the Board of Directors of the company.  Mrs. Nkechi Obi is the Executive Vice-Chairman; Engr Tony Onyeama, Managing Director and Mr. Godfrey I. Okigbo, Executive Director Finance and Admin.
MOBIL OIL NIGERIA PLC
Mobil Oil Nigeria Plc is a subsidiary of the American Oil Giant, Exxon Mobil. The Company operates in the integrated oil and gas industry. Mobil Oil Nigeria is engaged in the production and marketing of petrochemicals (gasoline, motor oils, lubricants, marine and jet fuels, etc.), packaging films and other chemical products. Through its wholly owned subsidiaries, Mobil operates worldwide oil and gas exploration and producing business, a global marketing and refining complex, a network of pipelines and tankers linking.
CONOIL
Conoil, formerly National is one of Nigeria’s major oil marketers of choice, providing fuel for transportation, energy for heat and light, and retail services for everyday needs.
Owned by famous industrialist Mike Adenuga, Conoil is one of the most formidable names in Nigeria’s downstream petroleum industry. It is engaged in the marketing of refined petroleum products and also in the  manufacturing and marketing of high-quality lubricants and chemicals for domestic and industrial use.
STONEBRIDGE OIL LIMITED
It is a subsidiary of Stonebridge holdings Limited and was incorporated in 2006.  Its head office is located at 19, Wema Terrace, Udi Street, Osborne Estate Ikoyi, Lagos with operations office at the Ibru Organization Administrative block, Ibru Port Complex, Ibafon, Apapa.
Mr. SAMUEL O. Owa  (CEO); Segun Aluko (CHIEF OPERATIONS OFFICER); MILDRED OPARAEKE, LEGAL ADVISER.
Oilbath
Oilbath is a wholly owned Nigerian company, incorporated in 1996. It was set up to provide effective marketing solutions and proper distribution of petroleum products to the end users nationwide. As a matter of fact it is engaged in importation of petroleum and petrochemical products, which it stores at a facility in Apapa Lagos.
Mr. Kola Gbadamosi is Managing Director; Mr. Olasukanmiis the General Manager of the Company and Mr. Adebayo is the chief Accountant of the Company.
Fargo Petroleum & Gas Limited
This is an indigenous company that specializes in the marketing and distribution of petroleum products and commodities trading. Fargo Petroleum & Gas Limited was incorporated as a private limited liability company in July, 2001 and has experienced unprecedented growth in the Nigerian oil industry. The company is an independent oil trading company.
Nepal Oil & Gas Services Limited
 Incorporated on 13thof October 2004 to carry on the business of supply, trading and productivity support in the down, mid and up-stream sub sector of the petroleum industry. The company is renowned for its importation of massive volumes of petroleum products into Nigeria, and with a sizeable fleet of motorized tanker trucks.
Barrister Ekeoma is the Managing Director and Chief Executive Officer of the company, while Boniface Chukwunaru actsas Chief Operating Officer of the company.  Isaac  Shola Adegbenro the Group Financial Controller of the Company.
Lottoj Oil & Gas Limited
An international marine fuel logistics and petroleum products trading company that markets and physically supplies refined marine fuel and petroleum products in the port and at sea.
Chief C.O.Oyibo , Admiral Taiwo Odedina (Rtd) is the Chairman, . Richard Alabi the Director / CEO,  ,  Admiral Adetoye Sode (Rtd) CON is a Executive Director.
Tempo Energy Nigeria Limited
An energy and exploration company that produces hydrocarbons
It is an independent exploration and production company, acquiring and managing new ventures, acquiring technical and management support in developing portfolios.
Rocky Energy Limited
A full-serviced oil trading company licensed to import petroleum products. Its activities run through – marketing, distribution, services, logistics and risk management to customers around the world.
Mr Emmanuel S. Morah  is the Chairman, Mr George Ogbonna is the Executive Director, Mr. Dike Justin Ugochukwu Obih is the Director.
Delmar Petroleum
Company business-line involves large scale storage, distribution and marketing of refined and unrefined petroleum products.
HEYDEN PETROLEUM LIMITED
Incorporated in 30th October 2001 as an independent Oil Trading Company in Nigeria and in the United Kingdom.
Close look on House  committee members
Farouk Lawan
Farouk Muhammad Lawan (born July 1962) is a  politician and four-term (since 1999) member of the House of Representatives  for the Bagwai /Shanono  Federal Constituency of Kano State.
Lawan is a graduate of Bayero University  in Kano. He is married with four children.
A People’s Democratic Party , PDP, member, Lawan was first elected in 1999, and again in 2003 and 2007. Lawan was the Chairman of the House Committee on Finance under former Speaker. He identifies his legislative interests as “Appropriation, Information and Education.”
