PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (PPPRA) 1012 Cadastral Zone, AOO, Central Business District, P. M. B. 609, Garki, Abuja. PREAMBLE to debit the PPPRA PSF account while crediting the Marketers. It is worthy of note here Following the establishment of an Ad Hoc Committee by the House of Representatives to that this was done in line with government policy of e-payment before the advent of the verify and determine the actual subsidy requirement and monitor the implementation of alternative method of subsidy payment in 2010. The records of this payment (shown the subsidy regime in Nigeria, the Agency was invited, and made presentations to the below) still reside with the Agency and CBN, and are available for scrutiny. Committee on the implementation of the scheme from 2006 to 2011. P AY M E N T S U M M A R Y While the Agency is still awaiting the Resolution of the House on the Report of the Ad-Hoc DETAIL 2009 2010 TOTAL PAYMENT TO MARKETERS 149,868,776,105.99 150,472,645,215.60 300,341,421,321.59 Committee, we consider it appropriate to correct some information in the media, which TOTAL PAYMENT TO PEF have been attributed to the report. Please find below the allegations and the clarifications (MGT) BOARD 5,793,575,133.90 6,297,005,647.75 12,090,580,781.65 by the Agency: TRANSFER TO S/N MARKETERS SUBSIDY NO OF PAYMENT CHEQUE (BILLION NAIRA) BATCH 1 MRS OIL AND GAS LTD. 21 20.979 F&G/08 2 OANDO PLC 26 25.974 F&G/08 3 AP PLC 19 18.981 F&G/08 FEDERATION ACCOUNT 2,808,524,935.91 2,808,524,935.91 TOTAL PAYMENT TO PPPRA (ADMIN CHARGE) 1,124,666,970.66 1,124,666,970.66 3. SUBSIDY DETERMINATION OF BUDGETARY ESTIMATE FOR 2012 4 BRITTANIA-U NIG. LTD. 1 0.999 F/08 It is also in this context that we wish to refer to reports in the media which indicate that the 5 AITEO ENERGY RES. LTD. 6 5.994 F&G/08 Committee s recommendation for 2012 budgetary provision is based on a PMS subsidy 6 TRIQUEST ENERGY LTD. 6 5.994 F&G/08 N44 of per litre. This is not adequate as the volatility associated with the Hydrocarbons' 7 IMAD OIL AND GAS LTD. 6 5.994 F&G/08 market makes determination of such projections very difficult and unreliable for planning 8 RAHAMANIYYA OIL & GAS LTD. 12 11.988 F&G/08 purposes. 9 NORTHWEST PET. AND GAS 9 8.991 F&G/08 Please find below the subsidy trend from January April, 2012 based on N97/ltr and 10 CONOIL PLC 5 4.995 F&G/08 N50/ltr for PMS and HHK respectively. 11 ACORN NIGERIA PLC 5 4.995 G/08 MONTH PMS HHK 12 A-Z PETROLEUM LTD 1 0.999 G/08 January 51.41 113.13 13 TOTAL PLC 1 0.999 F/08 February 59.87 118.70 14 FOLAWIYO ENERGY LTD. 8 7.992 F&G/08 March 71.91 122.35 15 INTERGRATED OIL & GAS LTD. 2 1.998 F&G/08 th April (As At 20 April, 2012) 74.43 119.66 TOTAL 128 127.872 Although there were 38 Marketers under the scheme at that time, the 128 cheques representing multiple payments made to the 15 participating Marketers whose identities are indicated above. It should be noted that the above payments were in respect of the 2 batches for which payments had fallen due and which were paid together in Jan 2009. In line with government financial regulation at the period, government agencies were not permitted to issue cheque of One Billion naira and above. At the period of the payment approval, the Marketers listed above were owed several billions cumulatively and as such, payments were broken down to N999 million per cheque in line with financial regulation. The allegations of fraudulent duplication of payments to unknown beneficiaries cannot therefore be substantiated. This information is easily verifiable as the cheques issued were CBN cheques; the counterfoils of which are still available. The similarities of the figures derived from the adherence to financial regulation and not a likelihood of fraud as indicated in the report. 