The Nigerian Extractive Industries Transparency Initiative (NEITI) on Tuesday said that payments made in respect of fuel subsidy by the Nigerian National Petroleum Corporation (NNPC) lacked transparency and due process.
Assisi Asobie, Chairman of the Board of NEITI made the statement in Abuja at an investigative hearing organised by the House of Representatives Ad hoc Committee on the Management of Fuel Subsidy.
The News Agency of Nigeria (NAN) recalls that the house had at an emergency session on January 8, constituted an ad hoc committee to investigate the fuel subsidy regime in the country.
Mr. Assobie said that subsidy payments should be made from the Central Bank of Nigeria through the Petroleum Equalisation Fund.
He said that payment could only be effected on the approval of the Accountant-General of the Federation (AGF) with the approval of the Petroleum Products Pricing Regulatory Agency (PPPRA).
“Payment should be made only on the approval of the AGF based on claims approved by PPPRA,” he said.
He accused the NNPC of deducting directly from estimated amounts from the domestic crude proceeds before remitting the rest to the federation Account.
The NEITI boss maintained that NNPC, like other petroleum product importers, should draw claims for subsidy after verification of its claims by the PPPRA and approval by the NNPC.
He said that during the audit of the oil and gas sector for 2006 and 2008, NEITI discovered inadequacies that complicated the problem of accurate determination of volume of imported petroleum products into the country.
According to him, in 2006 to 2008, the total oil lifted from the country was 8.8 million barrels, while NNPC lifted 4.8 million barrels.
He said that from 2002, NNPC lifted domestic crude at market price, providing incentive for export of domestic crude rather that domestic refining of all crude.
Mr. Asobie said that the measurement methods used by PPMC and Department of Petroleum Resources were not in line with international best practices, saying this could not be relied upon.
He said that the methods used for recording the movement of refined products through the PPMC pipeline system were outdated, paper-based and subject to error.
The chairman advised the NNPC and PPMC to strengthen their controls over product importation and distribution.