Fuel subsidy corruption cost Nigeria $6.8 billion in 3 years – Lawmakers

ABUJA  (Reuters) – House of Representative approved a report on Wednesday recommending senior officials be prosecuted for their part in the corrupt fuel subsidy scheme that lawmakers said cost the country $6.8 billion over three years.

The probe was prompted by nationwide protests in January when the government tried to remove the fuel subsidy, seen by economists as a massive drain on public finances, but which highlighted public anger about waste and public malfeasance.

President Goodluck Jonathan partly reinstated the subsidy a week later and his administration ordered several probes.

The parliamentary investigation covering 2009 to 2011 found that petrol marketers, including state-owned NNPC, were taking subsidy payments for fuel that did not exist or was sold abroad – siphoning billions of dollars meant to ease the pain of high fuel prices into the pockets of corrupt officials and businessmen.

“Nigerians have been suffering under the deceit of a select few that has milked us all dry in the name of fuel subsidy,” Lawan Farouk, head of the committee that carried out the probe, said.

It was its strongest report on corruption to date, although it remains to be seen whether any action will be taken.

The missing $6.8 billion equals roughly a quarter of Nigeria’s annual budget for a country in which more than half of inhabitants live below the poverty line.

The report gives the most damning evidence against officials at the fuel regulator, Petroleum Products Pricing Regulatory Agency (PPPRA), the state-oil company, Nigerian National Petroleum Corp (NNPC) and the petroleum ministry.

Such was the scale of the fraud and mismanagement that in 2011 the government paid 900 times more in subsidy than it budgeted for – putting into question the actions of the accountant general, finance ministry and even the central bank.

PROSECUTIONS URGED

The house recommended that Senator Ahmadu Ali, former chairman of the ruling PDP party and of the PPPRA when the worst excesses of the subsidy scheme were going on, be indicted.

It pledged to pass on the report’s findings to the “the President, the Senate President and all the anti-corruption Agencies of government for further action.”

No senior official has ever been successfully prosecuted for corruption in Nigeria.

Parliament’s report said the clearest mistake came when PPPRA approved a rapid expansion in the number of companies who could import fuel, from six in 2006 to 140 by 2011.

Many of these firms had no capacity to import fuel and existed simply to sponge subsidy money. Officials at NNPC, PPPRA and the oil ministry either aided the theft or failed to stop it due to incompetence, the report said.

Two American contractors arrived on an NNPC waste management contract but set-up a shop in the capital Abuja as gasoline importers and collected 1.9 billion naira ($12 million) in subsidy, without delivering a drop of fuel.

The proliferation of fake importers led to chaotic payments. On one day, the government paid subsidy of 999 million naira 128 times in a 24 hour period – a payment equal to $6.36 million almost every 10 minutes.

There was even collusion between PPPRA, NNPC and the navy: in one case they all signed documentation saying gasoline had been imported from a ship that was later found to have been in South Africa on the supposed delivery date.

Amongst the companies the house says owe money to the government was a local unit of ExxonMobil.

The fuel subsidy has yet to be tamed.

Nigeria’s 2012 budget allocation to pay fuel subsidies is 888 billion naira but this will be spent well before the end of the year, risking Africa’s second biggest economy being burdened by more debt, the central bank governor said last week.

 

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