Despite the raft of measures initiated in 2011 by the last administration, especially at the Petroleum Products Pricing Regulatory Agency (PPPRA) to curb infractions in the administration of the subsidy regime and reduce claims to sustainable levels, total fuel subsidy claims by oil marketing companies have risen to N1,706,734,090,992 from January 2013 to September 2015, THISDAY has exclusively gathered.
Based on a document obtained from PPPRA, the figure includes interest charges and foreign exchange differentials claimed by private oil marketers who imported a total of 31.34 billion litres of petrol during the three-year period.
Oil marketers alone account for an estimated 50 per cent of petrol imports, so if subsidy claims deducted from source by the Nigerian National Petroleum Corporation (NNPC), which accounts for the other 50 per cent are added, Nigeria has effectively been slapped with a N3 trillion subsidy bill during the period under review.
At N3 trillion in three years, Nigeria has in effect been paying N1 trillion per annum to sustain the subsidy regime.
Even more inexplicable is the fact that Nigeria is paying the same amount in 2015, when oil prices averaged $50 a barrel, as it paid in 2013 and 2014 when oil prices sold at over $100 a barrel. Oil prices started to head south in June 2014 and had plunged to over $60 a barrel by the end of last year.
The PPPRA document shows that oil marketers imported 10.217 billion litres in 2013, 12.276 billion litres in 2014, and 8.847 billion litres from January to September 2015.
During the three-year period, subsidy claims amounted to N522.665 billion in 2013, N565.175 billion in 2014, and N292.810 billion in 2015, bringing total claims on subsidy alone to N1.380 trillion, excluding interest charges and foreign exchange differentials.
Of this amount, N967.288 billion was actually paid to the marketers, while N413.363 was outstanding.
But the marketers actually claimed N553.734 billion in 2013, N829.978 billion in 2014, and N323.021 billion in 2015 for subsidy, foreign exchange differentials and interest charges, making it a total of N1.706 trillion in three years.
Of this amount, N1.063 trillion has been paid while N642.922 is outstanding to date.
The National Assembly just approved N521 billion to cover subsidy claims for the entire year, implying that there will still be an outstanding claim of N122 billion that will be carried over to the 2016 budget.
The document also showed that the computations did not include the subsidy claims that NNPC deducts from source, which usually accounts for about 50 per cent of total fuel imports into the country.
The implication is that if NNPC’s subsidy claims are added to the marketer’s claims, Nigeria will be paying an estimated N3 trillion on subsidy in three years, since the corporation does not include interest charges and foreign exchange differentials to its subsidy bill.
Even more shocking in the marketers’ claims are the rising forex differential and interest charges, especially in 2013 when the exchange rate of the naira to the dollar was stable and could not have attracted the huge forex differentials claimed by marketers.
Oil marketers also source their forex requirement for fuel imports from the official Central Bank of Nigeria (CBN) window instead of autonomous sources.
In 2014, crude oil sold for $100 a barrel until June when prices started to plunge, thus leading to the first official devaluation in December and the second around June-July 2015.
But the forex differentials claimed by the marketers rose from N1.13 billion in 2013 to a whooping N213.24 billion in 2014, before it dropped to N23.529 billion in 2015.
Similarly, interest charges on delayed payments stood at N29.934 billion in 2013 but the figure rose to N51.562 billion in 2014 and dropped to N6.681 billion in 2015.
Claims for forex differentials and interest charges combined amounted to N320.08 billion from January 2013 to September 2015.
Former Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had at the peak of the fuel crisis in April/May this year disputed the claims by the marketers on interest charges and forex differentials, insisting that the federal government did not owe them N200 billion as claimed by marketers but N131 billion.
The minister had asked an inter-agency committee that included the marketers to reconcile the claims.
However, the Major Oil Marketers Association (MOMAN) and Depot and Petroleum Products Marketers Association (DAPPMA) had argued in May that the time left before the expiration of the last administration was insufficient for the reconciliation to be concluded.
Before Reginald Stanley was appointed the PPPRA’s Executive Secretary in November 2011, fuel imports into the country was dominated by “brief case” companies, resulting in manipulation and malpractices that swelled subsidy claims to unsustainable levels of N2 trillion between 2010 and 2011.
The reports of the Aig-Imoukhuede-led committees and other legislative probes carried out under the last administration exposed how the fuel subsidy scheme was manipulated by corrupt officials of NNPC and oil marketing companies which defrauded the government of several billions of naira.
Till today, not one of the indicted marketers has been successfully prosecuted for the alleged subsidy scams.
Rising interest charges and forex differentials, coupled with the lack of transparency in the issuance of quarterly import permits by the PPPRA, have fuelled renewed concerns that the scheme is being manipulated again to enrich private pockets.