Following the oil marketers’ threat of back-out
from collaboration with government on fuel importation in the country
over unpaid subsidy claims, President Umar Yar’Adua has approved the
release of N54.6 billion to fuel marketers.
However, in a statement released last week the
Major Oil Marketers Association of Nigeria said the government
actually owed $900 million and was six months late in making the
payment.
Meanwhile a probe by Economic ad Financial Crimes
Commission (EFCC) on the disbursement of subsidies on imported fuel
uncovered fraud involving the illegal payment of Naira 64.07 billion
in subsidies to fuel importers.
Some of the marketers alleged to have bee involved
in the scam are mainly those that did not meet the facility
requirements for participation in the lucrative rackets.
The Petroleum Support Fund (PSF) managed by the
Petroleum Products Pricing Regulatory Agency (PPPRA).
The government pays domestic fuel marketers the
difference between the cost of imported gasoline and the regulated
retail price for fuel, currently N70/liter.
Minister of State for Finance, Mr. Remi Babalola,
said in Abuja that the money was released following the verification
by government auditors on the actual subsidy cost on the fuel imported
by marketers.
In its statement, the oil marketers group said the
government had promised to make the payment over six months ago. It
said the delay had created problems for marketers, who borrow money to
cover their costs and must pay interest on those loans.
"With the recent financial crisis everywhere,
interest rates have been on the increase," the group said.
The group noted that domestic interest rates are
"not less than 25 percent" but said the government uses the
considerably lower London Inter-Bank Offered Rate to calculate
marketers’ costs.
Last month, the government said it had spent over
N800 billion on fuel subsidies so far this year. It launched a probe
into claims of fraud in the disbursement of the subsidy and suspended
the head of the PPPR, Dr Oluwole Oluleye.
Nigeria imports nearly 100 percent of its petroleum
products needs as the four state-owned oil refineries are producing
far below their capacity due to technical, security and other reasons.
Meanwhile, a probe by EFCC on the disbursement of
subsidies on imported fuel by the state fuel pricing regulatory agency
has uncovered fraud involving the illegal payment of N64.07 billion in
subsidies to fuel importers.
Three top officials of the PPPRA have been
suspended following the discovery of the fraud by the Commission.
The Na64.07 billion was part of funds diverted from
the money the government allocated to the Petroleum Support Fund (PSF)--a
pool of funds budgeted by the government to pay for subsidies in order
to keep domestic prices of fuel low, the newspaper reported.
"We have uncovered two types of scandal in the
PPPRA. The first has to do with the payment of N64.07 billion to five
oil firms that ought not to benefit from the intervention fund in
2006," a report quoted a government source as saying.
"By our findings, 28 companies applied for the PSF
in 2006 but only 18 has so far benefited. And of the 18, the five oil
firms which got the Naira 64.07 billion subsidy either did not have
branded outlets or failed to meet the conditions for benefiting from
the fund," the report said.
The EFCC is said to have submitted an interim
report to President Umaru Yar’Adua on its findings.
Last month, Yar’Adua, who has pledged zero
tolerance on corruption in the oil sector, ordered the EFCC to probe
the disbursement of over Na800 billion as subsidies on imported
petroleum products by the PPPRA.
The president also directed the suspension of the
head of the PPPRA Oluwole Oluloye pending completion of the
investigation of his office.
The government has recently expressed worries over
the continued increase in the costs of subsidizing imported petrol and
kerosene, which is funded through contribution from the federal
government and the state governments into the PSF.
Nigeria has been dipping into its extra oil income
to pay for the subsidy in order to keep the domestic fuel prices low.
Separately, the Central Bank of Nigeria also began
investigating commercial banks on the utilization of foreign exchange
provided by the government to fund importation of petroleum products
so far this year.
Minister of State for Petroleum, Mr. Odein
Ajumogobia, said in August that the government plans to phase out fuel
subsidies beginning January 2009, which would result in an increase in
fuel prices.
But labor groups, including oil unions, said they
would resist the government plan to withdraw fuel subsidy.
