Subsidy probe latest Monarchs, Govt Officials Move To Kill Report -Reps –Sunday Trust


By Theophilus Abbah, Ismail Adebayo,Turaki A. Hassan, Isiaka Wakili & Abubakar Adam Ibrahim


Governors, government officials,  traditional and religious leaders as well as other prominent citizens are mounting pressures on members of the House of Representatives to kill the report of the Farouk Lawal-led ad hoc committee that has indicted key government agencies and officials in a massive fuel subsidy fraud.

Some members of the House confided in Sunday Trust that Speaker Aminu Waziri Tambuwal, his deputy Emeka Ihedioha, body of principal officers and some members have been put under serious pressure ahead of Tuesday’s planned consideration of the report. The report indicted past ministers of finance and petroleum, current ministers of these ministries, agencies of government and rich oil marketers.

However, Hon. Farouk Lawal, who headed the committee that produced the damning report, said the House will resist all pressures to kill the report because it had resolved to do what is right for Nigeria.

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Speaking to Sunday Trust, Hon. Lawal said from the onset, there were attempts by some prominent citizens to scuttle the committee’s work by causing division within the House.

“They went to the media. They tried in other ways to distract us from discharging the responsibility given to us. They tried to create division in the House to ensure we didn’t succeed in our investigation but, of course, it didn’t work. Now that the report is out and some people’s interests are affected, some individuals tried to hide under some faceless groups to do something that may affect our personal integrity in the House,” he said.

He expressed confidence in the members of the House, saying that if the House could resist pressures to elect its current leadership, he is sure it could weather this storm to do the right thing for Nigeria.

Also speaking to Sunday Trust, House spokesman Zakari Mohammed said they were aware of moves by some oil cartels and their backers to blackmail the House and discredit the report.

He also confirmed that some of those indicted in the Farouk Lawal committee report have been contacting individual members, adding that “there is nothing we can do about that report as it is already in the public domain. We can’t say anything outside issues in the report,” Mohammed said, adding that the House will go ahead with its planned consideration of the report as scheduled on Tuesday.

Mohammed further raised alarm that legislators in the National Assembly are now being targeted by indicted parties and said, “We know that they are now targeting us because of our resolve to expose the decadence in the system. Nigerians have to be aware that we have become endangered species and principal targets of these people. They want to use security apparatus to get back at us but we will not be deterred or gagged from pointing out where there is wrong doing.”

Hon. Babangida Ibrahim (CPC, Katsina) said he is not aware of any attempt by the executive to influence the debate of the House on the fuel subsidy report.

According to him, “there is a rumour that our debate on the report will be influenced because of previous experiences in which the executive influenced the debates of the House and threw away reports. This time around, it is not going to be business as usual.”

Also speaking, Honourable Gafar Omotayo Amere (ACN, Osun) said he would not succumb to pressure if at all there was any, saying he expects other members to do same.

“We are going to debate the report objectively. We are going to consider the national interest. No sentiment at all”, he said.

In his own reaction, Honourable Tom Zakari (PDP, Kogi) said the era of influencing debates and decisions of the House on any issue is over given the transparent, free and fair manner the leadership of the House was emerged, stressing that “The report of the subsidy probe will be debated irrespective of whose ox is gored. We won’t succumb to any pressure”.

The task of the House of Representatives Ad Hoc committee on fuel subsidy probe would not have achieved a resounding success if the foremost British organisation in risk management, the Lloyds of London, had not cooperated with the committee. At the completion of the Public Hearing, the Chairman of the Ad Hoc committee had confessed in an interview with Sunday Trust that because of the closed system in the oil sector, getting experts to help expose the intrigues that facilitated the big fraud would be difficult. His reason was that those experts benefitted from the rot in the system and would be shooting themselves in the leg if they assisted in exposing the government agencies from which they benefitted.

In the 210-page report submitted by the ad-hoc committee to the House of Representatives last week, a section on marine forensics, which details the illegal activities like round-tripping, non-delivery, short-delivery etc by oil marketers was based on a forensic investigation led by the intelligence unit of Lloyds of London.  From the outcome of the investigation, it was apparent that the Nigerian National Petroleum Corporation (NNPC) and many oil marketers actually received subsidy on undelivered fuel.  The Lloyds of London provided 19 samples of such payments for undelivered fuel in the month of January 2011 alone.

