President Goodluck Jonathan has ordered an investigation into the activities of the alleged cabal behind the massive corruption in the fuel importation programme. Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed this during an interview yesterday on a live television programme in Abuja, adding that the findings of the investigations will soon be made public.
The Federal Government had based its decision to end fuel subsidy payment on the need to check the activities of the cabal comprised of government officials and businessmen that had resulted in the fuel subsidy regime spiraling out of control to be come an all comer's pot of porridge.
Fuel importers had received close to N3.7trn in subsidy payments between 2006 and 2011. In 2011 alone the fuel importers received about N1.4trn, due to what the government said was the increase in global oil prices and huge arrears due to the Nigerian National Petroleum Corporation, NNPC, for household kerosene imports. However, stakeholders have questioned how the subsidy payments rose from N261bn in 2006 to N673bn in 2010 and have accused government of grave failings in managing the petroleum products supply and distribution chain. The fuel subsidy regime was created to keep fuel prices low by the government paying the differences between market price and pump prices to fuel importers but quickly become an avenue for well-connected businessmen to make billions of naira for doing virtually nothing.
Even some genuine fuel importers creamed off huge profits by importing quantities much lower than that quoted on Letters of Credit. In December last year, the Joint Senate Committee on Petroleum Downstream, Finance and Appropriation named dozens of companies including construction firms that had benefitted from the fuel subsidy scheme and had collected N1.42trn between January and August alone. Some of the major actors named include Oando Plc, which got N228.5bn; MRS (N224.8bn); Pinnacle Construction (N300bn); AP (N104.5bn); Folawiyo Oil (N113.3bn); Obat (N85bn); Conoil (N37.9bn); Atio Oil (N64.4bn); Acorn (N24.1bn); Capital Oil (N22.4bn) Enak Oil & Gas (N19.6bn) and Honeywell (N12.2bn). Others are; Integrated Oil and Gas, owned by former Minister of the Interior, Captain Emmanuel Iheancho (N30.7bn) AZ Oil (N18.613bn); Emac Oil (N19.2bn); D. Jones Oil (N14.8bn); AMP (N11.4bn); IPMAN Investment Limited (N10.9bn); Forte Oil (N8.5bn); Bovas & Co. Nig. Ltd. (N5.6bn); Eterna Oil (N5. 57bn); Dozil Oil (N3.37bn) and Frado International (N2.63bn) Some other beneficiaries include A.A. Rano (N1.14bn); A.S.B (N3.16bn); Aminu Resources (N2.3bn); Avante Guard (N1.14bn); Avido (N3.64bn); Boffas and Company (N3.67bn); and Brilla Energy (N960.3m); Downstream Energy (N789.6m); First Deepwater Oil (N257.3) and Heden Petroleum (N693m).
A leaked United States diplomatic cable had suggested that MRS, Total and Oando were the only three officially listed beneficiaries of the fuel subsidy recognised by the Federal Government in 2006 . The following year, AP, Mobil Oil and NIPCO, a trading company formed by the independent petroleum marketers were added to the list of majors while two other firms, which did not own depots - Aiteo Energy Resources and Triquest Energy - were also brought in to bring the number of beneficiaries to eight. The gravy train got busier in 2008 with the total number of beneficiaries rising to 23 including notable firms such as Conoil, Capital Oil, Folawiyo Energy, Integrated Oil and Gas and Rahamaniyya joining the list.
While some of the petroleum importers have defended themselves saying that they were businesses rendering a service to the NNPC according to agreed terms, industry analyst say the lack of transparency in the entire system had given rise to a situation where importers could make subsidy claims for products not imported or over state import volumes and still get paid subsidies resulting in huge losses to the government. In some cases importers brought in fuel bought from the NNPC back to Lagos port as imported fuel and still got subsidy payments. Senior Special Adviser to the President on Maritime Services, Mr. Leke Oyewole, told the National Mirror last week that about 43.23 million metric tonnes of imported refined petroleum products valued at N5.63trn shipped to Nigeria were unaccounted for last year.
This information is based on a United States Energy Information and Administration Agency report that a total of 59.23 million metric tonnes of refined petroleum products were shipped into the country between January and December 2011 yet only 16 million metric tonnes were captured in the nation's shipping statistics.
Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi, had said in a recent article that the scam in the fuel import and subsidy regime could not be stopped because all the control mechanisms had been compromised. He explained that by establishing Letters of Credit for fuel importation under the subsidy regime, importers could easily bribe customs and obtain certification overstating the volume of imports and divert fuel to neighbouring countries. He said it was also possible to get papers certifying that importation was done without a single litre being shipped and still get subsidy payments.
He said the profit margins in the trade were so high that it was possible to buy off anybody and it was difficult to prove the fraudulent acts in a court of law since they transaction were covered by the relevant paperwork. However, some analysts have said the government should have gone after the fraudsters instead of removing fuel subsidy and visit more hardships on Nigerians. However, there are doubts that this can happen as the key players in the fuel import business are the major financial pillars of the politicians in power.
