EFCC Petitioned To Investigate NNPC/PPPRA Manipulation of 2011 Budget: Only 62.9% of N1.4 Trillion Paid As Subsidy, Falana Alleges

Femi Falana at the Lagos protest

Ibrahim Lamorde, the Acting Chairman of the Economic and Financial Crimes Commission (EFCC), yesterday received the first test of his commitment to fighting corruption in the form of a petition to investigate massive violations of the 2011 Appropriation Act by the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA).

In the petition, dated 5 January 2012, Mr. Femi Falana said that while N240 billion was voted for fuel subsidy in that budget, the PPPRA actually paid out N1.4 trillion, out of which the NNPC paid only 62.9% as subsidy on PMS.

Among the other claims in the complaint, Mr. Falana alleged that:

• Whereas the sums of N421 billion and N673 billion were paid as fuel subsidy for 2009 and 2010 respectively the NNPC was paid over N400 billion as arrears of subsidy claims for 2009 and 2010;

• Demurrage payments made by NNPC translated to an average of $6.6 million per month;

• Variations between NNPC claims and verifications by PPPRA led to over deductions of several billions of Naira;

• Professional fees of billions of Naira were paid to two private Auditors for covering up the perpetrators in the fuel importation scam;

• Exchange rates used by NNPC were lower than the average exchange rates approved by the Central Bank of Nigeria; and

• Contracts for fuel importation were awarded to companies/ suppliers that were not in the approved prequalification list.

Mr. Falana’s petition comes as Nigerians, tired of compromised governments and government officials, prepare for possibly debilitating strikes, called by the Labour Movement to start on Monday, over the government’s New Year Day’s abrupt withdrawal of subsidies on petroleum products.

Mr. Lamorde, who was appointed following the quiet dismissal of former chairperson Farida Waziri in November 2011, pledged to bring real combat to corruption, a chance to open Pandora’s Box he now gets with Mr. Falana’s petition. 

[Full text of the petition:]

DEMAND FOR INVESTIGATION INTO THE GRAND FRAUD IN THE IMPORTATION OF PMS IN 2011 BY PPPRA.

In the Appropriation Act 2011 the sum of N240 billion was voted for fuel subsidy. But in utter violation of the Appropriation Act 2011 the sum of N1.4 trillion was paid by the Petroleum Products Pricing Regulatory Agency for fuel subsidy from January – December 2011.

I have however discovered that the Nigerian National Petroleum Corporation (NNPC) which collected 50% of the fund and other importers of petroleum products engaged in unprecedented fraud which was committed in the following manner:

i. The fuel subsidy of N240 billion was illegally increased to N1.4 trillion without a supplementary appropriation bill passed by the National Assembly.

ii. Out of the said sum of N1.4 trillion only 62.9% was paid as subsidy on PMS in 2011.

iii. Whereas the sums of N421 billion and N673 billion were paid as fuel subsidy for 2009 and 2010 respectively the NNPC was paid over N400 billion as arrears of subsidy claims for 2009 and 2010.

iv. Demurrage payments made by NNPC translated to an average of $6.6 million per month.

v. Variations between NNPC claims and verifications by PPPRA led to over deductions of several billions of Naira.

vi. Professional fees of billions of Naira were paid to two private Auditors for covering up the perpetrators in the fuel importation scam.

vii. Exchange rates used by NNPC were lower than the average exchange rates approved by the Central Bank of Nigeria .

viii. Contracts for fuel importation were awarded to companies / suppliers that were not in the approved prequalification list.

ix. As a result of late settlement of invoices from suppliers NNPC paid interest rates running into millions of dollars.

x. Failure of PPPRA to regulate the supply and distribution of petroleum products.

xi. Failure of PPPRA to prevent collusion and restrictive trade practices harmful to the petroleum sector.

In the light of the foregoing, we demand for the investigation and prosecution of the officials of the PPPRA and NNPC as well as their collaborators who defrauded the nation to the tune of several billions of Naira.

Yours sincerely,