2. PSF PAYMENT TO ITSELF AS ADMINISTRATIVE CHARGE From the available information to the Agency, which was equally provided to the Ad-Hoc Committee, the N158 billion and N157 billion reported in the media alleging that the PPPRA paid itself is wrong. The amount is subsidy and other payments (forex differential and interest on late payment of subsidy) approved by government based on the report of the Federal Ministry of Finance appointed Auditor using the e-payment. The account resides with the Central Bank of Nigeria and the Agency usually advice CBN A D V E R T O R I A L PPPRA DID NOT PAY ITSELF N312 BILLION NAIRA: THE FACTS 1. TH TH PAYMENT OF N999 MILLION IN 128 TIMES FROM 12 TO 13 JANUARY, 2009 TOTALLING N127.872BILLION SUBTOTAL 158,470,876,175.80 157,894,317,834.01 316,365,194,009.81 th We wish to clarify that the payments of N999 million were made 128 times on the 8 January 2009 totalling N127.872billion to the following Marketers and not to unknown entities as concluded in the report: Transfer to Federation Account is for over recovery collected from Marketers. Payment to PPPRA is admin charge net off from Marketers' subsidy claims as it had been collected upfront by Marketers as part of Ex-depot price. Payment to PEF is for bridging claims net off Marketers' subsidy claims as it had been collected upfront by Marketers as part of Ex-depot price. From the above N1.1billion accrued to PPPRA as admin charge and not N316billion as reported. From the above it is clear that any projection based on N44 per litre subsidy on PMS is unachievable. 4. NON-PROVISION OF RELIABLE INFORMATION DATABASE BY THE PPPRA We wish to inform that in line with the Mandate of the PPPRA Act, to establish an information data bank through liaison with all relevant agencies to facilitate the making of informed and realistic decisions on pricing policies, the Agency developed a database for tracking and verifying all transactions under the scheme. This is to enable the Agency determine the veracity of Marketers' claims for re-imbursement from the Fund. It is worthy of note that this device (Analyser) was used to recall transactions from the commencement of the Scheme when the House of Representatives Ad-Hoc Committee requested for information. The Committee itself acknowledged this in its report in the listings of the inputs from the Agency to it. The role of the data provided by the Agency in the making of informed decisions by government and other stakeholders has been acknowledged by various institutions including International organisations over the years. Prior to the advent of the Agency, information on market fundamentals were not available in the Downstream Sector. The PPPRA has since 2004 grown to become a reliable data hub for the Downstream Sector. Signed: MANAGEMENT
