Removal of subsidy to raise funds for "capital spending" while the NNPC allegedly cannot account for $6.5 million worth of crude sales per day  ? We dey laff at "fresh air" and his "transformational" Government.


http://saharareporters.com/news-page/nnpc-cant-account-65000-barrels-daily-allocation-crude-oil-premium-times

NNPC Can't Account For 65,000 Barrels Of Daily Allocation Of Crude Oil-Premium Times
Posted: December 12, 2011 - 21:27


By Emmanuel Ogala
The NNPC is unable to account for some USD6.5 million worth of crude daily. [size=18pt]In a continued display of fraud and secrecy, the Nigerian National Petroleum Corporation, on Monday failed to account for 65,000 barrels of the 445,000 barrels of crude oil allocated to it daily.[/size]

The Group Managing director of the NNPC, Austine Oniwon, told the senate committee investigating the management of Nigeria’s fuel subsidy that he was ignorant of the whereabouts of 65,000 barrels out of the 445,000 barrels of crude allocated to the corporation daily.

Mr. Oniwon explained that the NNPC entered into a swap deal – crude for refined PMS - with three refineries 210,000 barrels per day while 170,000 is refined by local refineries daily.

Duke Oil, a subsidiary of NNPC gets a swap deal worth 90,000 barrels per day, while Transfigura UK and SIR, an Ivorian refinery with a refining capacity of 80,000 bpd, gets 60,000 barrels per day each.

The NNPC GMD added that local refineries – Warri and Port Harcourt – get 80,000 barrels and 90,000 barrels per day respectively.

Mr. Oniwon could not however account for the utilization of the balance of 65,000 barrels per day - crude oil worth USD6.5 million (N1.033 billion) daily and USD195 million (N31.005 billion) monthly.

When probed by the lawmakers, the GMD who admitted that NNPC had gained up to N2.157 trillion from the subsidy scheme since 2006 also failed to give an account of the volume and value of PMS it receives in return for its various swap deals.

“Definitely, it (volume of PMS received in exchange for a barrel of crude) is available but I don’t have the figures to give you,” Mr. Oniwon told the lawmakers.

The GMD could not also give the name of an oil company he had earlier, the previous week, claimed was indicted for declaring products it did not import.




[b]The senate investigative public hearing on the management of Nigeria’s fuel subsidy started three weeks ago and is becoming increasingly frustrated by the secrecy that characterises the operations of the NNPC and the management of Nigeria’s oil sector.

The probed was started after Bukola Saraki (PDP Kwara State) moved a motion challenging the astronomical expenditure on the scheme this year. Records show that N256 billion was budgeted for the subsidy scheme for 2011, but the reality is that N1.46 trillion has been spent on the scheme this year.

[size=16pt]While defending the expenditure in an earlier hearing, the Petroleum minister, Diezani Alison-Madueke blamed the excessive rise in subsidy expenditure to the rise in international crude price, increase in Nigeria’s vehicular usage and increase in forex.

The finance minister, Ngozi Okonjo-Iweala, argued differently. She said the rise was astronomical because only a “notional figure” was put in the budget.

The junior finance minster, Yerima Lawn Ngama, yet argued differently. He said the high cost of 2011 subsidy was because the 2011 subsidy budget was predicated on an initial plan – that was not strategically expedient – remove subsidy in March, a month before the recent presidential elections in the country.[/size]
[/b]
The hearing has also revealed entrenched fraud in the petroleum industry and a group of businesses the government has always called “The Cabal” and blamed for the failure of the scheme.

The senate panel, however, appears not satisfied with the information gotten so far, after three public hearing and is set to take a fourth before its final report is ready.

These people are making a "good" case for this subsidy removal. Who knows what really is going on?

Bawss1:

These people are making a "good" case for this subsidy removal. Who knows what really is going on?

I don't get your point. As far as I see it , the same people making a "good" case for subsidy removal are the same ones sitting on monumental fraud and corruption. They are simply too lazy, too corrupt and far too compromised to do what is really required.

So far none of them have been able to sell this their subsidy removal idea to the masses yet the government persists even with all these follies? That's why the good is in quotation marks. What they have succeeded in doing so far is display their gross incompetence.

Bawss1:

So far none of them have been able to sell this their subsidy removal idea to the masses yet the government persists even with all these follies? That's why the good is in quotation marks. What they have succeeded in doing so far is display their gross incompetence.