One of the samples goes thus: “NNPC/NIGERMED imported 31,343.802MT PMS on board MT Sanmar Stanza to Offshore Lagos SPM (Single Point Mooring) platform. NNPC document submitted to the Ad Hoc Committee did not esplain where this cargo was discharged to between 07 January and 13 January, 2011, as stated. NPA document capture Sanmar Stanza as being offshore Lagos at the period and discharged for 6 days, but again did not say where the 31,343.80MT was discharged into. NNPC may be invited to account for the whereabout of this cargo. Lloyd’s Agency Nigeria 2011 captured the vessel between 16/1/11 to 23/1/11 and 24/1/11 and 28/1/11 but still failed to state where the cargo of 31,343.802MT of PMS was discharged into.”

In the same month of January, another cargo carrying 31,444.764MT of PMS was supposed to have arrived Nigeria, but there was no trace of where the goods were discharged. The report said, “NNPC imported 31,444.764MT of PMS on board MT Freja Dania to Offshore Lagos SPM. The PMS cargo was discharged on 19 January 2011 (one day), according to NNPC submitted document. It did not state to where the cargo was discharged into. NPA document confirm MT Freja Dania arrived offshore Lagos and discharged for five days as against one day but failed to indicate where the cargo had been discharged to. MT Freja was also found on Lloyd’s Agency Nigeria and matched, however, NNPC to be invited to account for the whereabout of the 31,444.764MT of PMS cargo.”

The outcome of the forensic investigation seems to re-echo the position of the Nigeria Customs Service (NCS) whose representatives told the Ad Hoc committee that even when vessels carrying petroleum products arrived the country’s ports, they disappeared to where the agency could not tell. A Deputy Comptroller-General of Customs, Julius Ndubuisi Nwankwo, who represented Comptroller-General Abdullahi Dikko Inde, had alleged that: “as we speak, most of the importation of PMS has no documentation. NNPC does not make any documentation to the Customs. Several meetings were held where the NCS was directed not to ask for documents. The Ministry of Finance wrote to NCS, warning them not to ask for documents because this will cause crisis. Vessels imported into this country are referred to as mother vessels. These mother vessels never get to the ports in Nigeria. The vessels are normally anchored offshore. If you see the manifest covering these imports, what you will see is ‘offshore Cotonou, offshore Lome. They never get to the ports. Rather, you have smaller vessels that pick these products from the mother vessels and they come to the ports to report to the Customs – in line with the provision of the enabling Act of Customs.”

But it is not only the NNPC that was discovered to be involved in this short-changing of the country. The report produced samples of irregularities that point to the fact that other oil marketers engaged in inexplicable deployment of vessels offshore. Among the examples given include those involving A-Z Petroleum. The report said, “A-Z Petroleum imported 9,601,915 litres of PMS which was transhipped from MT Alpine Magnolia offshore Lagos into MT Okhotsk Sea, Ex MT Ermar, Ex MT Sea Progress between 14/12/10 and 15/1/11 for discharge into Ever Oil Depot through Integrated Oil Jetty, Apapa, Lagos. The Ever Oil Deport is in Calabar and not in Lagos as shown in the PPPRA list. MT Alpine Magnolia, the mother vessel was not listed in the Lloyd’s AIS Nigeria 2010 List, Lloyd’s Agency Nigeria 2010 List, so it may not have been offshore Lagos as noted in the PPPRA List. The mother vessel did not also call at Calabar as she was not listed in the NPA List for vessels that called at Calabar in December 2010 and January 2011.”

Lloyds said further that MT Okhotsk Sea, Ex MT Ermar, Ex MT Sea Progress was listed in the Lloyd’s AIS Nigeria 2011 List, Lloyd’s Agency Nigeria 2011 List as calling at Apapa but was not in NPA List for Calabar. It added that “There is need to check the records at Ever Oil Depot in Calabar to ascertain if such parcel was discharged at the depot. Moreover, given the draft (9.9 metres) of the daughter vessel, it would have difficult calling at Calabar Port with a draft restriction of 8.5 metres and channel draft of between 6.3 metres and 6.4 metres.”

