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Business News of Thursday, 30 June 2022

Source: vanguardngr.com

House of Reps to probe Petroleum subsidy of 2017 to 2021

House of Representatives House of Representatives

The House of Representatives has resolved that it will investigate the petroleum products subsidy regime of the Federal Government from 2017 to 2021.

The house came to the resolution following a motion moved by Rep. Ose-Ogun during Wednesday’s plenary in Abuja.

In his motion, Rep Ose-Ogun revealed that as at 2021, over $7b in over 120m barrels of crude oil revenue had been diverted. He expressed concerns that NNPC and other critical stakeholders have used the subsidy regime to subvert the nation’s crude oil revenue to the tune of over $10b.

The House noted that an advocate Committee will be set up to handle the probe which members of the committee will be named on Thursday.

The investigation will last for eight weeks after which the committee will return back to the house with a report of findings.

The Motion

“The House notes that section 88 (1) and (2) of the Constitution of the FRN (As Amended) empowers the National Assembly to conduct investigations into the activities of any authority executing or administering laws made by the National Assembly.

“Also notes that Section 32 of the Petroleum Industry Act, 2021 saddles the Petroleum Midstream and Downstream Regulatory Authority with the task of regulating and monitoring technical and commercial midstream and downstream petroleum operations in Nigeria.

“Informed that as of 2002, the NNPC’s purchase of crude oil at international market prices stood at 445,000 barrels per day in order to enable it to provide petroleum products for local consumption.

“Concerned that as of 2002, the installed capacity of Nigeria’s local refineries stood at 445,000 barrels per day, however, their capacity utilisation began to nosedive and eventually fell completely to zero due to the ineffectiveness and alleged corruption of critical stakeholders in the value chain.

“Aware that due to the decline in the production capacity of the refineries, NNPC Limited found it more convenient to export domestic crude in exchange for petroleum products on trade by barter basis described as Direct Sales Direct Purchase (DSDP) arrangement.

“Also aware that component costs in the petroleum products subsidy value chain claimed by the NNPC Limited is highly over-bloated while the transfer pump price per litre used by the NNPC Limited in relation to PPMC is underquoted as N123-N128 instead of N162-N165 and this fraudulent under-reporting of N37-N39 per litre translates into over 70 billion naira a month or 840 billion naira a year;

“Worried that the consumption rate of Petroleum Motor Spirit(PMS) is 40m to 45m litres per day, however, the NNPC Ltd uses 65m to 100m litres per day to determine subsidy as discoverable from NNPC’s monthly reports to the Federal Allocation Committee (FAAC).

“Also worried that the subsidy regime has been unscrupulously used by the NNPC Ltd & other critical stakeholders to subvert the nation’s crude oil revenue to the tune of over $10B, with records showing that as of 2021, over $7B in over 120m barrels have been so diverted.

“Disturbed that there exists evidence that subsidy amounts are being duplicated, thus subsidy is charged against petroleum products sales in the books of NNPC as well as against crude oil revenue in the books of NAPIMS to the tune of over N2 trillion”, the motion reads.