My bad. You are indeed correct. There is so much this government is failing to do before turning its beady eyes on "removal" of subsidy. We are seeing daily, the unacceptable amount of money being squandered , through corruption, under GEJ's watch by the NNPC. How can any sane Nigerian possibly see any sense in this insistence on subsidy removal by the same Government that concedes our refineries, rather than make a serious effort to fix them, into the grossly corrupt hands of the NNPC for the next two years? What bigger sign does any one need that the GEJ Government is a highly insincere one? Why is it that not a single one of his unpopular policies/directives was mentioned before the elections? I.e "Leaner Government not possible", tenure elongation bill, fuel subsidy removal , the directive that the clearing house of corruption (NNPC) "turn around" our refineries over 24 months , etc

http://www.osundefender.org/?p=23506

‘Fix refineries before removing subsidy’
Former Head of State Gen. Yakubu Gowon (rtd) yesterday called for the repair of the refineries before the removal of fuel subsidy.
He said fuel subsidy should be withdrawn with minimal pain to the people as he called for an end to importation of petroleum products.
Gen. Gowon spoke in Umuahia where, on behalf of the Carter Fundation Centre, distributed mosquito treated nets and initiated collaboration with the Abia State government on prevention of malaria.
He also visited the Government House where he was received by Deputy Governor Emeka Ananaba.
The former Head of State said:
“If all the refineries in the country are working at normal capacity and importation of petroleum products is stopped, the price of fuel will stabilise and the suffering of the people will be reduced.”
Gen. Gowon said if the contrary is done, the prices of goods and services will be too high for the common man, adding that the problem that will come after it might be too much for those in authority to handle.
He advised that the funds that will be saved from the removal of fuel subsidy should be channelled into infrastructure and other amenities.
On the late Dim Emeka Odumegwu-Ojukwu, the former Biafran leader, Gen. Gowon said: “He was a man who fought and defended the right of Ndigbo for them to stand on their own. His death is a great loss not only to the Igbo race but to the entire country.”
The Nigeria Labour Congress (NLC) also warned President Jonathan against withdrawal of fuel subsidy.
The Labour organisation urged the President not to listen to the dictate of the international monetary organisations [size=18pt]but re-direct his energy towards fulfilling his campaign promoters.[/size]
NLC Vice President Issa Aremu stated Labour’s position in Lokoja at the weekend during the 10th year memorial colloquium in honour of the late Prof. Bade Onimode.
He said fuel subsidy is a “dog action sold to Jonathan by agents of the World Bank”.
Describing the planned removal of fuel subsidy as an abuse of the President’s mandate, Aremu said: [size=18pt]“The President should follow his transformation agenda by first putting a stop to oil theft, rehabilitation and construction of new refineries as well as ensuring accelerated passage of the Petroleum Industry Bill (PIB) before the National Assembly.
“Subsidy removal is the same old song which Nigerians have been serially subjected to since the late 1980s. [/size]Therefore, it must be rejected. The struggle to halt this anti- masses policy is not that of NLC alone, but the entire people of Nigeria.”
Aremu said labour does “not know the existence of any subsidy. We challenge the government to prove their point,” eh said.
[size=18pt]According to him, the government is only trying to hang the burden of the failure of governance and the NNPC as an institution on the already over stressed Nigerians. There is no alternative to good governance, Aremu said.[/size]

This what we have been labouring to tell Nigerians and so many low-brain-powered Nairalanders. There is more than enough money for the goverment build whatever kind, manner or magnitude of infrastructure the country needs.

Jonathan wants to satisfy the greed of corruption and the yearnings of the people at the same time. Imagine about 30 billion naira unaccounted for daily. And they say the only money available to build infractructure is the one to be obtained through the unbearble burden of fuel increase and disastrous ripples of hyper-inflatiom it will cause in the economy.

What kind of wicked leaders do we have in this country, that are willing to destroy the collective destinies of people bacause of uncontollable greed.

Nigerians wake up. Demand accountabilty from your leaders and stop being silly and swallowing what you are told. In short, stop worshipping mediocrity and recognize it for what it is: something undeserving of your support and sympathy.

How can someone be pleading with you to allow him to continue to suck your blood?

A man, head of a family (President) of three wives(3 major tribes) and and thirty-six children (states); none of the children are going to school. He was advised, education (infrastructure) will better the lot of your children and safeguard their future.

