Tackling Corruption In Nigeria’s Petrol Transportation System
- Jul 20, 2019
In this report, CHIKA IZUORA looks at mounting campaigns by groups seeking more investigations on the management of the Petroleum Equalisation Fund.
The federal government’s determination to sanitise the oil industry and in particular the downstream subsector through deregulation has opened discourse on the future of the Petroleum Equalisation Fund, PEF.
In the year 2012, the administration of President Goodluck Jonathan sent a Petroleum Industries Bill (PIB) to the Nigerian National Assembly for its consideration. The bill, which was based on the report of a 2000 Oil and Gas Implementation Committee (OGIC) set up by the federal government, dwells on a reform legislation which considers explicit replacement of the existing myriad of legislative and administrative instruments in the Nigerian oil industry with one omnibus legislation.
The main essence of the bill is to promote the emergence of an open and transparent oil industry for the benefit of the majority of the citizens.
The reform is based on the evidence of some defects in the practices applicable in the industry. Although section 100 (1) of the PIB makes it explicit that PEF will continue to exist, section 100 (4) states that the PEF would be scrapped without any further legislation whenever “the government decides that petroleum product markets have been effectively deregulated.”
At this point, the Minister of Petroleum “shall take the required actions to ensure that the Equalization Fund ceases to exist and its assets and liabilities transferred to the government to be controlled and managed by the Ministry and at such time the provisions of the sections of the Act shall stand repealed”.
However, in view of the fact that PEF is one of the channels through which government subsidises the prices of petroleum products in Nigeria, it is not surprising that its fate is now entwined with the ongoing contentious and divisive debate over the removal of subsidy on petroleum products in Nigeria.
Some stakeholders have based their views on the ground that rather than promote uniformity in the prices of petroleum products across the country, the PEF along with wider government subsidies on petroleum products have created incentives for both system operatives and regulators to exploit the petroleum products market in order to earn arbitrage profits.
There is also strong claim that the PEF has simply become one of the inefficient channels of subsidising the price of petroleum products in Nigeria. Proponents of maintaining the status quo argue that it represents the only tangible benefit of oil wealth for most Nigerians and that the idea of calling for a full deregulation of the petroleum industry in Nigeria would bring disruptions in the system.
For instance, the Independent Petroleum Marketers Association of Nigeria (IPMAN) raised serious opposition to the planned abolition of PEF arguing that “it will create imbalance in the country. Nigerians, especially in the northern part of the country, will pay more for the products than their counterparts in the South.”
Similarly, a socio-cultural group, United for a Better Nigeria (UFBN), rejected the planned scrapping of PEF on the grounds that it would cause more hardship for Nigerians.
The chairman of the group, Olumide Mayowa, said at a forum organised by oil marketers in Abuja that if the government decided to get rid of the services of PEF, it would affect the price of petroleum products, as well as that of foodstuffs and other items used by average Nigerians.
According to Mayowa, PEF had been of immense assistance to all Nigerians. He said that the transport and bridging claims paid to transporters for the movement of products across the country has made the cost of petroleum products almost the same no matter the location.
He added that a removal of such bridging measures would mean that marketers would have to factor such products’ transportation costs into pump prices of products at service stations.
“If you scrap PEF, it means total deregulation and transporters will have no choice but to transfer the cost of the movement of products to the consumers and that will be unfortunate. I tell you that the least a litre of petrol will cost when total deregulation is implemented will be N250 per litre in cities like Abuja and N350 per litre for Maiduguri and other towns in the far North,” Mayowa said.
The Petroleum Equalization Fund is a fund set-up by the Nigerian government in 1975 “for the reimbursement of petroleum marketing companies for any losses suffered by them arising from the sale of petroleum products at uniform prices throughout Nigeria”.
The PEF is managed by a board known as the Petroleum Equalization Fund Management Board and is financed from both the budgetary allocation by the federal government and the net surplus revenue recovered from oil marketing companies. The net surplus revenue is “calculated by reference to the volume of the affected products sold on zonal basis and to the amount by which the uniform prices at which the products were sold exceeded, or were less than, the prices of those products prevailing immediately before the fixing of the uniform prices of the products”.
Despite the good intentions of setting up the Fund, allegations of corruption has crept into the operations of PEF leading to the discovery of huge monies being diverted by some key officers.
Some of PEF officials are being quizzed over their abuse of office and theft of public funds.
The probe of the agency by the Special Presidential Investigative Panel (SPIP) has led to the discovering of private accounts operated by two managers with over N3 billion which have been frozen.
