Subsidy probe: Oando sets record straight
…says it paid back N1.6 bn to FG as over_recovery
By Yemie Adeoye
Oando PLC, a major operator in Nigeria’s energy sector has said that it is a claimant in the Petrol Support Fund (PSF) scheme and not a beneficiary as widely reported.
This clarification was made on Tuesday, January 24, 2012, when its Group Chief Executive, Mr. Jubril Adewale Tinubu personally appeared before the House of Representatives’ Ad_hoc Committee investigating the subsidy scheme to clarify its participation in the controversial scheme.
Mr. Tinubu decried the blanket insinuations that all the marketers and importers of petroleum products have constituted themselves into fraudulent beneficiaries of the Petroleum Support Fund (PSF).
The Oil boss told the Hon. Lawan Farouk_led ad_hoc committee that far from the insinuations being peddled around, Nigerians are actually the beneficiaries of fuel subsidy, while the scheme only reimburses the marketers for the differential in the landing cost of fuel and the government stipulated pump price. He further averred that the claims are pursuant to enabling laws.
On the huge amount Oando has received as subsidy reimbursement, he said that as a leading player in the sector, with over 500 retail outlets across Nigeria, eight strategically located terminals (combined capacity of over 150,000 million litres) and over 1,980 trucks through partnership and invariably responsible for fuelling 1 in every 5 cars on Nigerian roads, it should not be surprising that Oando is one of the largest claimants under the PSF scheme.
However, he noted that the scheme was not without irregularities. “Over the years we have submitted several letters to the PPPRA management as to the way and manner the guidelines in our opinion were abused. Companies that were registered in 24 hours will get allocations and companies that have no assets are allowed to be involved in the scheme”.
Oando has championed the cause against ‘interest groups’ within the industry through several complaints written to Government. He said that Lowering of standards by PPPRA in part contributed to the emergence of briefcase companies.
For instance a case in point is a change in the guidelines of the PSF; in particular Part V, in 2007, which allowed companies with nothing more than a throughput agreement to operate under the PSF as against the ownership of storage facilities and distribution capacity. Oando has been a leading advocate for the removal of subsidy owing to it its burden on our resources which should have been used to improve our critical infrastructure.
Mr. Tinubu also revealed that Oando continues to abide completely by the rules that guide the scheme. He stated that “the Petroleum Support Fund expected that there would be under_recovery. For example, when the landing cost was higher than the pump price, the government owed us money, which is paid as subsidy.
When there is over_recovery, that is, when the landing cost is less than the pump price, we paid back to the government. For example, during the Yar’Adua administration, when the petrol price was N65 and the crude oil price dropped to $50 per barrel, the marketers paid back to the fund. I remember that Oando paid back N1.6billion back to the Federal Government.”
Oando PLC is the largest publicly quoted energy company in Nigeria and sub_Saharan Africa’s largest indigenous energy company, based on revenues, with primary listing on the Nigerian Stock Exchange with a secondary listing on the Johannesburg Stock Exchange.