The Governor of the Central Bank of Nigeria (CBN), Mr. Sanusi Lamido Sanusi has declared that claims by the Nigerian National Petroleum Corporation (NNPC) of spending money on kerosene subsidy are not credible. Sanusi made the declaration at the resumed Senate Investigative Public Hearing on unremitted oil revenue in Abuja on Tuesday, February 4, 2014, stressing that the sum of $20 billion was unremitted to the Federation account by the Nigerian National Petroleum Corporation (NNPC) between January 2012 and July 2013.
He said the burden of proof was now on the NNPC to substantiate that the $20 billion unremitted either did not belong to the Federation or was legally and constitutionally spent.
According to the CBN Governor, the NNPC, by paying kerosene subsidy, confessed to a number of serious infractions. Referring to the data provided by the National Bureau of Statistics (NBS), he stressed that kerosene was not a subsidized product, adding that the so-called subsidy was rent generated for the benefit of those in the kerosene business.
Producing evidence that former President Yar’Adua had issued a presidential directive eliminating subsidy payment on kerosene as from July 2009, Sanusi said the huge losses inflicted on the Federation Account have not been appropriated.
Speaking further, the CBN Governor said the burden of proof was on the NNPC to show where it obtained authorization to purchase kerosene at N150/litre from Federation funds and sell at about N40/litre, knowing full well that the product sells in the market at N170-N220/litre.
Citing records of the Nigeria Ports Authority (NPA), Sanusi said the records suggest that the NNPC imports about four to six vessels of kerosene a month. Similarly, he said based on industry sources, the Federation Account loses $100million monthly due to racketing in the industry.
He went further to list three outstanding issues that the NNPC needed to prove. These, he said, were the $12 billion out of the domestic crude sales yet to be remitted; the $6 Billion shipped on behalf of the NNPC; and the $2billion “third-party” financing as well as other claims bothering on pipelines repairs, maintenance and strategic reserves among others.
Concluding his submission, the CBN Governor proffered five recommendations for protecting the economy from what he described as unsustainable losses. He advised that the NNPC should stop collecting 440,000bbl daily as Domestic Crude and that all crude for product swaps should be terminated and crude should be exported and sold at market price.
Among others, he said, where the NNPC needs to generate cash flow to fund PMS import, such could be borrowed on the approval of the Finance Minister, for 90-120 days.
Rounding-off, he suggested that all the SAAs entered into by the Nigerian Petroleum Development Company (NPDC) should be investigated for constitutionality, adding that the tax arrangements entered into with the parties should be reviewed and all revenues due to the Federation Account collected.
“If possible, the SAAs should be terminated and the NNPC should be prohibited from entering into any SAA in the future”, Sanusi added.
He reiterated that the NNPC should account for subsidies claimed in 2010-2013 by producing documentary proof of legitimacy in addition to producing their authorization for paying kerosene subsidy after July 2009.