Meanwhile, the Senate yesterday pledged to use its legislative powers to go after oil subsidy cabal in the country, Senate President David Mark disclosed this at the plenary session.
The Federal Government had based its decision to end fuel subsidy payment on the need to check the activities of the cabal comprised of government officials and businessmen that had resulted in the fuel subsidy regime spiraling out of control to be come an all comer's pot of porridge.
Fuel importers had received close to N3.7trn in subsidy payments between 2006 and 2011. In 2011 alone the fuel importers received about N1.4trn, due to what the government said was the increase in global oil prices and huge arrears due to the Nigerian National Petroleum Corporation, NNPC, for household kerosene imports. However, stakeholders have questioned how the subsidy payments rose from N261bn in 2006 to N673bn in 2010 and have accused government of grave failings in managing the petroleum products supply and distribution chain. The fuel subsidy regime was created to keep fuel prices low by the government paying the differences between market price and pump prices to fuel importers but quickly become an avenue for well-connected businessmen to make billions of naira for doing virtually nothing.
Even some genuine fuel importers creamed off huge profits by importing quantities much lower than that quoted on Letters of Credit. In December last year, the Joint Senate Committee on Petroleum Downstream, Finance and Appropriation named dozens of companies including construction firms that had benefitted from the fuel subsidy scheme and had collected N1.42trn between January and August alone. Some of the major actors named include Oando Plc, which got N228.5bn; MRS (N224.8bn); Pinnacle Construction (N300bn); AP (N104.5bn); Folawiyo Oil (N113.3bn); Obat (N85bn); Conoil (N37.9bn); Atio Oil (N64.4bn); Acorn (N24.1bn); Capital Oil (N22.4bn) Enak Oil & Gas (N19.6bn) and Honeywell (N12.2bn). Others are; Integrated Oil and Gas, owned by former Minister of the Interior, Captain Emmanuel Iheancho (N30.7bn) AZ Oil (N18.613bn); Emac Oil (N19.2bn); D. Jones Oil (N14.8bn); AMP (N11.4bn); IPMAN Investment Limited (N10.9bn); Forte Oil (N8.5bn); Bovas & Co. Nig. Ltd. (N5.6bn); Eterna Oil (N5. 57bn); Dozil Oil (N3.37bn) and Frado International (N2.63bn) Some other beneficiaries include A.A. Rano (N1.14bn); A.S.B (N3.16bn); Aminu Resources (N2.3bn); Avante Guard (N1.14bn); Avido (N3.64bn); Boffas and Company (N3.67bn); and Brilla Energy (N960.3m); Downstream Energy (N789.6m); First Deepwater Oil (N257.3) and Heden Petroleum (N693m).
A leaked United States diplomatic cable had suggested that MRS, Total and Oando were the only three officially listed beneficiaries of the fuel subsidy recognised by the Federal Government in 2006 . The following year, AP, Mobil Oil and NIPCO, a trading company formed by the independent petroleum marketers were added to the list of majors while two other firms, which did not own depots - Aiteo Energy Resources and Triquest Energy - were also brought in to bring the number of beneficiaries to eight. The gravy train got busier in 2008 with the total number of beneficiaries rising to 23 including notable firms such as Conoil, Capital Oil, Folawiyo Energy, Integrated Oil and Gas and Rahamaniyya joining the list.
While some of the petroleum importers have defended themselves saying that they were businesses rendering a service to the NNPC according to agreed terms, industry analyst say the lack of transparency in the entire system had given rise to a situation where importers could make subsidy claims for products not imported or over state import volumes and still get paid subsidies resulting in huge losses to the government. In some cases importers brought in fuel bought from the NNPC back to Lagos port as imported fuel and still got subsidy payments. Senior Special Adviser to the President on Maritime Services, Mr. Leke Oyewole, told the National Mirror last week that about 43.23 million metric tonnes of imported refined petroleum products valued at N5.63trn shipped to Nigeria were unaccounted for last year.
This information is based on a United States Energy Information and Administration Agency report that a total of 59.23 million metric tonnes of refined petroleum products were shipped into the country between January and December 2011 yet only 16 million metric tonnes were captured in the nation's shipping statistics.
Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi, had said in a recent article that the scam in the fuel import and subsidy regime could not be stopped because all the control mechanisms had been compromised. He explained that by establishing Letters of Credit for fuel importation under the subsidy regime, importers could easily bribe customs and obtain certification overstating the volume of imports and divert fuel to neighbouring countries. He said it was also possible to get papers certifying that importation was done without a single litre being shipped and still get subsidy payments.
He said the profit margins in the trade were so high that it was possible to buy off anybody and it was difficult to prove the fraudulent acts in a court of law since they transaction were covered by the relevant paperwork. However, some analysts have said the government should have gone after the fraudsters instead of removing fuel subsidy and visit more hardships on Nigerians. However, there are doubts that this can happen as the key players in the fuel import business are the major financial pillars of the politicians in power.
Meanwhile, the Senate yesterday pledged to use its legislative powers to go after oil subsidy cabal in the country, Senate President David Mark disclosed this at the plenary session.
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