State run oil company, the Nigerian
National Petroleum Corporation, NNPC,
yesterday was unable to account for
65,000 barrels of crude oil out of an
official allocation of 445,000 barrels per
day.
At a public hearing held by the Senate
Committe investigating the management
of fuel subsidy funds by the federal
government, NNPC officials revealed
that a whopping 20% of the cost of
imported fuel represented the
component associated with importation,
the Vanguard reported.
With Nigeria’s crude selling at $97.89,
that translates to a daily $6,362,850
(N939 million daily) that is unaccounted
for.
Managing director of the NNPC group,
Mr. Austin Oniwon led senior oficials of
the corporation before the Senate
committee hearing which was chaired
by Senator Magnus Abe, head of the
Senate Committee on Petroleum,
Downstream.
The corporation attempted to give a
breakdown of how the 445,000 barrels
of oil allocated to it for use by local
refineries is utilized. Mr. Oniwon, in so
doing, disclosed that the NNPC sells
65,000 barrels of the allocation to a
foreign oil company, another 65,000
barrels is sent to an Ivory Coast refinery
Societe Ivoirienne De Refinnage.
The mother of all shockers, however, is
the fact that the NNPC could not account
for 65,000 barrels sold daily, to the tune
of N939 million.
It was also revealed that off the oil
barrels allocated to the NNPC on a daily
basis, only 170,000 barrels were refined
locally.
He said, “Warri refines 80,000 barrels;
Port Harcourt, 90,000 barrels, while
Kaduna refinery is shut down due to the
problems with the pipelines.”
The Vanguard further reported that the
NNPC swapped 60,000 barrels daily for
refined products with United Kingdom
based company Trafigura, while
another 90,000 barrels per day was
swapped for product with Duke oil, a
subsidiary of the NNPC.
On the retail price of crude, he told the
committee that the corporation before
2003 was buying crude oil locally at a
reduced price, paying between $9.50
and $22 per barrel between 1999 and
2003, but a change of policy has led the
NNPC to buy crude at the international
oil market price.
Mr. Oniwon also revealed to the
committee that subsidy has been
abused at all levels saying, “Whether at
the crude level or at the product level,
subsidy was subject to abuse, phasing it
out completely was the way forward.”
Senate members expressed concerns
that the products covered by subsidies
were left in the hands of the
beneficiaries. They said as much to Mr.
Reginald Elijah, the Executive Secretary
of the Petroleum Products Pricing
Regulatory Agency (PPPRA), however,
he said it was not within the purview of
the agency to provide security at the
tank farms where imported products
were stored even after paying
subsidies.
According to the Vanguard, Mr. Elijah,
while listing the components of the
subsidy, noted that there were various
charges, as well as the actual price of
crude in the international market.
He said the price of crude accounted for
80 percent of what becomes the pump
price of PMS, adding that the other 20
percent presented charges from
storage, finance, administration, freight
and distribution elements.
Contrary to wide spread belief that
refining petroleum product in the
country will bring about cheaper
products, the Executive Secretary of the
Petroleum Products Pricing Regulation
Agency (PPPRA), Mr. Reginal Elijah has
revealed that locally refined petrol in
Nigeria will only save N11.87k per liter.
He said the discount will come off the
N140.78K landing price of imported
products. Mr. Reginald Stanley told
Senators today, at the oil subsidy
hearing that because the NNPC buys
crude oil at the internation flat rate, the
difference in cost of subsidy between
locally produced and imported products
is marginal.
Senator Abe, chairman of the committee
concluded that the subsidy on diesel
and kerosene amounted to a sham by
oil companies.
He said, “I do not understand what talk
about deregulation because what we
have in this country is for oil companies
to come together and connive to import
AGO and sell to the public. Clearly what is
happening in the market is not
deregulation it is price fixing.”
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