The intelligence unit of Lloyds gave a similar sample involving African Petroleum, where imported 38,516,233 litres of PMS could not be traced. The agency remarked that “There is no evidence that the daughter vessel MT Vera Cruz called at any Nigerian port within the period under review as there is no evidence in the NPA List for the period.”


Apart from the marine forensic investigation, the ad hoc committee was involved in financial forensics investigation into the subsidy scheme, which revealed multiple payments, which shot the actual rate subsidy to N2.5 trillion. The report explained the strange payments thus: “In the course of analysing the total amount paid as subsidy in the period under review, 2009 – 2011, the committee came across two separate subsidy payments to NNPC for each of these years, one from NNPC records of deductions, while the second was payment by CBN for the same years. NNPC’s direct deductions for 2009 were the sum of N408.255 billion, for 2010 was N407.801 and N847.942 for 2011. The CBN payments for NNPC for these same years were the same of N81.648 for 2009, N402.423 for 2010, and N844.944 for 2011. NNPC appears to have been collecting subsidy simultaneously from two separate sources. If this 2011 subsidy payment figure is added, the total subsidy would amount to N2,587.087 trillion. The committee, however, recommends that the relevant anti-corruption agencies be invited to further investigate, verify and ascertain the direct deductions and actual payments to/by NNPC.”

There were many other financial infractions discovered by the panel. They include the following:

1.    Marketers obtained forex but not found to have utilised same for petroleum products importation.

2.    Marketers did not obtain forex but were found to have supplied and collected subsidy on petroleum products

3.    Marketers were not registered with PPPRA before they got their first allocation for product supplies

4.    Marketers never applied to PPPRA for product supplies before they got their first allocation

5.    Marketers that never applied to PPPRA at all but were given allocation to  supply products.

6.    Marketers with no tank-farms, no through-put agreement with any depot but claimed to have discharged products, and

7.    Marketers with no tank-farm, had through-put agreements but not confirmed to have utilised same yet claimed to have supplied products.


Apart from round-tripping, several agencies of government were found to have abused their functions or ignored their roles, thereby creating the avenue for fraud. For instance, apart from making shady payments to itself, the Petroleum Products Pricing Regulatory Authority (PPPRA) was indicted in the report for its failure to monitor and verify product supplies. The report said that, “Pursuant to its staturoty mandate as well as its responsibilities under the PSF Scheme, PPPRA deployed its staff to monitor and verify data on petroleum products reception and distribution at jetties and depots. However, we observed that there was massive collusion between PPPRA staff and some oil marketers as to defeat the envisaged purpose of the monitoring and verification… Failure of the agency to achieve the objective of verification resulted in certain marketers talking maximum advantage of the situation.” There is a section on how marketers took advantage of the refusal of PPPRA to do its job.

Other areas in which the PPPRA was found to have created avenue for the rip off included the proliferation of marketers by raising the number of importers from 49 in 2009 to 140 in 2011. The agency was accused of refusing to reverse the devastating policy of marketer proliferation, poor record keeping, and the non-compliance with its own guidelines of operation.

The report found the Federal Ministry of Finance wanting in several areas. First is the ministry’s acquiescene to direct deduction of subsidy by the NNPC. The report said, “The Ministry was fully aware of NNPC’s practice of making subsidy payments as a fist-line charge before revenue was shared among the three tiers of government. Successive Appropriation Acts have always made provisions specifically to defray the costs associated with cash calls on joint ventures as a first line charge. Thus, direct deductions by NNPC relating to joint venture cash calls are provided for in the budget. This is because Section 7(4)(b) of NNPC Act Cap N123 LFN2004 provides for defraying of expenses incurred in making money for the country.”

The committee stated that  “given the effect of direct deductions on all levels of government, none of the ministers of finance or petroleum resources or heads of parastatals under them sought authoritative interpretation from the Attorney-General of the Federation, who denied receiving any such request from any quarters. The direct deductions by the NNPC are a clear breach of Section 162 of the Constitution of the Federal Republic of Nigeria (as amended).”

The report blamed the Finance Ministry for what it called “troubled budget management,” referring to the fact that what was spent on subsidy in 2011 (N2,587.087 trillion) was at variance with the budgetary provisions (N245.96 billion). It also alleged that the ministry outsourced its responsibilities. The report made reference to the fact that Akintola Williams Deloitte and Olusola Adekanola & Co Limited were given the consultancy to witness and confirm imported products. The report said this should be the statutory responsibility of the Ministry of Finance.