Currenty the family budget is to be spent majorly on food, construction of a new house, cars, monthy Dstv bills, etc.

Now the head of the family, because the eductaion of the children is very important, decides he will divert the money allocated for Food and use to pay the school fees for Education of the children.

Won't the children starve to death before they can complete the education or at the vey least be irrepairable damaged (economy).

The head of family needs to think and look for a better way of achieving his goal. There are always several paths that leads to the stream,

lanre_front:

Jonathan wants to satisfy the greed of corruption and the yearnings of the people at the same time. Imagine about 30 billion naira unaccounted for daily. And they say the only money available to build infractructure is the one to be obtained through the unbearble burden of fuel increase and disastrous ripples of hyper-inflatiom it will cause in the economy.

N30 billion? The initial report says N1.033 billion

Jonathan is not really interested in catching looters, he's acting as if it doesnt exist

he appears to be acting like as long as the leakages are blocked they wont be a problem,
catching the big theives is not in his plan, he will just allow them enjoy their loots as long as they are not disturbing his presidency
whilst they scheme new ways to bypass his 'new' system

lanre_front:



What kind of wicked leaders do we have in this country, that are willing to destroy the collective destinies of people bacause of uncontollable greed.

Nigerians wake up. Demand accountabilty from your leaders and stop being silly and swallowing what you are told. In short, stop worshipping mediocrity and recognize it for what it is: something undeserving of your support and sympathy.

I certainly agree with the section in bold above. Below the EiE Nigeria (enough is enough Nigeria) make a statement on the "games" of the FG over subsidy removal. It is a great article that eloquently articulates the argument proffered against GEJ's method of subsidy removal. Under "issues to consider", number 1 is certainly very pertinent to me as it was my exact argument recently i.e why not tackle the deficient, inefficient  and corrupt element of subsidy instead of an indolent attempt to attempting to kill a fly with a sledge-hammer ? What of serious effort to ensure our refineries are fixed or sold transparently? Nigerians who know the history of government , through their fronts, profiting from State asset will discern that the senseless decision to hand our refineries over the the home of corruption for 2 years (NNPC) is simply to buy time till the refineries can be conceded to "buddies" of Government (Otedola, Dangote et al) so that awoof chop-chop continues. Anyway the article below is spot on and one every Nairalander should take time to read.

http://saharareporters.com/press-release/eie-nigerias-statement-federal-government%E2%80%99s-games-fuel-subsidy

EiE Nigeria's Statement On The Federal Government’s Games With Fuel Subsidy
Posted: December 12, 2011 - 18:44


By EiENigeria.org
Despite the concerns raised by different groups and individuals, President Jonathan will, tomorrow, present the 2012 Budget to the National Assembly excluding the provision for fuel subsidy.

In her two appearances before the Senate Joint Committees on Appropriation, Finance and Petroleum Resources (Downstream) for the public hearing on “The Operations of the Fuel Subsidy Scheme in Nigeria,” the Minister of Petroleum represented the Federal Government’s position as follows:

The fuel subsidy structure is inefficient, costing us N600bn (~$3.75bn) in 2010 and N1.3 trillion (~$8.125bn) from Jan – October 2011. The Federal Government cannot continue to pay as it’s unsustainable. By removing the subsidy, the savings will be used to provide critical infrastructure and services. Currently, only a small percentage of Nigerians (the marketers, middle & upper-class Nigerians) benefit. When removed, more Nigerians will benefit.

In the words of a Yoruba proverb, the Federal Government has, yet again, left leprosy to treat ringworm. While we understand that the current cost structure is unsustainable, Nigerians can no longer afford to pay for government’s inefficiencies. It’s too expensive (financially; productive man hours and human lives) and it’s also NOT sustainable.

Issues to Consider
[size=18pt]1.    A lazy, thoughtless approach
The government clearly finds it easier to undertake an unwise blanket removal of subsidy than engage in the discussion of trimming the inefficiencies in fuel subsidy management and in the running cost of government. The language is also deliberately confusing – one minute it’s ‘deregulation’ and the next it’s ‘fuel subsidy removal’.
[/size]


2.   How much subsidy?
The Interim Report on the Process and Forensic Review of NNPC by KPMG states “Based on our analysis, subsidy over-deduction for 2007, 2008 & 2009 was estimated at N2 bn, N10.3 bn and N16.2 bn respectively. A rough estimation of subsidy payment on product losses for the period under review (2007-2009) is estimated at N11.8 billion.”
Clearly, the subsidy management regime is fraught with waste, graft and insincerity; evidence that the ‘N1.3 trillion’ does not accurately reflect the amount of petrol imported or consumed by Nigerians.

