Nigeria’s central bank governor insists $20 billion oil money missing

February 14, 2014 | Government & Regulations

Nigeria's National Assembly Complex, Abuja

Nigeria’s National Assembly Complex, Abuja

Abuja, Nigeria – The Central Bank of Nigeria Governor, Sanusi Lamido Sanusi yesterday said he stood by his claims that the state-owned oil company, the Nigerian National Petroleum Corporation (NNPC) was yet to account for $20 billion oil sales money.

He spoke in Abuja at the resumed public hearing held by the Nigerian national assembly senate committee on finance on the alleged missing funds according to a local newspaper, Daily Trust.

Last week, the CBN governor revealed that the total oil sales money not remitted to the Federation Account from January 2012 to July 2013 stood at $20 billion (equivalent N3.25 trillion).

NNPC insisted all the money had been accounted for and that the unremitted $10.8 billion was for kerosene subsidy, pipeline maintenance, product losses and other operation costs.

But in his presentation yesterday, Sanusi said he stood by his last week’s submission on the unremitted funds.

He added that he still believed that part of the $6 billion the NNPC handed over to the Atlantic Energy and Seggy Energy through a joint venture with the Nigerian Petroleum Development Company (NPDC) belonged to the Federation Account.

He, however, said that whereas he accepted the reconciled figures regarding petrol subsidy as presented by the Petroleum Products Pricing and Regulatory Agency (PPPRA), he still contests the money NNPC spent on kerosene subsidy.

Sanusi also expressed disappointment over refusal of the NNPC to avail the CBN with relevant documents as directed by the Senate committee.

But speaking at the hearing, Petroleum Minister Diezani Alison-Madueke said the NNPC did not violate any law in the deduction at source of $10.8 billion for subsidy on imported petroleum products.

‘Presidential directive not law’

In his submission last week, Sanusi said NNPC’s deductions for kerosene subsidy were illegal because former President Umaru Yar’Adua issued a presidential directive to stop kerosene subsidy in 2009.

However, Mrs. Allison-Madueke said that presidential directive was ineffective because it was not gazetted.

“When a presidential directive or order is given, it is not a law until it has been gazetted. There was no gazette to that effect. Also, the Appropriation Act has deduction at source as first line charge,” she said.

She added that two previous GMDs of the NNPC had separately written to the Finance Ministry to clarify position on the presidential directive but there was no response.

The senate finance committee chairman Senator Ahmed Mohammed Makarfi, asked her to produce copies of the memos to the committee.

Mrs. Alison-Madueke said both the petroleum ministry and the NNPC were propelled by patriotic instincts when they began import of kerosene between 2009 and 2010 because most petroleum marketers had stopped following the “confusion” on subsidy.

She further contended that when the presidential directive was issued, there was an inter-ministerial meeting which sought to ratify it and it was then agreed that there should be “stay of action” because of the sensitive nature of kerosene to the Nigerian masses.

She said if subsidy is removed on kerosene its price will triple thereby putting it above the reach of ordinary Nigerians. “There would have been economic crisis,” she added.

Mrs. Alison-Madueke said the corporation will have no problem stepping out of kerosene importation if Nigerians wanted that to happen.

But she added that if this was done, Nigerians would have been subjected to “untold hardship” and it would plunge the entire West African region into an unprecedented economic turmoil. She also advised the committee and the finance ministry to extend the proposed forensic audit of the NNPC kerosene subsidy to 2004 when it first commenced.

For his part, the Group Managing Director of the NNPC Mr. Andrew Yakubu told the lawmakers that the Petroleum Act has empowered the minister to determine the price of petroleum products including subsidy deductions at source.

Yakubu insisted that the corporation was not sitting on any money as was being alleged.

At this stage, Finance Minister Ngozi Okonjo-Iweala was asked by the committee if money was provided in the 2013 and 2014 budgets for kerosene subsidy, to which she said “No”.

Okonjo-Iweala said the only way to know the truth on the unremitted funds matter was by conducting an independent forensic audit.

Senator Makarfi warned that expenditure outside the federal budget must be stopped. Senator Isa Galaudu, a member of the committee accused Mrs. Alison-Madueke of usurping the powers of the National Assembly by deducting monies at source instead of remitting to the Federation Account.

Senator Adamu Gumba, another member said, “This illegality must be stopped. NNPC should have gone back to the president to reverse the directive. If we stop the subsidy nothing will happen. Why are you saying that the country will collapse if we stop the subsidy? Stop it, let’s see what will happen. NNPC is also usurping presidential powers.”

Makarfi told the finance ministry to, within one month, conduct an independent forensic audit of the NNPC’s kerosene subsidy claims.

He also said next Thursday, Attorney General of the Federation Mohammed Bello Adoke will appear before the committee to give legal opinion on the controversies over the $6 billion and the agreement involving the NPDC.

Meanwhile, the NNPD GMD gave details of how the corporation spent the $10.8 billion it deducted at source. He said of the amount, $8.76 billion was amount spent on subsidy of petroleum products, $0.76 billion spent on crude oil and products losses, another $0.46 billion spent on national strategic reserve, while $0.91 billion was the cost for pipeline maintenance.

The hearing and investigations continues….