Three reports yesterday indicate that Minister of Finance and Coordinating
Minister for Economy, Dr. Ngozi Okonjo-Iweala's credibility might just recover
from recent setbacks suffered from the fallout at the removal of fuel subsidy
and the escalating debt profile of the country under her watch.

The first report is that the committee headed by the Managing Director and Chief
Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede, which was set
up by the Federal Ministry of Finance to verify arrears of claims on petrol
subsidy for 2011 has uncovered overpayments amounting to N430 billion to
private oil marketers and importers.

The second report is that the National Economic Council (NEC) has approved a
management process for the $1billion Sovereign Wealth Fund (SWF) and also
approved increase of the Excess Crude Account to $10billion from the present
$5.3billion to protect the economy from persistent global crises. This is to
provide at least a three-month buffer protection for the economy from the
mounting uncertainty of the global economy.

Not long ago the Debt Management Office (DMO) commenced the release of N17
billion in Sovereign Debt Notes to oil marketers for the payment of 2012 fuel
subsidy claims from the Petroleum Support Fund, but the Minister of Finance and
Coordinating Minister for the Economy, suspended all further payments, saying
that no payments will be made until the ongoing investigation and verification
into all claims is concluded.

Ngozi Iwealla also said the payment of subsidy claims for the import allocations
given to the marketers in December 2011, which covers the fuel imported up to
the first quarter of 2012, was suspended after the claims by both the marketers
and the Nigerian National Petroleum Commission overshot the budget.

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Of the N888 billion earmarked for subsidy payments in the 2012 budget, a total
of N232 billion was set aside for the payment of the 2011 arrears.

However, the Federal Ministry of Finance (FMF) had revealed that it had spent
N451 billion of the N888 billion on the payment of arrears for 2011.

A further N17 billion was paid on 2012 subsidy claims, but the ministry last
month suspended further payments on 2011 and 2012 claims, pending the submission
of the committee led by Aig-Imoukhuede.

The suspension of payments on subsidy claims had created panic in the market, as
several importers suspended importation, claiming that they could no longer
raise Letters of Credit for the importation of new cargoes.

Observers expressed fear over the possibility of a dislocation in the supply
regime caused by the suspension of fuel imports, but the Minister insisted that
the suspension of further payments for fuel imports under the subsidy regime, is
to enable the committee set up by the presidency and the Economic Management
Team conclude the verification of claims by marketers and NNPC and payments made
to them.

The committee, will be formally submitting its report to the government this
week, but according to reports, they discovered that some marketers including
companies that did not feature in the report of the ad hoc committee of the
House of Representatives that probed the administration of fuel subsidies had
fraudulently siphoned billions from the fuel subsidy armada.

The committee discovered discrepancies in the amount of subsidy claims made by
some of the marketers and the volume of products they imported during the period
under investigation.

Government sources explained that though the Federal Government had already
spent more than 50 per cent of what was budgeted for subsidy payments in the
2012 budget on 2011 arrears, the finance ministry was not considering submitting
a supplementary budget to meet its obligations for the rest of the year.

"The minister (Okonjo-Iwealla) is trying to work out the methodology to plug the
leaks in the system and would rather do this than submit a supplementary budget
to President Goodluck Jonathan for onward delivery to the National Assembly, as
this could lead to fiscal expansion and more borrowing.

"It is not in her agenda to submit a supplementary budget, as whatever method
she uses to get marketers to cough up what they owe the government will lead to
savings for the federation," the source explained.

With the committee concluding its findings, subsidy payments will resume next
month.

The committee headed by Aig-Imoukhuede was set up in May to undertake a forensic
audit and verify claims by oil marketers and NNPC, and the payments made to
them.

President Jonathan and Okonjo-Iweala, sources added, are determined to plug
leakages in the fuel subsidy regime and to improve the management of the
Petroleum Support Fund (PSF).

I must personally congratulate the Minister of Finance and Coordinating Minister
for Economy, Dr. Ngozi Okonjo-Iweala, for setting up this panel and suspending
payment of subsidy until the genuineness of the claim by oil marketers are
verified.

Those in the know said the committee, which is headed by the Managing
Director/Chief Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede,
did its work in a professional, forensic and non-controversial manner.

It is hoped, that the Aig-Imoukhuede report would resolve all the discrepancies
associated with oil subsidy payments and volume of fuel imports and consumption
in the country.

The names of fuel marketers established to have been overpaid by the
Aig-Imoukhuede-committee should be forwarded to the Economic and Financial
Crimes Commission (EFCC), which is already investigating marketers indicted in
the report of the House committee.

The Federal Government must march words with action by also implementing the
report of the House adhoc committee on Subsidy Management.

The finance ministry should try to establish a methodology on how it shall get
the marketers, whose subsidy claims were established to contain discrepancies
and which had been paid subsidies to which they were not entitled to, to refund
the money.

They should be compelled to either refund it to the treasury or if a marketer is
discovered to have been overpaid, the amount will be netted off against any
outstanding claims it might have.

The ball is now in the court of President Goodluck Jonathan to punish the
identified culprits.

With yesterday's sacking of the board and management of the Nigeria National
Petroleum Commission, the cleansing might have started. On Tuesday, Mr Jonathan
replaced the head of the Nigerian National Petroleum Corporation and three other
senior officials "in furtherance of efforts to achieve greater transparency and
accountability". But he should not stop at mere dismissal.

The third and last gladdening report from Ngozi Okonjo-Iweala, the finance
minister is that her Ministry is getting into the fight against the siphoning of
oil by oil thieves.

The Nigerian state and oil companies are losing a billion dollars or more a
month to oil theft by criminal networks whose activities have expanded rapidly
under the government of President Goodluck Jonathan.

Ngozi Okonjo-Iweala, yesterday told the Financial Times that the trade in stolen
oil led to a 17 per cent fall in official oil sales in April, or about 400,000
barrels per day). At average April prices of $121 per barrel, this results in a
loss of $1.2bn monthly.

This is a higher estimate than that given earlier by SPDC, Royal Dutch Shell's
Nigerian subsidiary, which put theft at between 150,000 and 180,000bd, or a loss
of $5b yearly.

Ms Okonjo-Iweala said the theft of oil – known in Nigeria as "bunkering" – along
with fraud in the allocation of a controversial fuel subsidy, may together have
cost the state $14bn in 2011.

This means that Nigeria has a limited cushion if oil prices continue their
current fall. The country, Africa's second-largest economy, depends on oil for
over 75 percent of hard currency earnings and typically over 90 percent of state
revenues.

"We have to get very serious about the bunkering issue," she told the Financial
Times.

"If we can stop the amount that is stolen we can beef up the excess crude
account faster," she said, referring to the rainy-day account where savings
accrue above a benchmark price for oil – set at $72.

This holds more than $4bn, Ms Okonjo-Iweala says. But those funds could be
targeted to supplement this year's budget for the fuel subsidy which has already
been largely depleted.

To Mrs Ngozi Okonjo-Iweala, I say jide ka iji!

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