N543.89b NNPC Subsidy Claims on Kerosene Unverified, Says PPRA

The Nigerian Petroleum Pricing Regulatory Agency on Wednesday said about N543.89billion being claimed by the Nigerian National Petroleum Corporation as funds spent on kerosene subsidy was yet to be fully verified.

According to the agency, the subsidy in question was for  imports made from January to December 2012 and the first seven months of 2013.

Executive Secretary of the agency, Mr. Reginald Stanley, said this while testifying before the House of Representatives Committee investigating subsidy payments on kerosene between 2010 and 2013.

He said the subsidy claims were for 3.907 billion litres of kerosene imported during the period under review.

The committee is chaired by an All Progressives Congress lawmaker from Rivers State, Mr. Dakuku Peterside.

Stanley told the committee that the verification process involved checking records  of products discharged by bigger vessels into small ones on the high seas and the eventual discharge of the same products into tank farms.

According to him, the function of the PPPRA stops at confirming that the products get into tank farms, where marketers load for the downstream distribution.

He further explained that the agency’s work was also aided by the marketers, who would confirm receipt of the quantity discharged on the high seas.

He said, “Our men will not usually be at the point of reception, but we can confirm based on the documents the NNPC presents to PPPRA.

“We have documents showing that the vessels came in, but when a vessel arrives anchor in Lagos, we are not there.”

Stanley told the committee that it was the responsibility of the Ministry of Finance and the Debt Management Office to pay effect payment for the claims on importation of products after verification.

On the issue of the outstanding N543.89bn, Stanley said the agency merely “advised” for payment based on documents available to it,  but had not completed the verification process.

He equally told the committee that between 2009 and 2011, the PPPRA under his predecessor, verified kerosine subsidy claims of N331.4bn.

The ES explained that the subsidy value was for 4.229bn litres of kerosine.

“My predecessor issued a certificate to the NNPC; that is all I can confirm”, he said.

The Executive Secretary also said he aware that the NNPC was allocated 445,000 barrels of crude oil per day for its swap arrangements and refining by local refineries in the country.

However, he clarified that the corporation paid  for the crude at “international price.”

“The crude is fully paid for by the NNPC; it is not sold at any concessional price, it is important to clarify this”, he said.

He explained that whether the kerosene supplied to the country came from the 445,000 barrels of crude or from direct importation, it would attract subsidy since the NNPC was not taking the crude free of charge from the Federal Government.

When panel members sought to know the average landing cost of a cargo of kerosene in Nigeria.

Stanley replied that a standard cargo could carry 30,000 metric tones of the product, saying that the price per tone ranged from $1,085 to $1,115.

He added that this would translate to $34.2million for a cargo of 30,000 metric tonnes.

The ES also put the daily consumption of kerosine in the country at 10million litres, though he said this depended on the season of the year.

“On the average, 10m litres is the industry figure per day.

“However, during the wet season, more kerosene  is consumed because cooking wood is wet and people use kerosene more to provide energy.

” In the dry season, the consumption will drop because again, there will be more reliance on dry wood”, he added.

Like the NNPC, and the Pipelines and Product Marketing Company earlier told the committee, the PPPRA boss also blamed the scarcity of kerosene  in the country on government subsidy, diversion, the use of the product in road construction and the aviation sector.

According to to him, the competing demands have forced marketers to cut corners and adopt any means at their disposal to sell to the highest bidder hence the cost it was being sold to the public has remained higher than the official price of N50 per litre.

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