The Nigerian National Petroleum Corporation (NNPC) on Tuesday denied having in its custody a $3.5 billion subsidy fund it is managing exclusively without appropriation by the National Assembly.
Instead, the NNPC says, $1.05 billion “revolving fund” used to ensure stability in fuel supply is domiciled with the Central Bank of Nigeria.
On Tuesday, senators had a heated debate at the plenary over a report by a colleague, Biodun Olujmi (Ekiti-PDP), alleging the NNPC had a secret $3.5 billion budget recovery fund it has been drawing from to offset the rising cost of subsidy of petroleum products supply in the country.
Despite the decision by the present administration to do away with the practice by previous governments to pay for the subsidy of petroleum products supply, critics say there still exists a high subsidy component in the fuel pricing template being managed by the NNPC.
There are insinuations that the subsidy in the current pricing structure, as a result of the difference between landing cost of imported products and the N145 per litre retail price approved by the government, was as high as almost N2 trillion per annum.
The lawmakers’ concern on the issue was that, contrary to the usual practice, since 1999, for a specific amount to be appropriated in the annual budget for subsidy recovery, the present administration jettisoned that arrangement, for a subsidy recovery fund.
Besides, the lawmakers said they were worried about the transparency of the arrangement, as only the Group Managing Director of NNPC, Maikanti Baru, and the chief financial officer in charge of Finance & Accounts, Isiaka Abdulrazaq, were managing the funds without appropriation.
“This fund is too huge for two people to manage. Right now, Mr President, the $3.5 billion is managed by just two and this is too huge to be managed without appropriation, without any recourse to any known law of the land,” Mrs Olujimi noted.
However, the NNPC, in a reaction through its spokesperson, Ndu Ughamadu, denied the existence of any $3.5 billion subsidy recovery fund it was alleged to be managing without appropriation.
Rather Mr Ughamadu said what was in existence was a $1.05 billion revolving fund, which was adopted by the NNPC as one of strategies to meet the directive by the National Assembly to find all ways possible to resolve the fuel supply crisis in the country late last year.
“At the heat of the shortage of petroleum products supply towards the close of last year, the National Assembly asked the NNPC to do everything possible to stem the hiccups.
“Accordingly, the NNPC initiated the move to raise a revolving fund of $1.05 billion, since the corporation was, and still is, the sole importer and supplier of white products in the country.
“Ever since, the fund has been domiciled in the Central Bank of Nigeria (CBN). At no time was it in the custody of the NNPC,” Mr Ughamadu explained.
He said the revolving fund, dubbed the National Fuel Support Fund, is jointly managed by the NNPC, CBN, Federal Ministry of Finance, Petroleum Products Pricing Regulatory Agency (PPPRA), Office of the Accountant General of the Federation (OAGF), Department of Petroleum Resources (DPR) and the Petroleum Equalization Fund (PEF).
According to Mr. Ughamadu, the NNPC did not independently spend a dime of the fund, despite its challenge to ensure stability in the petroleum products supply in the country.
“For the avoidance of doubt, the corporation was fully aware it is only the National Assembly that has the statutory responsibility to appropriate on petroleum subsidy matters,” he said.
On the source of funding for the revolving funds as well as the accompanying terms and conditions, Mr Ughamadu said all agencies involved in its management jointly sourced for it in-country, from one of the international agencies.
He did not name the agency.
“You don’t need to disclose where you source your loans,” he said.
He was also not forthcoming with the terms and conditioned attached to the loan.
“These are legalities. The important point is that there is a loan. The other important point is that it is a revolving fund that is not meant for subsidies on fuel supplies, but for importation of petroleum products to ensure stability of supply.
“At the heat of the fuel supply crisis, the National Assembly directed the NNPC to do everything within its reach to restore normalcy. So, the corporation went out, applied and got approval to source for a revolving fund to be managed by the CBN and other agencies,” he said.
Although the NNPC spokesperson agreed the revolving fund was repayable, he did not disclose the terms and conditions of the repayment.
“The important thing is that there is the fund; there is approval for it; it’s not being managed solely by the NNPC, and it is meant to solve a given challenge, which is ensuring stability in fuel supply in the country. Without the fund, I don’t know what the country could have done if there was another round of fuel crisis,” he said.
EDITOR’S NOTE: This story has been edited to reflect the exact stance of the NNPC.