The figure keeps growing, 2011 subsidy payment exceeds N2 trillion

At the last count, federal payouts on petrol subsidy for 2011 will exceed N2 trillion, according to lawmakers and multiple testimonies at the ongoing House of Representatives hearing on subsidy management.

Separate from the N1.73 trillion the Central Bank of Nigeria on Tuesday admitted it cleared as of December 31, several oil importers’ claims are still not cleared, and the sum may aggregate to N500 billion, the House committee chairman, Farouk Lawan, said.

“Some are owed N10 billion, some N9 billion; by the time all these are added, it may be up to N500 billion and the total figure will be above N2 trillion,” Mr. Lawan said on Thursday.

For instance, AMG petroleum, a company owned by Risqua Mohammed, son of former Head of State, Murtala Mohammed, is yet to be paid N1.8 billion for imports done some time in 2011, Mr. Mohammed told the lawmakers.

Yet, whatever amount is reached eventually as the final figure of the claims for 2011, will be a “child’s play” when compared to what would have obtained if a secret paper that agreed on a new raise for marketers early 2011, had scaled through and won approval, a former senior official said.

Goody Egbuji, the immediate past Executive Secretary of the Petroleum Products Pricing and Regulatory Authority(PPPRA) said the memo, pushed by oil marketers, was agreed upon by the ministries of finance and petroleum, the Nigerian National Petroleum Corporation(NNPC), the Nigeria Labour Congress, the PPPRA and other relevant parties.

That happened shortly before he took over as charge at the Agency February 2011, and he was only needed to append an approval, having been approved by all others.

“I am not saying they were still negotiating; No, it was complete. They only asked me to sign and I pleaded for time to study the paper. And when I did, it was a disaster,” Mr. Egbuji said.

The agreement was promptly reversed after he informed the “authorities” of the consequences on the subsidy volume.

“I felt I needed to draw the attention of the authorities that this is what we will be paying,” he stated.

The astonishing raise in the amount of paid out as subsidy from a little above N200 billion in 2010 to more than N1 trillion in 2011, and still counting, has remained as sort of mystery that has troubles the House  hearing since its start more than a week ago.

The two ministers prominent at the sittings, Ngozi Okonjo-Iweala of finance and Diezani Allison Madueke of petroleum, have announced varied figures and reasons for the climb at previous sessions of the house.

The NNPC, PPRA and the Central Bank of Nigeria, have given dissimilar figures too.

But the position of the former head of the PPPRA, allows for a reflection on how strange bedfellows can work together to reach a contentious policy that may simultaneously undermine the economy, and still stir unrest.

Mr. Egbuji himself, described recently by the petroleum minister, Mrs. Madueke, as “unsatisfactory” in his conduct, appears an uneasy personality beholden to many considerations.

His brief tenure has been fingered as largely responsible for the extraordinary raise in the import volume and corresponding subsidy claims. Import permits under him rose from 51 to 110.

He is accused of widening imports irrespective of the country’s need, in the believe that government subsidy continues to cover whatever petrol was brought into the country.

Before the lawmakers on Thursday, he spoke in a halting tone that intermittently as would an official that was seemingly misunderstood by his subjects as well as his superiors.

Mrs. Madueke told the lawmakers she decided to fire Mr. Egbuji after he repeatedly failed to perform satisfactorily.

Many key questions put to him by the lawmakers on why the volumes suddenly rose, and who authorized them, were answered but somewhat unconvincingly.

He said there was nothing “magical” about how the subsidy payout grew in such a short while, as the volume had risen and the cost too within the period. He also claimed part of the 2011 payments may have been for 2010 deliveries.

“People make it seem as if the PPPRA simply multiplied the figures,” he said. “The whole thing is not magical. It follows from the volume, exchange rate and cost.”