During the late-2007 corruption scandal that caused former Speaker of the House  Patricia Etteh  to resign, Lawan led the Integrity Group , an alliance of Representatives opposed to Etteh. He is now considered a strong candidate for the governorship of Kano state.
Hon James Abiodun Faleke
Hon James Abiodun Faleke,  52,  ACN, represents Ikeja Federal Constituency, Lagos State in the  House of Representatives, having been born on January1, 1960.
Hon. Alphonsus Gerald Irona
Member of PDP, represents Oru West/Egbema/Ohaji/Oguta Constituency, Imo State.
Hon. Umar Abubakar Sale, PDP, Bauchi.
Hon Eucheria Azodo.
Born on 3rd, November 1961 to the family of late Ichie Elias Egbuachor of Umudibe, Amuwo village and Lolo Josephine Egbuachor, Nee Onwukoha of Umuduru ubaha village both of Amesi, Aguata Local Government Area of Anambra State of Nigeria. A product of Holy Rosary Primary School, Fegge Onitsha and Ogidi Girl’s Secondary School, Idemili North Local Government and Girl’s Secondary School, Achina, Aguata Local Government Area all in Anambra State.
Studied Secretarial Administration at the institute of management and technology (IMT), Federal Polytechnic Oko. Proceeded to Anambra State University of Science and Technology (ASUTECH) presently known as Enugu State University of Science and Technology where she did a postgraduate studies in Management.
Has vast knnowledge and experience in Politics and Public Administration at management level.
Anambra State Coordinator – National Poverty Eradication Programm (NAPEP).
She has contributed in many ways to affect positively the live of her people both in Aguata LGA and Anambra State in General. According to her: “I have proved that politics can be played without rancour and acrimony. The love of humanity is paramount to me hence my strong resolve to join forces with other progressive colleagues in order to bring democratic dividends to Aguata and Anambra State in general “.
HON. JOHN ENOH OWAN ENOH
(PDP,CROSS RIVER State)
CONSTITUENCY: OBUBRRA/ETUNG FEDERAL CONSTITUENCY
Membership: Aids, Loans & Debt Management
Co-operation & Integration in Africa.

How NNPC, others looted subsidy fund

The House of Representatives Ad-hoc committee that investigated the implementation of the subsidy regime in the country, yesterday, recommended that the sum of N1,067,040,456,171.31 be refunded to the Federation Account by the Nigerian National Petroleum Corporation, marketers, companies that refused to appear before the committee as well as the Petroleum Product Pricing and Regulatory Agency.
Out of this amount, the Nigerian National Petroleum Corporation which came under heavy criticism from the Committee is to refund N310,414,963,613.00 for subsidy it collected on Kerosene after the subsidy on the product had been outlawed in the country; N285,098,000,000 for subsidy it collected above the PPPRA recommended amount and N108, 648,000,000 for self discount it granted itself while marketing companies are to refund a N8,664,352,554.00.
Companies that failed to appear before the committee are to refund the sum of N41,936,140,005 while the PPPRA is to refund the sum of N312,279,000,000 being excess payment it made to itself. The refunds are to be made within three months.
The Committee chaired by Hon. Faruk Lawan also recommended that relevant anti-corruption agencies should investigate and prosecute all persons and companies that have been found to have committed any crime while those companies that obtained foreign exchange, FOREX, but failed to import petroleum products should also be referred  to the Anti-Corruption agencies with a view to verifying what they used the forex for.
And contrary to the official figure of subsidy payment of N1.3 Trillion, the committee noted that ‘the Accountant General of the Federation put a figure of N1.6 Trillion, the CBN N1.7 Trillion, while the committee established subsidy payment of N2,587.087 Trillion as at 31st December, 2011 amounting to more than 900 per cent over the appropriated sum of N245 Billion’.
It noted that the committee arrived at this figure based on the CBN figure N844.944Billion paid to the NNPC in addition to another figure of N847.942 Billion reflected as withdrawals by the NNPC from the excess Crude Naira account as well as the sum of N894.201Billion paid as subsidy to the marketers.
The committee which came hard on the Nigerian National Petroleum Corporation ‘for not being accountable to anybody or authority’ recommended that the corporation be unbundled to make its operations more efficient and transparent, adding that ‘the Management and Board of the NNPC should be completely overhauled and all those involved in the following infractions should be further investigated and prosecuted by the relevant anti corruption agencies’.
