The unfolding charade of musical chairs within the Jonathan administration over the oil subsidy removal debacle unleashed by the President of the federal republic of Nigeria on new years day upon the common people of Nigeria appears on a never ending spin. This is as the house of representative committee [adhoc] charged with investigating the management of the oil subsidy funds and chaired by Hon Farouk Lawan has begun to remove the veil over the sharp practices within the oil sector managers of the Jonathan cabinet.
On Tuesday, January 17, 2012, the Petroleum Resources Minister, Mrs Allison Madueke appeared before the adhoc committee. During her exchanges with the committee, she made clear that the N1.3trillion paid out last year for oil subsidy was authorized by the finance ministry. The Petroleum made the claim repeatedly to the committee while admitting that she was not aware of the volumes of petrol consumed domestically in the country, or the volumes of refined product produced by Nigerian refineries – under her ministry’s care.
However the Finance Minister, Mrs Okonjo Iweala’s appearance before the adhoc committee today [Thursday] contradicts the Petroleum Minister’s claims as untrue. The finance minister began her presentation by clarifying the process of payment authorization laid down by the operating protocol.
She listed seven  steps in the procedure – 1) Selection and Registration of oil marketers/importers by NNPC/Petroleum Ministry – 2) Submission of selected importers to PPPRA for approval – 3) Certification of Imported products by appropriate partners [eyewitness checks at the ports] -4) Inspection of Import documents by PPPRA – 5) Checks by PPPRA – forwards to finance ministry – 6) Finance Ministry forwards to Auditor [for an audit] – 7) It is then forwarded to Accountant General for payment. The entire process is allowed 30days.
“We [finance ministry] have no role in selecting importers or marketers” added the finance minister.
The Finance Minister clarified that the actual amount paid for oil subsidy last year was not N1.3trillion but N1.43trillion – comprising of 35million liters of petrol and 10millin liters of kerosene. “Some of it is arrears. There may be more payments remaining”, she added.
“The N1.43trillion was deducted at source by the NNPC before it enters the nation’s account” stated Mrs Okonjo Iweala as she added that “we tried to change the system while I was the Finance Minister under General Obasanjo but today the subsidy is withdrawn from the source. We will change it. We have told NNPC that we would prefer that they don’t deduct at source”.
It was understood that the NNPC withdraws monies directly from the national revenue stream before it is paid into or recorded in the national accounts – without authorization or consultation from the Finance Ministry or any ministry. The current procedure is NNPC deducts money and then informs the finance ministry of the amount deducted.
Within the parastatals in the finance ministry, there appear a tin-ch of impropriety in the manner they prepared the 2011 budget allocation for oil subsidy provision. The sum of N245billion was allocated in the 2011 budget for subsidy payment and N630billion was allocated for the previous year’s budget . But N1.43trillion was paid out in subsidy for 2011.
The Director General of the Federal Budgeting Office, under questioning as to the wide discrepancy in the amount budgeted and the actual amount paid out, indicated that there were several causative factors. He pointed to the increased volumes of petrol and kerosine ‘imported’, fluctuating exchange rate, price of crude oil, and the politics of oil subsidy removal -as the reasons for the “under provision”. He explained that the Budget office was briefed on the government’s policy on oil subsidy – that the subsidy program will be scraped – for this reason they believed that oil subsidy will be done aware with by the March of 2011 – so they chose to present a budgeted amount of N245billion in the appropriation bill to the national assembly for approval.
“We would have never put N1.43trillion in the fiscal frame work for 2011. We know it would not pass” stated the Director General.
The Chairman of the adhoc committee, Hon Lawan further impressed on the Budget Chief on any available evidence from the federal government indicating that it was about to do away with oil subsidy by March 2011. The Budget Chief answered that there was no documentary evidence indicating such. “The political economy of oil subsidy did not allow for a documentary evidence” stated the Budget Chief – who could not provide answers to why the finance ministry paid the sum of N647.6billion to PPPRA marketers when only N245billion was budgeted for in the 2011 budget.