Subsidy: Mark Says Cartel Exists In NNPC, DPR, Others As Senate Okays Probe

* Senators Divided Over Planned Removal



ABUJA, OCTOBER 12, (THEWILL) - The Senate on Wednesday resolved in plenary to commence the probe of the operations of the Nigeria National Petroleum Corporation (NNPC), Directorate of Petroleum Resources (DPR) and Petroleum Product Pricing Regulatory Commission (PPPRC) over fuel subsidy. This is even as senators were sharply divided over whether the controversial fuel subsidy should remain or not.

The Senate President David Mark however believes there is a cartel operating in the NNPC, DPR, PPPRA and the PPPRC.

“My personal view is that there is a cartel and whatever they do like most of you know the mafia, it is exclusive to them. 90 percent of us are not in that circle. There is need to open it up,” Senate President Mark stated. 



The resolution to investigate the fuel subsidy was sequel to a motion sponsored by Senator Bukola Saraki (PDP, Kwara) and 13 others. After a heated debate on the subsidy scheme, the Senate mandated its committee on Petroleum Resources (downstream Sector), Appropriation and Finance to investigate the scheme. In the purview of the probe the Ministry of Petroleum, Nigeria National Petroleum Corporation, Department of Petroleum resources, and the Petroleum Product Price Regulatory Agency and other agencies are detailed to provide explanations on the management of the Fuel subsidy scheme.

This comes as the Senate President adduced the failure of the fuel subsidy to its hijack by a cartel. He lamented that 90 percent of Nigerians are not beneficiaries of the subsidy. The sponsors of the resolution are seeking to launch an investigation into the current management of the fuel subsidy. 



Leading the debate, Sen. Saraki argued that the removal of fuel subsidy should be based on informed decision, stating that the implementation of the 2011 appropriation Act will surely be in troubled waters if a variation of N1.2trn arises as a result of the level of expenditure incurred on fuel subsidy so far. He noted that the processes, audit, scrutiny and value for the money in the entire subsidy management system lacks transparency and control as the costs have continued to maintain on an upward swing. 



He argued that although 20bn was set aside for subsidy on monthly basis in the Appropriation Act 2011, in August 2011 the total figure expended was N165bn of which NNPC was for N88bn and Independent marketers was for N77.7bn.

Although N240bn was budgeted for the year, so far as at end of August 2011 N931bn had been spent. This is a variance of N771bn or 700 percent above budget. 


“On The N20bn monthly allocation, N11.2bn was allocated for domestic fuel subsidy (NNPC) and N.8bn for domestic fuel subsidy (market) as stated in the Appropriation Act 2011



“That the National Assembly spends an enormous amount of energy to conclude a capital budget of 1.1trn (one trillion one hundred billion naira) for the entire country and single agency of government can incur the same amount without due approval of the National Assembly poses a grave challenge and therefore an urgent need arises to review the subsidy scheme in order to strengthen the institutional integrity, transparency and accountability of the agency.

“If nothing is done to address this situation urgently we risk the non-implementation of the 2011 budget and the hopes of Nigerians that much can be achieved this year will be a mirage,” Saraki noted.

However, while all the senators welcomed the motion, some contended that the crux of the motion dwelt on failure of subsidy scheme and as such it should be removed. Others maintained that fuel subsidy should remain emphasizing rather the need to ensure transparency and stem the constitutional breach as regards the management of the scheme.

Presiding over the debate, Senate President David Mark setting an agenda for the committee Mark said, “The crucial issue here is; how much have we have spent, we must find out? Who are the beneficiaries? Has it achieved the desired goals? They must all be taken together.”



Speaking in favour of the removal of subsidy, the Senate Leader, Ndoma Egba noted that fuel subsidy was the issue. He said, “Subsidy is a mirage which benefits a few group of Nigerians. The total concept of subsidy is opaque and lacks transparency. We must identify those who benefit from it. Whether we like it or not we will go beyond the prayers of the motion. We cannot escape it. The official position of the presidency is that fuel subsidy will be removed we are now at the end of two spectrums. If we investigate the management and find the rot, will we stop there? While I support the motion I support it because I and my people have not benefitted from the subsidy.”


Sen. Enyinnaya Abaribe (PDP) hailed the motion for its timeliness, he however expressed his reservation with the title of the motion which focused on investigation. He noted that the motion falls far short of where it needed to go. He asked, “what is very fundamental is the question; are we going to continue with subsidy or not? At the end of the day there must be an answer to this question in other to stop the haemorrhage. This goes to the National Assembly allocating funds. I fully support the motion but we must answer the question, can we continue like this? 



In the same vein, Sen. Heinken Lopkobiri, (PDP), contended that the motion speaks to the question that fuel subsidy has to go. He noted that subsidy is not achieving the reason why it was set up adding that the impact of the subsidy is not felt in his constituency.

“What is relevant for us to do at this stage is to ask whether it should go or stay. The Senate cannot sit on the fence; somehow it has to go.” He said. 



Senator James Manager on his part said “I come from the heart of the Niger Delta, without roads and of course the impact of the subsidy has no effect on the price of petroleum product in my constituency.”



Senator Paulker (PDP) who was former committee chairman of downstream sector in the sixth Senate said he had advocated for the phased removal the subsidy. He argued that the price of Crude in the international market was a major factor for the fluctuating amount budgeted for subsidy adding that it was not easy to decide on it now. The issue is whether we like it or not?” he said. 



Speaking against the removal of subsidy, Sen. Ibrahim Gobir (PDP) said the issue bothers more on the mismanagement of the fuel subsidy. He said the issue of removal should not come up. He argued that the amount of money if well managed can make our local refineries work. 



Also, Sen. Ahmed Sani Stores (CPC) also echoed that the amount of N1.5trn was enough to build new refineries. While he called for investigation, he added that if subsidy is removed inflation will set in. He however called for education of Nigerians on reasons why it should be removed. 



Sen. Kabiru Gaya (ANPP) stated that it was unconstitutional to remove money without going through the appropriate channel. We have to investigate how the money goes not to remove the subsidy. 



Sen. Abdul Ningi (PDP) while quoting section of the constitution18, (3 &4) added that the motion was not about the removal of subsidy but about the flagrant abuse of the withdrawal of monies from the federal account which breaches the provisions of the constitution.

“Who authorized the payment of the gap between 240bn and 1.5trn? Who is actually sure that 1.5trn is what is paid and all those benefitting from it should be arrested. He challenged the EFCC and ICPC to wake up to their responsibilities. 



Sen. Olusola Adeyeye (ACN) on his part questioned the constitutionality of the expenditure, charging the security agencies to wade in and arrest those that are responsible. 



Sen. Ali Ndume (PDP), called for the investigation of the scheme on grounds of constitutional breach of section 81 sub section 4.

“I don’t think that there is need to remove the subsidy. He said the mismanagement of the subsidy should be focused on,” the Senator added.