RESPONSE TO THE REPORT OF THE HOUSE OF REPRESENTATIVES AD-HOC COMMITTEE TO VERIFY AND DETERMINE THE ACTUAL SUBSIDY REQUIREMENT AND MONITOR THE IMPLEMENTATION OF THE SUBSIDY REGIME IN NIGERIA PREAMBLE The mandate of the Agency as enacted by the National Assembly Act No. 8 of 2003 Part II, Section 7 includes, but is not limited to, the following: i. Moderating volatility in petroleum products prices, while ensuring reasonable returns to the operators ii. Establishing parameters and codes of conduct for all operators in the downstream sector of the petroleum industry; iii. Maintaining constant surveillance over key indices relevant to pricing policy and periodically approve benchmark prices for all products; Based on government directive to develop a modality in order to cushion the effect of International crude price fluctuation on the prices of local petroleum products, the Agency developed the Petroleum Support Fund (PSF) guidelines in conjunction with Stakeholders in the downstream Industry. This was approved by government for implementation with effect from January, 2006. Consequently, the scheme commenced on February 2006 with roles earmarked for the various Stakeholders. AD-HOC COMMITTEE INVESTIGATION Following the establishment of an Ad Hoc Committee by the House of Representatives to verify and determine the actual subsidy requirement and monitor the implementation of the subsidy regime in Nigeria, the Agency was invited, and made presentations to the committee on the implementation of the scheme from 2006 to 2011. While the Agency is still studying the official report of the Ad Hoc Committee set up to investigate the Management of Subsidy Regime, we consider it appropriate to correct some information in the media which have been attributed to the report. Please find below the allegations and the response of the Agency: Page 1 of 17
1. PAYMENT OF N999 MILLION IN 128 TIMES FROM 12 TH TO 13 TH JANUARY, 2009 TOTALLING N127.872BILLION We wish to clarify that the payments of N999 million were made 128 times on the 8 th January 2009 totalling N127.872billion to the following Marketers and not to unknown entities as concluded in the report: S/N MARKETERS SUBSIDY NO OF CHEQUE PAYMENT (BILLION NAIRA) BATCH 1 MRS OIL AND GAS LTD. 21 20.979 F&G/08 2 OANDO PLC 26 25.974 F&G/08 3 AP PLC 19 18.981 F&G/08 4 BRITTANIA-U NIG. LTD. 1 0.999 F/08 5 AITEO ENERGY RES. LTD. 6 5.994 F&G/08 6 TRIQUEST ENERGY LTD. 6 5.994 F&G/08 7 IMAD OIL AND GAS LTD. 6 5.994 F&G/08 8 RAHAMANIYYA OIL & GAS LTD. 12 11.988 F&G/08 9 NORTHWEST PET. AND GAS 9 8.991 F&G/08 10 CONOIL PLC 5 4.995 F&G/08 11 ACORN NIGERIA PLC 5 4.995 G/08 12 A-Z PETROLEUM LTD 1 0.999 G/08 13 TOTAL PLC 1 0.999 F/08 14 FOLAWIYO ENERGY LTD. 8 7.992 F&G/08 15 INTERGRATED OIL & GAS LTD. 2 1.998 F&G/08 TOTAL 128 127.872 Although there were not 128 Marketers under the scheme at that time, 128 cheques represent multiple payments were issued to the 15 participating Marketers whose identities are indicated above. It should be noted that the above payments are in respect of the 2 batches for which payments had fallen due and which were paid together in Jan 2009. In line with government financial regulation at the period, government agencies were not permitted to issue cheque of One Billion naira and above. At the period of the payment approval, the marketers listed above were owed several billions cumulatively and as such, payments were broken down to N999 million per cheque in line with financial regulation. The allegations of fraudulent duplication of payments to unknown beneficiaries cannot be substantiated. This information is easily verifiable as the cheques issued were CBN cheques; the counterfoils of Page 2 of 17