In its remark on this deviation, the committee said, “We observed that the firms contributed little value to the veracity of the exercise. Indeed during interaction with the committee, it became obvious that the firms had neither adequate knowledge of procedure of measuring products in a vessel before and after discharge, nor did they demonstrate professional care expected of their standing in auditing marketers’ claims based on quantity, exchange rate and crude price. This care-free attitude could hardly be explained beyond an interest of participating in a bazaar and collecting N275,000.00 per vessel. Surprisingly, the loophole of non-availability of reliable data on quantity of imported products or any other relevant information could not be salvaged by these firms.”

The committee commended the Central Bank of Nigeria (CBN) governor, Malam Sanusi Lamido Sanusi, for raising an alarm over the uncontrolled payments for subsidy. However, it complained that the CBN created, through its forex policy, “avenue for easy falsification of records of quantity of petroleum products discharged.”

However, relating to the financial agencies, the committee faulted the former Accountant-General of the Federation’s office, saying: “The particular Accountant General that served during the period 2009 was found to have made payments of equal instalments of N999 million for the record of 128 times within 24 hours totaling N127.872 billion.

“The confirmed payments from 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 payments.”

It added: “All those in the Federal Ministry of Finance, office of the Director General of the budget, Accountant General of the Federation involved in the extra budgetary expenditure under the Petroleum Support Scheme between 2009-2011 should be sanctioned in accordance with the civil service rules and code of conduct bureau. The payment of N999 million 128 times within 24 hours between 12th and 13th January 2009 by the office of the Account General should be further investigated by relevant anti-corruption agencies.”

Alhaji Dankwambo, who is now the governor of Gombe State, reacted to the report last week, saying that he was never involved in the questionable payments. In this case, it will be vital to carry out an investigation into the payment, because if such a huge sum of money is paid out without the authorisation of the Accountant-General,  it presupposes that there were shady deals in that department of government at a level below the authority of the AGF.

Perhaps, the agency that received the most devastating knock in the report is the NNPC, mainly because of its inapplicability of guidelines for operations in the oil industry.  To add to this, the agency became a beneficiary from the subsidy funds because “NNPC acted as importer, marketer, claimant, payer and payee. Simply NNPC was not accountable to anybody or authority.” Apart from the non-application of its rules, other charges against NNPC included the payment of subsidy on kerosene, contrary to presidential directive, making direct deductions for subsidy from source; making over-deductions, with an example that should a total deduction of N844.944 billion as against the sum of N540.419 billion for subsidy as recommended by the PPPRA in 2011. The amount in excess was N285.098 billion. The agency was accused of operating an inefficient demurrage system of importation of petroleum products, so that the demurrage payments pilled up for months. The committee also discovered that petroleum products imported by NNPC were sold by a private concern – Capital Oil Limited because NNPC did not keep its part of an agreement with the company. The NNPC was accused of the lack of transparency in its operations in entirely, and “this created room for abuses, inefficiencies and manifest lack of accountability.” There were also issues relation to the 445,000 barrels of crude allocated to NNPC for local consumption and the fact that the agency grants itself discount in the payments for this provision of crude for domestic use everyday.  The report said, “contrary to NNPC’s claim of taking the 445,000 barrels of crude daily at international market price, the committee established that NNPC was actually taking domestic crude at prices below the international market prices.”

Furthermore, the Department of Petroleum Resources (DPR) was blamed for failure to certify the quantity of products imported, failure of cross-check the quantity of products; non-imposition of sanctions for selling kerosene above subsidy, failure to provide PPPRA with data relating to products supply and distribution for both imports and local productions; failure to monitor product supplies, leading to diversion of imported petroleum products, etc.

Other agencies of government found wanting include the Petroleum Equalisation Fund Management Board (PEFMB), Ministry of Petroleum Resources specifically,  the Nigeria Customs Service (NCS),  the Nigerian Ports Authority (NPA), The Nigerian Navy (NN) and several agencies related to these organisations.

This report has laid bare vital issues that affect the Nigerian economy, but will government act on it?


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