Tuesday, April 24, 2012

Fuel Subsidy Reforms

I hear an interesting debate is going on right now about the Farouk Lawan fuel subsidy report. Excellent. If you are home, or don't have to work - you can watch live on Channels TV.

I hope someone is watching, and will hold the house accountable for executing all the motions they are carrying today.

Read all 61 recommendations from the Farouk Lawan fuel subsidy report here.

A few excerpts though:
2. With regards to the 445,000bpd allocation to NNPC to refine for local consumption, the Committee established that the allocation is sufficient to provide the nation with forty million litres per day for PMS and Ten million litres of HHK.

The above can be achieved conveniently through;
SWAP arrangement,
Offshore processing,
Outright sale of the 445,000bpd and or partial sale of the excess from the local refining capacity of 53%.
Therefore there is no reason for government to grant subsidy importation to any other marketer.

3. The NNPC should refund to the Federation Account, the sum of N310,414,963,613 (Three hundred and ten billion, four hundred and fourteen million, nine hundred and sixty three thousand, six hundred and thirteen naira only) paid to it illegally as subsidy for kerosene contrary to the Presidential Directive of July 29th, 2009 withdrawing subsidy on the product.

8. The NNPC should also refund to the Federation Account the sum of NGN285.098Billion being over-deductions as against PPPRA approvals for 2011. The Relevant Anti- Corruption Agencies
should further investigate the Corporation for deductions for the years 2009 and 2010.

15. The Executive Secretaries of the PPPRA who were the accounting officers, and under whose watch these abuses were perpetrated that led to the Government losing billions of naira, should be held liable. Therefore, we strongly recommend that those who served as Executive Secretaries of PPPRA from January 2009 to October 2011 should be further investigated/prosecuted by relevant Anti- Corruption Agencies. This should also include 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.

22. The Executive Secretary of PPPRA 2009 – February, 2011 should be investigated and punished for the official recklessness he exhibited in the implementation of the Board decision to reverse the qualification for participation in the scheme. The allocation/approvals to import products given to thirty-five (35) Companies before their formal registration with PPPRA testify to this. Companies that lack the required competence and expertise to import petroleum products and even those who did not meet up with the agreed standards were also awarded large chunks of the allocation, an act that culminated in huge loss of resources to the nation.Many Companies under his watch who had neither depots nor through-put agreement were allowed to participate in the Scheme contrary to the revised eligibility guidelines.

25. The Committee is firm in its view that if any petroleum product is deserving of subsidy, HHK should enjoy a pride of place. It therefore recommends the immediate reinstatement of subsidy for Kerosene not later than second quarter, 2012 at pump price of N50 per Litre.

30. The following Companies that participated in the Scheme and refused to appear before the Committee and never submitted the required documents as was repeatedly announced during the hearing are to refund the various sums against their names. It is believed that these companies deliberately refused to appear because they had something to hide. The relevant Anti- Corruption Agencies should ensure full recovery:
1. Mut-Hass Petroleum Ltd                           1,102,084,041.30
2. Nepal Oil and Gas Service                   2,353,911,979.10
3. Oilbath Nigeria                                           1,019,644,138.97
4. Techno Oil Ltd                                           1,036,514,387.08
5. Somerset Energy Services                           3,015,221,487.94
6. Stonebridge Oil Limited                           1,784,158,258.14
7. Mobil Oil Nigeria                                   14,934,371,661.76
8. AX Energy Limited                                   1,471,969,643.31
9. CAH Resources Association Limited           1,052,466,415.28
10. Crust Energy Limited                           1,192,651,581.76
11. Fresh Synergy Limited                           1,417,029,059.70
12. Ibafon Oil Limited                                   4,687,730,540.46
13. Lottoj Oil and Gas Limited                   1,427,429,910.95
14. Oakfield Synergy Network Limited           988,920,219.15
15. Petro Trade Energy Limited                   1,471,027,874.73
16. Prudent Energy & Service Limited           1,360,898,638.10
18. Rocky Energy Limited                           1,620,110,167.58
TOTAL                                                           41,936,140,005.31

32. The markets of opportunity situated within Nigerian territorial waters which are designated “offshore Cotonou” or “offshore Lome” to qualify for FOREX payment and to evade payment of appropriate levies, dues and taxes to the Nigerian government should be discontinued forthwith.

36. The services of the accounting firm of Akintola Williams, Deloitte and OlusolaAdekanola& Partners should be discontinued with immediate effect for professional incompetence on this particular assignment. Now, this is some REALLY strong recommendation!

37. In view of the above the 2 firms should be blacklisted from being engaged by any Federal Ministry, Department or Agency (MDA’s) for a period of three years.

42. The payment of N999,000,000 in 128times within 24hrs (12th& 13th January, 2009) by the Office of the Accountant -General of the Federation should be further investigated by relevant Anti-Corruption Agencies.

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