- Title: NIGERIA: Senate orders audit of oil billions unaccounted for
- Date: 14th February 2014
- Summary: BAYELSA, NIGERIA (FILE) (REUTERS) VARIOUS OIL INSTALLATIONS RESIDENTS LOOKING ON/ JERRY CANS FILLED WITH CRUDE OIL VARIOUS OF CONTAINERS FILLED WITH CRUDE OIL
- Embargoed: 1st March 2014 12:00
- Location: Nigeria
- Country: Nigeria
- Topics: Business,Industry,Energy
- Reuters ID: LVA3GRSWS6RSQADN788W1JLXKNB4
- Story Text: Nigerian lawmakers investigating a claim that the state oil company has failed to remit 20 billion US dollars in oil revenues ordered a forensic audit of fuel-subsidy payments on Thursday (February 13) to find out where the money has gone.
Central Bank Governor, Lamido Sanusi wrote a letter last September to President, Goodluck Jonathan saying almost 50 billion US dollars in revenues from oil exports from January 2012 to July 2013 had not been remitted to the federation account, in a clear violation of the law.
He later lowered the estimate to 20 billion US dollars in his testimony to a Senate committee investigating the case.
"All that we have said as Central Bank and I think there is no disagreement, is that NNPC (Nigerian National Petroleum Corporation) shipped 67 billion dollars worth of crude, they have repatriated or we have established that 47 billion dollars has come back to the federation. There is a 20 billion dollars that has not come back. The burden of proof is on NNPC but we have made suggestions that will question some of those explanations and we believe that even some of that which has gone to NPDC does not belong to NPDC (Nigerian Petroleum Development Company) but to the federation," the Central Bank governor said.
The governor's suspicion of massive fraud at the heart of one of the world's most opaque state oil companies has put pressure on Jonathan a year ahead of elections, when he is already reeling from a failure to quell a northern Islamist insurgency.
It has also spooked debt investors worried about government squandering of oil revenues during election cycles.
The biggest gap in accounting is for 8.5 billion US dollars the NNPC (Nigerian National Petroleum Corporation) says it retained from revenues during the 19-month period to cover subsidies it was owed on importing gasoline and kerosene.
NNPC says it buys kerosene at 150 naira a litre and sells it to suppliers at 50 naira per litre. But the retail rate is still 150 naira, which Sanusi said showed the subsidy was just "rent generated for the benefit of those in the kerosene business".
He also says a directive in 2009 by then President Umaru Yar'Adua, who died in May 2010, scrapped kerosene subsidies.
Petroleum Minister and NNPC Chair Diezani Alison-Madueke told the committee they continued to subsidise kerosene despite the presidential order to prevent hardship for Nigerians.
NNPC has been criticised in several investigations in recent years but consistently denies any wrongdoing.
Amongst other things that need explaining are the fact subsidies were being paid out on 54 million litres of fuel per day, even though Nigeria only consumes 40 million litres per day; a discrepancy that lay behind a previous subsidy scam.
Sanusi also says that some of the 6 billion US dollars that NNPC's producing arm, NPDC, earned during the period should have been submitted to government accounts. Instead, it has been funnelled into private hands through special deals given to oil companies.
Lagos based lawyer, Onyebuchi Ememanka says the situation raises questions about the integrity of public office holders in Nigeria and raises concern over political interference.
"What kind of economy do we run that 20 billion dollars gets missing in one fell swoop? That's on the one part. On the second part is, it also raises issues about the integrity and personality of the people who occupy strategic positions, the office of the CBN governor is a very strategic one, his words are taken seriously by Nigerians, economic watchers and the international community so he must be very very sure of his facts before he brings them to the public," he said.
"Indeed, there has been accusations that Sanusi is carrying out a political agenda to create the impression that the presidency is confused about how to manage resources. Indeed, there were insinuations that the presidency demanded that Sanusi should resign but Sanusi insisted that he will not resign until his tenure expires by June so there's a lot of political mix in the entire story," he added.
The head of the committee told the finance ministry to set up an independent audit of subsidy claims approved for NNPC by the petroleum regulator PPPRA, which came under scrutiny in 2012 over a separate multi-billion-dollar fuel subsidy fraud involving private companies.
Finance Minister Ngozi Okonjo-Iweala agreed to organise a forensic audit.
"These are extraordinary times and a lot of accusations are been made in this country and the only way Nigerians are going to be satisfied is to have an independent opinion on this amount," she told the committee.
"No government can afford to let this continue so we are surprised that even the president is not worried you know about this diversion of this revenue that is supposed to come to the federation account but ending up in some individual or private pocket" said Auwal Musa Rasfanjani, spokesman for Transparency International, Nigeria.
Although Nigeria's economy is projected to continue growing, poverty is likely to get worse as the gap between rich and poor in Africa's largest oil producer continues to widen.
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