NNPC not authorised to deduct subsidy, says Okonjo-Iweala

The Nigeria National Petroleum Corporation never had the mandate of the Ministry of Finance to deduct subsidy cash before remitting funds to the Federation Account, Finance Minister Ngozi Okonjo-Iweala revealed yesterday.

She made the revelation before the House of Representatives ad-Hoc Committee on Subsidy Management, chaired by Farouk Lawan.

The minister told the committee that the NNPC was being investigated to determine where it derived such authority from.

When the House Committee asked her on who was the approving authority, Mrs. Okonjo-Iweala said: “This has been a practice that was kicked in rather than any authorisation. We have actually been looking into this issue to find out  who gave the authorisation. We have not been able to come up with an answer. It was a practice that was developed. I’m afraid I can’t go further than this except my colleagues will add something, I can’t give you that answer.”

Her defence was in sharp contrast with the assertion by  NNPC’s Group Managing Director Austen Oniwon on Wednesday. Oniwon told the committee that at no time had the corporation taken money out of the Federation Account for subsidy payment illegally.

He had stated before the committee that: “I only deduct what is authorised by PPPRA. Once they give me the certificate after checking with all authorised inspectors and auditors, it is that value that constitute what is deducted as per the Appropriation Act.

“I don’t go outside that, so, it is not for me to determine what is deducted from the crude’s value and before I deduct, I write to the Minister of Finance that the PPPRA has approved it for me.”

Mrs. Okonjo-Iweala, who said her ministry is not aware of any authority on which the payment by the NNPC was based, but asked  for more time from the committee to investigate the matter and report back  with her findings.

She, however, stated that the entire system required thorough clean up to free it from the huge economic wastages that was holding it back from achieving the desired development.

According to her, the government was serious about stemming corruption, adding that steps were being taken to block all areas of wastages in revenue.

She said: “We are going to be very aggressive in recovering money owed government, we will block all revenue leakages.”

On transparency in the transactions and deductions of the subsidy funds, she said: “We have two places where we interact with NNPC to know what they are deducting and remitting just to ensure transparency in their dealings.

“We always make it clear and NNPC knows this. We prefer a system whereby the deductions were not made, amount due were remitted at international oil price and we could pay them for whatever products that are imported. But things got out of hand for them when price gets higher and higher and they started to deduct these. That is where we are.”

The minister expressed worry over the non remittance of additional revenues generated by some agencies to the Federation Account, adding that measures were being taken to force those revenue generating agencies to obey the laws regarding full remittances to the Federation Account.

She said serious changes that would culminate in the diversification of the country’s revenue base, were being introduced to take the country out of its present economic quagmire.

Her words: “We are investing in non-oil sectors like agriculture, solid minerals to achieve a solid revenue diversification for the country.”

Former President of the Nigeria Bar Association (NBA), Olisa Agbakoba said Nigeria was losing about N15 trillion by the non-passage of the Petroleum Industry Bill (PIB) and the non-implementation of the KPMG audit report on the NNPC.

According to him, Nigeria could generate N15 trillion annually from the oil sector if the KPMG report on the NNPC was implemented fully and if the PIB was given accelerated passage.

The implementation of the oil and gas content law in the PIB will yield N10 trillion to the country’s coffers.

If the  recommendations of the KPMG audit report is fully implemented, will bring in a revenue of about N5 trillion.

He said the report has exposed ‘embarrassing sharp practices’ in the NNPC and has the antidote to revealing the “thieving elements” in the oil sector.

Agbakoba insisted that if the corruption in the oil sector was to be exposed and stopped, the KPMG report must be fully implemented by the Federal Government.

His words: “The KPMG report is so embarrassing and a big disgrace. A substantial part of the work of this committee had been done by the KPMG and it is very unfortunate that ever since that audit was finished, nothing was done with it. The KPMG report should be fully implemented.”

Agbakoba urged the House to demand the full implementation of the report which he said, was submitted September last year.

On subsidy, the lawyer argued that it could be said not to exist because there is no evidence of such.

“In the court, for instance, the crucial issue would have been if there was indeed a subsidy, and if there is, where is the evidence?” he said.

The former NBA president noted that it was wrong to implement the deregulation policy without considering other basic and important issues in the system, adding that such an action will not yield positive results.

He accused the Federal Government of not patronising indigenous businessmen and professionals, adding that by so doing, such multinational companies use Nigeria’s funds to develop their economies.

He said the non-enforcement of the existing laws has made the country vulnerable to exploitation by some advanced nations that have come into the country to do business.

His words: “If we want to change our country, let us implement our laws. The economy will not grow by budgeting so much money. It will grow by government empowering our people. Why does our government still bank in foreign banks? Is anything wrong with our banks? Government has to promote Nigerian businesses. We have to love ourselves first.

“Mobil Oil Ltd is still importing foreign lawyers to write simple agreements. They still bring in foreign engineers while our people are here without jobs. Can you go to the United States or Britain and do that? Of course, they will not allow you to do that.”

He said that it is better for the government to empower the people economically than by merely rolling out economic policies that would not be implemented.

Agbakoba implored the National Assembly to pass a law that would accord Nigerians preferential treatment in business transactions with the government over their foreign competitors.

However, the Director-General of the Budget Office of the Federation, Dr. Bright Okongwu, told the committee in his presentation that the much talked about Petroleum Subsidy Fund (PSF) never existed in practical terms.

His words: “The PSF is a virtual account which does not really exist. What usually happens is that subsidy monies are paid from the Federation Account before the rest is shared among the three tiers of government; any time such payments are made, records are kept and it is these records that is referred to as PSF”

The Director of Department of Petroleum Resources (DPR), Augustine Olorunshola, absolved his department of blame. He said it was only involved in monitoring and has nothing to do with the payment.
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