Senate to investigate N9.3tr spent on petrol subsidy in 30 months
The 10th Senate began full business yesterday by announcing a plan to investigate the controversies surrounding petrol subsidy payments.
The probe will be carried out by an ad hoc committee on downstream oil sector which is to be constituted.
It summoned Nigerian National Petroleum Company Limited (NNPCL) Group Chief Executive Officer (GCEO) Mele Kyari to brief it on Federal Government’s under-recoveries.
The Senate said that the Adhoc Committee on Petroleum (Downstream), should, when constituted, constantly monitor, scrutinise and approve Midstream and Downstream spending of the NNPCL.
It urged the NNPCL, in conjunction with some IOCs, to form three different consortia and build three refineries to stabilise the nation’s oil market, give value to the Naira and stabilise the economy.
Also yesterday, Kyari speaking at another forum in Abuja, said the oil giant spent N400 billion naira monthly paying petrol subsidy.
The Senate also called for a living wage for workers as a way of cushioning the effects of subsidy removal.
These resolutions were sequel to the consideration of a motion by Senator Ndubueze Chinwuba.
The motion was titled “Need to Investigate the controversial huge expenditure on Premium Motor Spirit (PMS) under the subsidy/under recovery regime by the Nigerian National Petroleum Company Limited (NNPCL).”
In his lead debate, Ndubueze said the step taken by President Tinubu on subsidy was commendable.
He submitted that while within 10 years (2006 – 2015), the Federal Government through NNPCL, claimed N170 billion as under-recovery, it expended N843.121 billion on under-recovery between January 2018 and January 2019.
The lawmaker said: “Very worrisome is the expenses made on subsidy/under recovery by NNPCL during the period under review, particularly from January 2021 to June 2023 when N9.3 trillion was claimed to have been spent.
“The available records show that in 2021, N1.42 trillion was expended, in 2022 N4.3trillion and in the first six months of 2023, N3.6 trillion, totalling, N9.3trillion.”
Many of the Senators frowned at the bogus expenses made during the subsidy regime by NNPCL and supported all the prayers contained in the motion.
The Senate accordingly resolved that the committees on Petroleum (Downstream), Petroleum (Upstream) and Finance, when constituted, should investigate subsidy payments and under-recovery regime.
Ruling on the motion, Senate President Godswill Akpabio, said: “We commend President Tinubu for the decision to remove fuel subsidy. We are excited about the courage displayed by the President. It was one decision that had to be taken and we are happy that it was taken during the lifetime of the 10th Senate.
“We are also looking forward to the implementation of the palliatives.”
NNPCL ‘spent N400b months’
The NNPCL yesterday extolled President Bola Tinubu for removing subsidy, saying the policy was costing the Federal Government N400 billion monthly.
It described the policy as the “worst challenge” that faced Nigeria before its removal 44 days ago.
“The biggest trouble we had in this country in the last 45 years was the issue of subsidy on PMS (Premium Motor Spirit). It takes out close to N400 billion every month to smoke cigarettes,” said Kyari at the ongoing Nigeria Oil and Gas (NOG) conference in Abuja.
In the Senate yesterday, members also hailed Tinubu for ending the subsidy regime but resolved to probe the N9.3trillion spent on it (subsidy) in the last 30 months and under-recovery by the NNPCL.
Kyari, who delivered a paper on “ Redefining Nigeria’s Energy Landscape for a Sustainable Energy Future,” stated that subsidy removal and the floating of the Naira were already improving Nigeria’s rating.
He also spoke on the plan by the NNPCL to go public, sell off some of its assets and improve gas availability for local and international consumption.
He said: “We are happy today because of the decision of Mr President to remove subsidy. We have walked away from the worst challenge we had as a country.
“And we are already seeing the value. Our national rating is changing. The removal of subsidy is complemented by the FX stability that we have now.”
Kyari explained that with subsidy removal, NNPC would, like any other firm interested in petrol importation, source FOREX from the open market. “NNPCL will no longer have access to easy dollars. If we have US Dollars, we convert it at the same market as any one of you here. There is really no advantage anymore for us. It is an open market that we have now. It is a competition to deliver value by everyone.
“ Therefore, we see this market changing for the good of all of us and the nation.”
He also restated that most of the International Oil Companies (IOCs) in the country were divesting from onshore oil production because of insecurity.
Assuring the stakeholders that the government was addressing insecurity, especially around oil facilities, the NNPCL boss said: “ I am aware that a lot of intervention is going on and the results will be seen very soon.”
Kyari advised indigenous investors to tap into the opportunity created by the IOCs by going into onshore oil production.
He also bemoaned a situation where the NNPCL hardly gets paid for petrol and gas supplies.
But the GCEO added that the NNPCL would announce its Initial Public Offer (IPO) after being quoted on the Nigeria Stock Exchange.
Blaming the delay of projects in the oil and gas industry on late Appropriation, Kyari said that an enabling fiscal environment was needed for Nigeria to deliver on its attractive gas pipeline projects.
He said that presently, the NLNG was undersupplying gas to its local and international users.
Kyari announced that NNPCL was expanding the NLNG with train seven, and doubling its capacity.
He said: “We are proceeding with our major gas infrastructure, gas pipeline project. When you do a pipeline from Brass all the way to West African countries, into Morocco and beyond, you are creating prosperity and promoting integration.
“But mind you, security and safety means that you must look around your neighbours. And that is already happening around the world.”
Kyari explained that NNPCL was not obstructing the divestment of Shell Petroleum Development Company from onshore assets.
“NNPC is not blocking any deal. We are in competition First, the Shell divestment and I am sure the Shell guys are here they know NNPC didn’t stop it.
“We will like to see more private sector groups come in. There are assets we will not walk into. As a matter of fact, you are going to see assets getting out of our (NNPCL) hands.”.
