SUBSIDY FRAUD FIRMS GET FRESH FG OIL CONTRACTS – REPORT
One of the subsidy protest in Edo State
Nigeria relies on fuel imports because it lacks the capacity to refine its own crude oil, and government tried to remove petrol subsidies last year but was forced to partially reinstate them after a wave of strikes and protests.
A House of Representatives investigation later found the subsidy administration had facilitated more than N1 trillion of corruption over three years, with half the approved fuel imports never arriving or being sold to neighbouring countries.
The list of petrol importers compiled by Reuters using information from five sources showed around 3.4 million tonnes was allocated for the third quarter to more than 40 companies, expanded from 30 last year.
The list showed four companies that failed to cooperate with the House of Representatives probe were named as suppliers. These were Nepal, Fresh Synergy, Ibafon and Techno, which the parliamentary report showed collectively claimed for subsidies of nearly N9.7 billion.
Nepal’s website lists its CEO as Barrister Ngozi Ekeoma who has twice been arraigned by the Economic and Financial Crimes Commission (EFCC) in relation to fraudulent subsidy payments. She has pleaded not guilty to the charges. Phone calls to her company went unanswered.
At least three other companies awarded third quarter allocations - Masters, Matrix and MRS - were also ordered to account for their shipments or refund falsely claimed subsidy money in another government report released last June.
Matrix provided documents to Reuters showing it had since been exonerated by Nigerian authorities.
The other firms declined or did not respond to repeated requests for comment by email and telephone, Reuters reported. It was not clear if these companies had since repaid their debts or been cleared.
The Finance Ministry would not comment on specific firms but provided a document which showed that in total only N14 billion out of N232 billion in questionable claims, or around 6 per cent, had so far been refunded.
The ministry has previously said importers will not be delisted so long as they paid back money owed to the government.
Nigerian authorities have taken some measures to improve controls,” said Marc Gueniat of Swiss NGO The Berne Declaration which campaigns against corruption in the developing world.
“But the fact that certain companies accused of participating in the fraud are continuing to benefit from allocations raises the question of whether the political will to change is sincere,” he added, quoted by Reuters.
Absent from the list of petrol importers are large trading houses like Vitol, Mercuria and Trafigura which have historically played an important role in supplying fuels to Nigeria but have been replaced by local firms.
However, some still provide fuels indirectly to the country or via crude-for-product swap deals.
The government has arraigned some fuel marketers and industry sources say the Petroleum Products Pricing Regulatory Agency (PPPRA) has introduced measures designed to limit abuse of the system.
Officials at PPPRA’s public affairs department did not respond to Daily Trust’s request for comment on the Reuters report.
Industry sources suggested the rise in the number of importers may have been partly an attempt to stave off future supply problems, as some importers struggled to get bank loans.
“What they are doing now is giving smaller allocations to more and more companies because of the credit situation. The number is creeping higher and it could be a cause for concern if it continues,” said Dolapo Oni, oil and gas analyst at Ecobank.
The supply list showed Nigerian energy firm Oando PLC won the biggest allocation of 135,000 tonnes while Total and Folawiyo, in which global commodity merchant Glencore is a minority stakeholder, won 90,000 tonnes each.
Petrol subsidies soaked up N1 trillion last year, equivalent to 20 per cent of the federal budget and exceeding a budgeted N888 billion.
For this year, the Federal Government budgeted N971.138 billion to pay subsidies but PPPRA executive secretary Mr. Reginald Stanley was quoted to have said last month that no marketer had been paid for this year’s supplies yet.
The Finance Ministry had been paying backlog of subsidy claims for supplies made last year, and a total of N240 billion “verified claims” had been settled by July 15.
“There has been no payment for any marketer importing petroleum products in 2013. This is caused by delays in the payment of subsidy claims by the Federal Ministry of Finance, resulting in interest as foreign exchange differential claims request by marketers,” Stanley had said while briefing a Senate committee in Abuja on June 5
.
A House of Representatives investigation later found the subsidy administration had facilitated more than N1 trillion of corruption over three years, with half the approved fuel imports never arriving or being sold to neighbouring countries.
The list of petrol importers compiled by Reuters using information from five sources showed around 3.4 million tonnes was allocated for the third quarter to more than 40 companies, expanded from 30 last year.
The list showed four companies that failed to cooperate with the House of Representatives probe were named as suppliers. These were Nepal, Fresh Synergy, Ibafon and Techno, which the parliamentary report showed collectively claimed for subsidies of nearly N9.7 billion.
Nepal’s website lists its CEO as Barrister Ngozi Ekeoma who has twice been arraigned by the Economic and Financial Crimes Commission (EFCC) in relation to fraudulent subsidy payments. She has pleaded not guilty to the charges. Phone calls to her company went unanswered.
At least three other companies awarded third quarter allocations - Masters, Matrix and MRS - were also ordered to account for their shipments or refund falsely claimed subsidy money in another government report released last June.
Matrix provided documents to Reuters showing it had since been exonerated by Nigerian authorities.
The other firms declined or did not respond to repeated requests for comment by email and telephone, Reuters reported. It was not clear if these companies had since repaid their debts or been cleared.
The Finance Ministry would not comment on specific firms but provided a document which showed that in total only N14 billion out of N232 billion in questionable claims, or around 6 per cent, had so far been refunded.
The ministry has previously said importers will not be delisted so long as they paid back money owed to the government.
Nigerian authorities have taken some measures to improve controls,” said Marc Gueniat of Swiss NGO The Berne Declaration which campaigns against corruption in the developing world.
“But the fact that certain companies accused of participating in the fraud are continuing to benefit from allocations raises the question of whether the political will to change is sincere,” he added, quoted by Reuters.
Absent from the list of petrol importers are large trading houses like Vitol, Mercuria and Trafigura which have historically played an important role in supplying fuels to Nigeria but have been replaced by local firms.
However, some still provide fuels indirectly to the country or via crude-for-product swap deals.
The government has arraigned some fuel marketers and industry sources say the Petroleum Products Pricing Regulatory Agency (PPPRA) has introduced measures designed to limit abuse of the system.
Officials at PPPRA’s public affairs department did not respond to Daily Trust’s request for comment on the Reuters report.
Industry sources suggested the rise in the number of importers may have been partly an attempt to stave off future supply problems, as some importers struggled to get bank loans.
“What they are doing now is giving smaller allocations to more and more companies because of the credit situation. The number is creeping higher and it could be a cause for concern if it continues,” said Dolapo Oni, oil and gas analyst at Ecobank.
The supply list showed Nigerian energy firm Oando PLC won the biggest allocation of 135,000 tonnes while Total and Folawiyo, in which global commodity merchant Glencore is a minority stakeholder, won 90,000 tonnes each.
Petrol subsidies soaked up N1 trillion last year, equivalent to 20 per cent of the federal budget and exceeding a budgeted N888 billion.
For this year, the Federal Government budgeted N971.138 billion to pay subsidies but PPPRA executive secretary Mr. Reginald Stanley was quoted to have said last month that no marketer had been paid for this year’s supplies yet.
The Finance Ministry had been paying backlog of subsidy claims for supplies made last year, and a total of N240 billion “verified claims” had been settled by July 15.
“There has been no payment for any marketer importing petroleum products in 2013. This is caused by delays in the payment of subsidy claims by the Federal Ministry of Finance, resulting in interest as foreign exchange differential claims request by marketers,” Stanley had said while briefing a Senate committee in Abuja on June 5
.
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