3.   A matter of trust?

To counter the argument that Nigerians do not trust the government to wisely manage the ‘savings’ from the removal of the fuel subsidy, the government is planning a subsidy savings management program. The details were shared by the Vice-President in a meeting with some civil society organisations on Friday, December 9th. Why has this plan not been made public?

The questions and concerns that arise are obvious ones:

a.    How does the government plan to calculate ‘fuel subsidy removal savings’?
Will these savings be the theoretical cost of the subsidy – minus cost of corruption - or the current (inflated) figure? Also, how does the government intend to remit same to this proposed quasi-government agency? Will this necessitate the setting up of another special account, in the manner of the Excess Crude Account?

b.    The Obasanjo regime wound down the widely acclaimed PTF because it served as a duplication of the work of the ministries.
We agree with this approach.

c.    Setting up a new body means an increase in recurrent expenditure for staffing, salaries, pensions, cars, running costs etc. This is UNACCEPTABLE.

4.    No Effect on the Poor
The government’s assertion that the subsidy removal would have little effect on the poor is quite simplistic. The resultant increase in the price of PMS would drastically increase the cost of food, transportation and doing business, shutting down many small enterprises which directly or indirectly depend on the price of petrol remaining low. The middle class is the engine of growth by way of consumption and the SMEs that create jobs. Any strain on them is negative for the economy.

[size=18pt]The Way Forward[/size]




The government should take a more measured and sustainable approach that takes into consideration all stakeholders in the Nigerian project. They need to:

1.    Reduce Cost of Governance
The government must drastically cut down the cost of maintaining public and civil servants – security votes, multiple advisers, fuel guzzling convoys, excessive foreign travel and estacodes etc. Expenses such as (a) the Vice-President’s residence awarded to Julius Berger at N7 bn ($43.75m) with a request for N9 bn ($56.25m) more; (b) disbursement of N250 billion per year in  ‘security votes’ to the President and Governors; and (c) a N1.7 trillion wage bill (2012 Budget) are criminal and unstainable!

2.    Reduce Cost of Subsidy
Why does NNPC get 445,000 barrels of crude a day that it can’t refine? In 2006, there were 3 marketers; we now have 77. According to BusinessDay, “the increase has also been linked to this year’s elections and it has been suggested that the subsidy programme became an avenue for patronage extended to those with political connections.” Significant savings can be made on the bandied N1.3 trillion if the government will prune out the “briefcase marketers”, clean up the NNPC/PPPRA to plug waste and leakages, and tackle smuggling.

3.    Restore or Sell the Refineries
This is of critical concern and priority. Increasing the capacity of our refineries would reduce the amount of fuel that needs to be imported into the country. How much has been spent on repairing the refineries in the last 12 years?

4.    Provide Power
According to a 2009 report by the Nigerian Electricity Regulatory Agency (NERC), Nigerians spend N797 billion yearly to buy fuel for powering generators. In 2010, President Jonathan said the cost of fuel (to power generators) was $13 billion. NERC’s estimates 32% of generator fuel is PMS. This means Nigerians spend about $4.19 billion or N646 billion on petrol, while the rest goes to diesel. Imagine how much fuel import dependence we can curb if this government fulfills the often-repeated promise of improving power supply in Nigeria!

[size=18pt]Why has the government not presented a policy document or engaged openly and directly with Nigerians on this issue? Why the rush to remove the subsidy when other holes have not been plugged?

Enough is Enough Nigeria will continue the conversation by hosting a public Town Hall Meeting within the next 10 days to discuss the issue. In a country that provides no social services and the average citizen provides all basic utilities – water, electricity, and security; the government cannot remove the bread from our mouths while it continues to feed fat on its princely cakes.

We will engage in words and action. Enough is enough![/size]

Bawss1:

N30 billion? The initial report says N1.033 billion

Try to take and read articles properly. I'm talking about the daily 65 000 barrels which equates to 31 biilion naira daily which the NNPC is unbale to account for. This is a fresh revelation.

You are quoting/talking about the 1.3 trillion the goverment claimed to be the amount spent so far on subsidy this year.