The House of Representatives at plenary resolved to set up an Ad-hoc committee to investigate the petroleum products subsidy regime in Nigeria from 2017 to 2021, by the Nigerian National Petroleum Company (NNPC).
The committee was constituted, sequel to the adoption of a motion sponsored by Lawmaker, Hon. Sergius Ose Ogun (PDP-Edo), on the floor of the House, on Wednesday in Abuja.
In his motion, Ogun said he was informed that as of 2002, the NNPC purchased crude oil at international market prices, which stood at 445,000 barrels per day.
He added that it was to enable it provide petroleum products for local consumption, saying he was concerned that as of 2002, the installed capacity of Nigeria’s local refineries stood at 445,000 barrels per day.
He, however, said their capacity utilisation began to nosedive, and eventually fell completely to zero, due to the ineffectiveness and alleged corruption of critical stakeholders in the value chain.
The lawmaker said that due to the decline in the production capacity of the refineries, NNPC found it more convenient to export domestic crude, in exchange for petroleum products on a trade by barter basis, maintaining that the component cost in petroleum products subsidy value chain claim by the NNPC, is highly over-bloated.
He expressed concerns that the consumption rate of petrol is 40 million to 45 million litres per day, adding that the NNPC uses 65 million to 100 million litres per day to determine subsidy as discoverable from NNPC’s monthly reports to the Federal Accounts Allocation Committee (FAAC).
Ogun said records showed that as of 2021, over seven billion dollars of 120 million barrels was diverted, alleging that there was evidence that subsidy amounts were being duplicated.
In his words: “Also aware that component costs in the petroleum products subsidy value chain claimed by the NNPC Limited is highly over-bloated, while the transfer pump price per litre used by the NNPC Limited in relation to PPMC is underquoted as N123-N128 instead of N162-N165 and this fraudulent under-reporting of N37-N39 per litre translates into over N70 billion a month or N840 billion a year.
“Also worried that the subsidy regime has been unscrupulously used by the NNPC and other critical stakeholders to subvert the nation’s crude oil revenue to the tune of over $10 billion with records showing that as at 2021, over $7 billion in over 120 million barrels have been so diverted.
The lawmaker added that subsidy was charged against petroleum product sales in the books of NNPC, as well as against crude oil revenue in the books of NAPIMS, to the tune of more than N2 trillion.
Adopting the motion, Speaker Gbajabiamila said that the ad hoc committee, whose members will be announced at plenary, Thursday, will be given eight weeks to carry out the assignment and report back to the House for further legislative action.