which are still available. The similarities of the figures derived from the adherence to financial regulation and not a likelihood of fraud as indicated in the report. 2. DISCREPANCIES IN OVER-RECOVERY ACCOUNT Contrary to the presentation on the existence of discrepancies in the PSF overrecovery account, we wish to clarify that the information available on the overrecovery account is clear and unambiguous. The Agency has comprehensive data on over-recoveries and there is no contention on the issue as alleged. The total over-recovery accruable between 2008 and 2009 is N5.701 billion for Other Marketers and NNPC is N8.372 billion, totalling N14.073 billion. Out of this amount, the sum of N10.268 billion was paid by NNPC and Other Marketers (N7.37 was paid into PSF account with the CBN by NNPC and Other Marketers, while N2.891 billion was net-off by Federal Ministry of Finance from Other Marketers subsidy claim) leaving an outstanding balance of N3.804 billion by two Marketers. The above is the Agency s position on over-recovery and is open to verification and confirmation. 3. PSF PAYMENT TO ITSELF AS ADMINISTRATIVE CHARGE From the available information to the Agency which was equally provided to the Ad-Hoc Committee, the N158 billion and N157 billion by the media as administrative charge is wrong. The amount is subsidy and other payments (Forex differential and Interest on late payment of subsidy) approved by government based on the report of the Federal Ministry of Finance appointed Auditor using the e-payment. The account reside with the Central Bank of Nigeria and the Agency usually advice CBN to debit the PPPRA PSF account while crediting the Marketers. It is worthy of note here that this was done in line with government policy of e-payment before the advent of the alternative method of subsidy payment in 2010. The records of this payment (shown below) still reside with the Agency and CBN, and are available for scrutiny. Page 3 of 17
S/N REF 1 A.3/7/408/C.28/VOL. I/02/09 2 A.3/7/408/C.28/VOL. I/01/09 3 A.3/7/408/C.28/VOL. I/03/09 4 A.3/7/408/C.28/VOL. I/03/09 MARKETERS 2009 OANDO PLC,INTEGRATED OIL & GAS, FOLAWIYO ENERGY, ACORN NIGERIA PPLC, SHIELD PETROLEUM NIG LTD MRS OIL & GAS CO. LTD, SIGMUND COMMUNNECCI LTD, DEE JONES PET & GAS LTD, AFRICAN PETROLEUM PLC,IMAD OIL & GAS,TOTAL NIG LTD, TONIQUE OIL SERVICES, MOBIL OIL NIG PLC, RAHAMANIYYA OIL & GAS, NORTHWEST PET &GAS CO LTD AMOUNT (NAIRA) RAHAMANIYYA OIL & GAS,AMG PETROENERGY LTD, TRIQUEST ENERGY LTD, BRITTANIA-U NIG LTD, CONOIL PLC, SHIELD PETROLEUM NIG LTD, RYDEN OIL LTD 3,609,717,832.00 OANDO PLC, AFRICAN PETROLEUM PLC, FOLAWIYO ENERGY LTD, SIGMUND COMMUNNECCI LTD, TOTAL PLC, A-Z PETROLEUM LTD, MRS OIL & GAS CO LTD, INTEGRATED OIL & GAS, NORTHWEST PET & GAS LTD, ACORN 12,855,314,944.59 PURPOSE 17,032,079,380.44 BATCH A/09 SUBSIDY 31,100,560,536.47 BATCH A/09 SUBSIDY BATCH F &G/08 PSF EXCHANGE RATE DIFFERENTIAL,BATCH F/08 PSF EXCHANGE RATE DIFFERENTIAL (AMG PETROENERGY LTD,BRITTANIA-U NIG LTD), BATCH G/08 PSF EXCHANGE RATE DIFFERENTIAL (SHIELD PETROLEUM NIG LTD,RYDEN OIL LTD) BATCH F & G/08 PSF EXCHANGE RATE DIFFERENTIAL,BATCH F/08 PSF EXCHANGE RATE DIFFERENTIAL (TOTAL PLC), BATCH Page 4 of 17
