The huge scam that was Nigeria’s oil subsidy
The fuel subsidy regime was a huge scam in the Nigeria oil and gas sector, with the state colluding with its friends to steal from the people. It was during this time that entrenched corruption such as inflation of the subsidy figures, the rise of proxy marketers, over-invoicing and non-record keeping became common.
At the peak of the subsidy fraud, the Nigerian state said it could not fund it anymore, arguing that its payment was taking a huge amount of monies from the federation account, thereby impeding the state’s ability to fund core infrastructures. Pursuant to that, by 31 December 2011, the subsidy was removed. This was followed by massive protest, with citizens holding a strong view that it was the huge corruption in the scheme that needed to be addressed and not subsidy removal.
The House of Representatives set up a committee headed by Farouk Lawal to investigate the subsidy claims. The Committee Report shows, N261.1 billion was expended in petroleum subsidy in 2006, N278.8 billion in 2007 and N346.7 billion in 2008. Five companies, including the Nigerian National Petroleum Corporation (NNPC), were involved in managing the subsidy in 2006; it rose to 10 companies in 2007; and 19 in 2008. Within a year under President Goodluck Jonathan, 121 companies were added to the subsidy management list, making a total of 140 companies in 2011.
Lawal was caught on a video collecting $62,000 from Mr. Femi Otedola, the Managing Director, Zenon Oil. This was to exonerate some oil marketers from the committee report, Otedola alleged. Lawal was arrested and suspended by the House of Reps in an emergency sitting convened by Mr. Aminu Tambuwal, the former speaker.
Mr. Sanusi Lamido, the former Nigerian Central Bank Governor, accused NNPC of failing to remit $20 billion to the federation account. He was subsequently sacked for daring to expose the monumental corruption in NNPC. Nigerian state under the leadership Jonathan and the current Buhari administration are yet to give an account of the missing monies.
Nigeria Extractive Industries Transparency Initiative (NEITI) 2013 audit report shows that, between 2005-2013 Nigeria Liquefied Natural Gas (NLNG) paid $12.9 billion as dividends to NNPC. But NNPC did not remit the payments to the federation account.
In 2011, NNPC made N310.4 billion payment arrears of kerosene subsidy for 2009-2011. And this happened despite the president having in 2009 directed removal of subsidy on kerosene.
The Petroleum Revenue Special Task Force, an investigative panel committee constituted by the Federal Government and headed by Mr. Nuhu Ribadu, to investigate the subsidy regime indicted NNPC. The panel report shows that NNPC could not account for $1 billion paid to it by oil companies.
During the probe, the House of Representatives Committee discovered how Accountant-General of the Federation paid N999 million 128 times within 24 hours, amounting to N127.8 billion, to subsidy scammers and, in spite of that, failed to disclose their identities even on demand. This further confirmed how the state colluded with its friends to steal from the people.
The presidential committee headed by Aig-Imoukhuede in its report made a recommendation for N382 billion refunds from 21 companies, while the House of Representatives report shows that N1.7 trillion went missing.
On 8 January 2012, whilst addressing Nigerians on why we should support subsidy removal, the state assured us that we would derive clear and measurable benefits from the removal of subsidy. Some of the benefits the state claimed would be the construction, completion and rehabilitation of rail lines, petroleum refineries, key federal highways, hydro-stations, information technology and water projects.
The state assured citizens the Subsidy Reinvestment and Empowerment Programme (SURE-P), created to make savings from the subsidy removal, would provide for mass transit, public works, training in artisans for the unskilled youth, social services, healthcare, etc. On specifics, we were told, the federal government would make available 1,600 buses to remedy the consequence of subsidy removal on public transportation.
Christopher Kolade, who was the SURE-P chairman, resigned as a result of entrenched corruption that characterized the scheme, while none of the state promises has been fulfilled.
Four out of over 40 scamsters who participated in the subsidy fraud have been convicted. Two of the convicts got 10 years imprisonment each. Ada Ugo-Ngali and her boss were convicted in January 2017 and Rowaye Jubril in March 2017. Besides the jail sentence, they are to make a refund of N755 million and N963 million respectively to the Federal Government.
With the secured convicts, we are hopeful that all who were involved in the subsidy fraud will face the consequences of their actions. It is not that the state cannot convict the accused, but under the Goodluck administration, bringing them to justice was not a state priority.
By 2014, the Economic and Financial Crimes Commission (EFCC) revealed that 17 oil marketers and 23 companies were on their trail list. We believe the already secured convictions will spur EFCC and the state to bring the remaining ones to justice.
The subsidy regime showed how the state colludes with its friends to loot public funds. For instance, the presidency did not show any anger at oil marketers who deliberately refused to appear before the House of Representatives committee. Also, nine of the oil marketers refused to honour the invitation of the Presidential Committee headed by Aigboje Aig-Imoukhuede that reviewed the Ministry of Finance technical report on the subsidy scam. Rather than compel them to appear before the panel, the presidency was shielding and defending them.
In the 2015 presidential electioneering, fighting corruption with a particular focus on oil and gas sector was All Progressives Congress (APC)’s cardinal campaign promise. Given the circumstances that surrounded the subsidy regime, it becomes fundamental that President Muhammadu Buhari and APC-led administration launch an investigation. And we are sure that when this is done, more facts will emerge. And when that happens, the state must use its mechanisms to bring those that have colluded to steal from Nigerians to justice. This is a core responsibility APC government owes the Nigerian people.
The subsidy regime exposed how corruption is entrenched in the oil and gas sector. Of great concern is that no administration has been able to give Nigerians the true picture of what happens in NNPC. Even the APC that made so much noise about unbundling and sanitizing the rot in the sector appears to have allowed the rot to go on unabated.
It boggles the mind. Nigeria lost a huge amount of monies to subsidy scams with the state playing a major role, and to this moment no state official has been quizzed.
If this trend continues, we are not likely to achieve infrastructure, industrialization, job creation and poverty reduction. The implication is persistent poverty and the struggle for survival that leads to the breakdown of law and order, with insecurity as the final outcome.
Thus, at Publish What You Pay-Nigeria, we appeal to the Nigerian state to use state mechanisms to bring those who have looted state resources to justice and position the state in such a way for citizens to benefit from their natural resources.
* Audu Liberty Oseni is Communication Officer, Publish What You Pay, Nigeria.
* THE VIEWS OF THE ABOVE ARTICLE ARE THOSE OF THE AUTHOR AND DO NOT NECESSARILY REFLECT THE VIEWS OF THE PAMBAZUKA NEWS EDITORIAL TEAM
* BROUGHT TO YOU BY PAMBAZUKA NEWS
* Please do not take Pambazuka for granted! Become a Friend of Pambazuka and make a donation NOW to help keep Pambazuka FREE and INDEPENDENT!
* Please send comments to [email=[email protected]]editor[at]pambazuka[dot]org[/email] or comment online at Pambazuka News.