See who to refund what? here
The infractions for which the committee recommended further investigation/prosecution are: Payment of N285.098Billion in excess of the PPPRA recommended figure for 2011; subsidy deductions of N310,414,963,613 for kerosene against a presidential directive; Direct Deductions from funds meant for the federation account in contravention of section 162 of the Nigerian Constitution and the illegal granting of price differential (discounts) of crude oil price per barrel to the NNPC to the tune of N108.648Billion from 2009-2011.
Wants NNPC audited
It further recommended that ‘the House do direct for the auditing of the NNPC to determine its solvency. This is as a result of plethora of claims of indebtedness and demands for payments by NNPC’s debtors which, if not well handled, will not only affect the entire economy of Nigeria but also the supply and distribution of petroleum products.
On the part of the PPPRA, the committee recommended that ‘the Executive Secretaries of the PPPRA who were the Accounting Officers, and under whose watch abuses were perpetrated that led to the government losing Billions of Naira should be held liable. We strongly recommend that those who served as Executive Secretaries of PPPRA from January 2009 to October 2010 should be further investigated/prosecuted by relevant Anti-corruption agencies. This should also include the GM Field Services, ACDO/Supervisor Ullage Team 1 and ACDO/Supervisor Ullage Team 2 within the same period for their roles in the management of the ullaging under the subsidy scheme.
Part of the committee report reads: “Our investigation further revealed that certain marketers collected subsidy of over N230.184 Billion on PMS volume of N3,262,960,225 litres that from the records made available to us were not supplied. Apart from proliferation and non-designation of bank accounts for subsidy payment, PPPRA and the OAGF were unable to manage in a transparent manner the two accounts they chose to disclose. There were indications that PPPRA paid N258billion to itself in 2009 and N157Billion in 2010. When confronted, the OAGF was unable to submit details of the bulk payments arrogated to PPPR A and the account from which the bulk sums were disbursed to the supposed beneficiaries.
“Curiously too, the particular Accountant General that served during the period 2009 was found to have made a payment of equal installments of N999 Million for a record 128 times within 24 hours on the 12th and 13th of  January 2009, totalling N127.872Billion. The confirmed payments from the CBN records were made to beneficiaries yet to be disclosed by the OAGF or identified by the committee. We however discovered that only 36 marketers were participants under the PSF scheme during this period. Even if there were 128 marketers, it was inconceivable that all would have imported the same quantity of products to warrant equal payment” the report noted.
On the quantity of fuel that is consumed nationwide daily, the committee in its report noted that from its findings, ‘the consumption level for 2011 is estimated at 31.5 million litres per day. However, in 2012, marginal increment of 1.5 million litres a day is recommended in order to take care of unforeseen circumstances, bringing it to 33 million litres per day.
“And to maintain a strategic reserve, an additional average of seven million litres per day (or 630 Million litres per quarter) for the first quarter of 2012 only is recommended. Thus PPPRA is to use 40million litres of PMS in the first quarter as its maximum ordering quantity per day. In subsequent quarters, PMS daily ordering quantity should be33 million litres per day for Kerosene, the committee recommends a daily ordering quantity of 9 million litres” the report noted.
It therefore proposed a budget proposal of N806.766 Billion for the 2012 fiscal year for payment of subsidy on PMS and Kerosene based on its projection that the PMS consumption is 40million litres per day (including the strategic reserve for the first quarter of 2012); and 9million litres of Kerosene per day.
Other recommendations by the committee:
*Marketers without storage facilities and retail outlets should be excluded from participating in the PSF scheme.
*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.
*All those in the Federal 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 under the PSF scheme (2009-2011) should be sanctioned in accordance with civil service rules and the code of conduct Bureau.
*The overhauling of the PPMC management.
*Mr. president should reorganize the Ministry of Petroleum Resources to make it more effective in carrying out the much needed reforms in the oil and  gas sector.
*Given the large and complex nature of the Ministry of Petroleum Resources, the committee recommends that two ministers should be appointed to take charge of the Upstream and Downstream.
*The PPPRA should provide the Nigerian Navy and NIMASA advance copies of allocation and vessel arrival notification documents to enable the navy monitor, track and interdict vessels seeking to avoid Naval certification.
*The committee recommends that the regulatory capacity of PPPRA be strengthened and the National Assembly should commence the process of amending the Act to make the Agency autonomous
*The committee recommends that FIRS should follow up on the companies listed earlier to pay their taxes with due penalties in line with the provisions of the Companies Income Tax Act.
*The PSF guidleines should be revised to make Tax compliance a mandatory pre-qualification requirement for all participants under the scheme.
*The CBN and the Federal Ministry of Finance should critically examine and review policy guiding payment for importation of petroleum products to  avoid the current fraudulent system that allows importers to bring in products from off-shore ‘lome’ or cotonou to qualify for forex payments
*The committee recommends that the PPMC management be overhauled.