Nigeria oil minister, NNPC boss pass buck over kerosene subsidy

February 19, 2014 | Management, Refining & Processing

Nigerian National Petroleum Corporation (NNPC) Head Office, Abuja

Nigerian National Petroleum Corporation (NNPC) Head Office, Abuja

Abuja – Nigeria’s Petroleum Minister Diezani Alison-Madueke and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Andrew Yakubu yesterday confirmed the existence of subsidy on kerosene but refused to explain the source of the fund for the subsidy.

Persistent questions by members of the National Assembly petroleum committee (Downstream) about the actual amount spent on kerosene subsidy from 2011 to 2013, the source of the money and whether there have been budgetary approvals for the subsidies within the three year period did not get any response from the NNPC boss.

The duo appeared during public hearing on expenditure, supply, distribution and subsidy on kerosene by the Nigerian national assembly House of Representatives committee reports local newspaper, the Daily Trust.

The petroleum minister, who took less than five minutes of her presentation to the committee before leaving, admitted that the NNPC has been the sole supplier of kerosene since the “confusing presidential directive” banning the subsidy on kerosene in 2009.

She said the NNPC was therefore in a better position to answer questions relating to the subsidy.
However, when the NNPC boss was asked to explain, he initially shifted the responsibility to the Pipeline and Products Marketing Company (PPMC) a subsidiary of his corporation, which he said has been the operational agency for the kerosene importation and supply.

The PPMC Managing Director, Haruna Momoh, said his agency has been importing kerosene through the two channels of vessels and NNPC refineries which are being facilitated by Coastal marketers and Major marketers as well as Independent Petroleum Marketers Association of Nigeria.

Momoh explained that PPMC obtains its larger volume of kerosene supply through the Coastal supplies, and dissociated his agency from the distribution of the product down to the end consumer, since they only distributed to various depots in states.

The PPMC MD also admitted that questions about the budgetary approvals of the subsidy as well as the source of the financing of the subsidy could only be answered by NNPC, since the PPMC is only discharging an operational duty under the parent organisation.

Chairman of the committee Rep. Dakuku Peterside turned to the NNPC GMD for the explanations about the subsidy and its source.

The NNPC boss, Yakubu, affirmed the existence of the subsidy, as the product’s landing price is N150, against the official N40.90k being sold to retailers by NNPC.

He said: “Since I am on oath here, I don’t have exact numbers and I don’t want to quote myself out of quote.”

Yakubu said due to the uncertainty of the presidential directive stopping the subsidy, suppliers of the product withdrew, which left the corporation to be the only supplier of the product.

Asked on whether any presidential directive has to be gazetted before effecting the order, Mr Yakubu referred the question to his legal adviser, who explained that it’s only the minister’s directive that is supposed to be gazetted, and acted upon by NNPC, and not that of the president.

But when further asked to reveal on whose authorities NNPC derives order for the continued use of subsidy, he said “we do not pay subsidy, in fact we are victims of subsidy. We are supposed to benefit from kerosene subsidy, but we are not”.

He added that NNPC continued with the subsidy based on “the existence of Petroleum Support Fund (PSF), through revenue that is not realised” and that kerosene was yet to be deregulated.
Yakubu said $8.49bn was spent on both petroleum and kerosene subsidy between 2012-2013, covering only 19 months, adding that NNPC imported 5.1 million litres of kerosene within the period.
He added that the problems associated with the high selling price of kerosene beyond the official N50 was not unconnected to the diversion of the product to neighbouring countries, pipeline vandalism, sharp practices of middlemen among others.

With a maximum crude oil production capacity of 2.5 million barrels per day, Nigeria ranks as Africa’s largest producer of oil and the sixth largest oil producing country in the world. But more than half of the population live in abject poverty which has led to incessant unrest, armed resource control campaign and now militant attacks on oil infrastructure and government.

The saga of the $20billion missing oil money and kerosene subsidy racket continues…….

  • Simon Ahura

    It saddens some of us to hear all these from our leaders.It is an open
    secret that kerosine depots have for the past 3 yrs emerged in all the
    settlements here in Abuja where tankers carry kerosine subsisdy has been paid
    on and dumped the products there to be sold at N150/per litre.What a wicked
    world.What happens to Agencies that are supposed to

    monitor the movements of these products?Who owns these kerosine depots that no
    body has ever gone to question their price tag and source of supply?Probably
    NNPC officials or their allies.