SPIP chairman, Okoi Obono-Obla, who confirmed the development explained that the accounts were frozen over alleged cases of money laundering, corrupt enrichment and acquisition of wealth beyond their legitimate earnings.
According to Obono-Obla, the cases were being investigated by the panel to uncovered billions of naira believed to be in the private accounts of the civil servants.
He named two of the indicted PEF officials as Dr. Goddy Nnadi, general manager Corporate Services Department and the general manager (Operations), Hajiya Aisha Usman, who had monies running into billions in multiple private bank accounts.
He said: “After painstaking perusal of the statements of accounts of the suspects and witnesses and a critical appraisal of the documents so far retrieved during the course of our investigation, the suspect, Dr. Goddy Nnadi, a civil servant attached to PEF as general manager (Corporate Services), operates corporate accounts with Galbani and Greatwood Hotels, Owerri, Imo State.
“That the total inflow of money into the suspect’s accounts in various institutions amounts to N22 billion,” he said.
Obono-Obla added that there were also foreign currencies discovered from the suspect’s accounts, adding that the panel would approach the court to seek for the forfeiture of the money to the federal government.
The panel chairman said that most of the inflows came into the suspect’s account from huge transactions deposited into his personal accounts.
The Human and Environmental Development Agenda (HEDA), an anti-corruption non-governmental organisation, is mobilising public support for federal government anti-corruption fight especially in the oil industry calling for immediate the prosecution of the accused and all those involved in the PEF corrupt practices.
The chairman of HEDA, Mr. Olanrewaju Suraju, said the arrest of Nnadi was just a tip of the iceberg in the gory tales of corruption at the PEF, stressing that the presidential panel’s investigation had revealed more than three accounts in Standard Chartered Bank Limited where Nnadi has nearly N2 billion, which he noted was beyond his legitimate means.
He also said that the accused had huge amounts in several foreign currencies in the said bank, adding that “it was appalling to discover that he owns a multimillion hotel complex in Owerri, Imo State in addition to vast estates in Abuja, the Federal Capital Territory and in other cities. Put together, these amount to billions of naira misappropriated from public fund.”
Suraju said that the panel had also “discovered 49 companies which have been steadily transferring monies into the accounts of the general manager. These are corporate collaborators. The panel is currently investigating the entire team of the PEF. We are convinced that this investigation will no doubt lead to a can of worms.
“We call for the immediate prosecution of these officials who have put their fingers in huge funds belonging to the public.’’
The HEDA boss, however, assured that the organisation shall continue to monitor developments through media reports and intelligence gathering, warning that “any attempt by the government or its official to influence, frustrate or terminate investigation will be further exposed and ultimately resisted by the people”.
He said: “Corruption fuels poverty, it nurtures violence, breeds extremism and in fact aids premature deaths. A country ravaged by corruption can never attain the development goals set by global standards; a country troubled by corruption faces the prospect of misery and even war. This is the reason why the fight against corruption is not a government franchise, but the responsibility and obligation of all Nigerians.
“This philosophy is behind the ceaseless campaign of HEDA locally and abroad. We are determined, with a will cast in iron to continue to lead the campaign and provide hope for many disillusioned Nigerians who fear that the battle against corruption may never be won.
“For HEDA, we are impressed by the gains of the past few years and with the continuous support of Nigerians, especially the media, we are confident that corruption will be brought down from her giant posture. Corruption is a scourge Nigerians have been fighting since independence. This is a menace that keeps Nigeria in the red light district of global affairs. We are not relenting. We shall not give up. We will kill corruption before it kills all of us”.
The SPIP has discovered that Nnadi’s Bank Verification Number (BVN) is associated with eighteen different bank accounts and owns a house at Plot 500B 142 Road, Gwarimpa, Abuja. During a search in the suspect’s house, two documents, dollars, Euros and pounds were found,”
Obono-Obla said, “Both individuals and oil companies deposited money alleged to be gratification/bribe to the personal and corporate accounts of the suspect in order to get allocation of either PMS, AGO and DPK from the Nigerian National Petroleum Corporation (NNPC) depot. Nnadi was questioned and released on bail and is at present undergoing Senior Executive Course (SEC 41, 2019) at the National Institute for Policy and Strategic Studies, Kuru, Plateau State.
“The suspect admitted helping some of the oil companies to get allocations from NNPC and that was the reason they paid money into his accounts. During a search on Nnadi’s house, two documents of landed property, $1,000 and €200 were recovered,” he said.
On Aisha Usman, Obono-Obla said that she operated nine accounts with one bank alone with a total inflow of N1.4 billion. Some corporate organisations allegedly paid the money into her account.