…signs swap agreement with BP …denies $3.5bn under recovery fund The Nigerian National Petroleum corporation (NNPC) yesterday said that the current pump price of N145 of Premium Motor Spirit or Petrol was unrealistic. It said that no marketer would want to import fuel and sell at that cost. That was as the Senate gave the Corporation a two-week ultimatum to furnish it with all the documents pertaining to how it has utilized the $1.05 billion (or N383.2 billion) National Fuel Support Fund it set aside since October 2017 to date. The Senate gave the ul-imatum in Abuja, at an investigative hearing on the $3.5 billion Subsidy Under-recovery Fund, allegedly created by the NNPC and solely managed by its Group Managing Director and the Executive Director, Finance. The apex legislative chamber had, on October 16, 2018, set up a 15-member ad-hoc Committee to carry out the investigation, following a point of order raised by the Senate minority leader, Senator Abiodun Olujimi, alleging that the Corporation created a fund to finance fuel subsidy without appropriation by the National Assembly. However, responding to questions from the members of the ad-hoc Committee, the Group Managing Director of the NNPC, Mr. Maikanti Baru, said that there was no such fund, but admitted that what the Corporation set aside was $1.05 billion to augment the differential between the landing cost of imported fuel and the pump price of N145 per litre. He told the Panel that the landing cost of petroleum product was N185 per litre, which left a gap of N40 differential; pointing out that the gap was being filled with the $1.05 billion Support Fund. Baru also said that the current pump price of N145 per litre of fuel was unrealistic, and that as long as the Federal Government continued to peg the price of petrol at this rate, the NNPC would remain the sole importer of the product because the independent marketers would not import and sell at a loss. The GMD further observed that the pump price of N145 was the lowest in the whole of West Africa, lamenting that it was the main reason smuggling was thriving well in the country. “The N145 per litre pump price of PMS in Nigeria is the lowest when compared to N400 it is sold in Cameroon, N350 in Ghana, N330 in Benin Republic etc. “As long as the product is sold at the lowest price in Nigeria, so shall it be attractive for smugglers to trade on across the borders”, he complained. He said: “Based on available parameters from landing to transportation costs, the pump price of PMS is supposed to be N185 per litre as against the official price of N145 per litre, indicating shortage of N40 per litre. “Since subsidy is not appropriated and pump price not adjusted upwardly, NNPC had no other reason than to, in line with its establishment Act, section 7 sub section 4(b), defray its costs from its revenues”. He explained further that the $1.05billion costs augmentation fund was set up in October 2017, when Independent Marketers pulled out of the supply chain of importation of PMS into the country as a result of increase in landing cost without corresponding increase in pump price. He stated that the issue of subsidy or pump price increase could best be addressed by the National Assembly and not the NNPC, failure of which, he said, would make smuggling of petroleum products across Nigerian borders, lucrative business for those in the business. He, however, told the lawmakers that he did not know the daily consumption of the product in Nigeria presently, but disclosed that the consumption rate as at 2016 was 49 million litres per day and 53 million litres per day in 2017. According to him, the NNPC presently has 1.9 billion litres of PMS in stock, which could last the country for 39 days in case of any breakdown in the supply chain. Baru’ s appearance before the committee was sequel to a resolution taken by the Senate on October 16 for probe into alleged warehousing of $3.5billion by NNPC for fuel subsidy through a motion moved by the Senate Minority Leader, Biodun Olujimi (PDP Ekiti South). Apart from Baru, officials of government from the Ministry of Finance, Office of Auditor-General of the Federation etc, also appeared before the committee. In his submission, the Permanent Secretary, Federal Ministry of Finance, Mr. Mahmoud Isa-Dutse, said that the Ministry did not know anything about the alleged $3.5 billion subsidy, stressing that the Ministry did not keep subsidy account. “Ministry of Finance does not handle subsidy account. So, we don’t have any information on the said $3.5 billion. The NNPC imports and sells fuel; so, it is not under the purview of what we do”, he said. The Committee, chaired by the Leader of the Senate, Ahmed Lawan ( APC Yobe North) , had, however, adjourned its sitting to Tuesday, November 6, 2018.]]>
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