G/08 PSF EXCHANGE RATE DIFFERENTIAL (A- Z PETROLEUM LTD,NORTHWEST PET &GAS LTD) 5 A.3/7/408/C.28/VOL. I/05/09 FEDERATION ACCOUNT 2,808,524,935.91 TRANSFER FROM PSF/PPPRA TO FEDERATION ACCOUNT ACORN PLC, AFRICAN PETROLEUM PLC, MATRIX ENERGY LTD,OANDO NIG PLC, RAHAMANIYYA GLOBAL RES, SIGMUND COMMUNNECCI LTD, 6 A.3/7/408/C.28/VOL. I/06/09 TONIQUE OIL SERVICES LTD. 12,452,344,556.45 BATCH B/09 SUBSIDY PART OF BATCH F &G/08 PSF EXCHANGE RATE DIFFERENTIAL,BALANCE OF BATCH F &G/08 PSF EXCHANGE RATE DIFFERENTIAL,BATCH 7 A.3/7/408/C.28/VOL. I/09/09 IMAD OIL & GAS LTD 1,439,748,235.91 B/09 SUBSIDY 8 A.3/7/408/C.28/VOL. I/07/09 9 A.3/7/408/C.28/VOL. I/08/09 10 A.3/7/408/C.28/VOL. I/09/09 OANDO NIG PLC, AFRICAN PETROLEUM PLC, MOBIL OIL NIG PLC, TOTAL NIG PLC. OANDO NIG PLC, A-Z PETROLEUM LTD, DEE JONES PET & GAS LTD, ACORN,FOLAWIYO ENERGY, RAHAMANIYYA OIL & GAS LTD, INTEGRATED OIL & GAS LTD, TOTAL NIG LTD MRS OIL &GAS LTD, OANDO PLC, AFRICAN PETROLEUM PLC, DEE JONES PET & GAS LTD, ACORN, FOLAWIYO ENERGY LTD, RAHAMANIYYA GLOBAL RES. LTD, INTEGRATED OIL &GAS LTD, CONOIL,NORTHWEST PET & GAS, AFRICAN 21,941,919,119.72 2,760,497,832.69 BATCH C/09 SUBSIDY 5,434,130,891.13 BATCH D/09 SUBSIDY BATCH E/09 SUBSIDY,2ND PART PAYMENT (AFRICAN PETROLEUM PLC) Page 5 of 17
PETROLEUM PLC 11 A.3/7/408/C.28/VOL. I/10/09 MRS OIL &GAS, OANDO,AFRICAN PET PLC, RAHAMANIYYA GLOBAL RES LTD, FOLAWIYO ENERGY LTD, INTEGRATED OIL &GAS LTD, CONOIL PLC, TOTAL NIG PLC, CHEVRON OIL NIG LTD,A-Z PETROLEUM LTD. 21,164,880,263.60 BATCH F/09 SUBSIDY, PART PAYMENT OF BATCH C/09 SUBSIDY (AFRICAN OETROLEUM PLC) BRIDGING CLAIM FOR 12 A.3/7/408/C.28/VOL. I/11/09 PEF MGT BOARD 3,402,271,618.65 BATCH F/09 BRIDGING CLAIM FOR 13 A.3/7/408/C.28/VOL. I/13/09 PEF MGT BOARD 2,391,303,515.25 BATCH G/09 OANDO PLC, AFRICAN PET. PLC, NORTHWEST PET. & GAS LTD, AITEO ENERGY RES. LTD, MRS OIL &GAS LTD, CONOIL, INTEGRATED OIL&GAS LTD, ACORN, CHEVRON OIL NIG LTD, AMG PETRO ENERGY LTD, SAHARA ENERGY RES. LTD, DEE JONES PETROLEUM 14 A.3/7/408/C.28/VOL. I/12/09 & GAS LTD, HEYDEN PETROLEUM. 18,835,734,436.71 BATCH G/09 SUBSIDY 15 A.3/7/408/C.28/VOL. I/14/09 AP PLC 173,508,297.55 MRS LTD, OANDO PLC, AP PLC, NORTHWEST PET & GAS LTD, RAHAMANIYYA PET & GAS LTD, CONOIL PLC, IMAD OIL & GAS LTD, AITEO ENE. RESOURCES 16 A.3/7/408/C.28/VOL. I/15/09 LTD 1,068,339,778.73 2009 SUBTOTAL 158,470,876,175.80 BALANCE PAYMENT OF BATCH C/09 SUBSIDY SHORTFALL ON BATCH F & G 2008 Page 6 of 17
2010 AMOUNT (NAIRA) PURPOSE S/N REF MARKETERS BRIDGING CLAIM FOR 1 A.3/7/408/C.28/VOL. I/19/10 PEF (MGT) BOARD 1,474,668,024.15 BATCH I/09 OANDO PLC, AFRICAN PETROLEUM PLC, NORTHWEST PET. AND GAS LTD, MRS OIL AND GAS LTD, CONOIL PLC, MOBIL OIL NIGERIA PLC, MRS OIL AND GAS LTD, AMG PETRO-ENERGY LTD, A-Z PETROLEUM LTD, TONIQUE OIL SERVICES LTD, 2 A.3/7/408/C.28/VOL. I/16/10 ACORN PLC 16,730,892,239.37 BATCH H/09 SUBSIDY OANDO PLC, AFRICAN PETROLEUM PLC, NORTHWEST PET. AND GAS LTD, MRS OIL AND GAS LTD, CONOIL PLC, MOBIL OIL NIGERIA PLC, AITEO ENERGY RESOURCES LTD, SAHARA ENERGY RESOPUCES LTD, FOLAWIYO ENERGY LTD, TOTAL 3 A.3/7/408/C.28/VOL. I/17/10 NIGERIA PLC. 11,927,943,973.09 BATCH I/09 SUBSIDY 4 A.3/7/408/C.28/VOL. I/20/10 5 A.3/7/408/C.28/VOL. I/21/10 RAHAMANIYYA OIL AND GAS LTD, FOLAWIYO ENERGY LTD, AFRICAN PETROLEUM PLC, SHEILD PETROLEUM COMPNAY LIMITED, MRS OIL AND GAS LIMITED, AITEO ENERGY RESOURCES, AMG PETRO ENERGY LIMITED, OANDO PLC, TRIQUEST ENERGY LTD, MOBIL NIGERIA PLC, A-Z PETROLEUM PRODUCTS LTD, CHEVRON NIGERIA PLC, TOTAL NIGERIA PLC, ACORN NIGERIA PLC, INTEGRTAED OIL AND GAS LTD, TONIQUE OIL SERVICES LTD 37,100,750,229.17 PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (REVENUE ACCOUNT) 908,949,361.41 2ND BATCH FOREX DIFF FOR BATCHES F/08-F09 OUTSTANDING ADMIN CHARGES DUE (BATCHES A/06 - E/09), ADMIN CHARGES ON Page 7 of 17
6 A.3/7/408/C.28/VOL. I/21/10 PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (REVENUE ACCOUNT) 26,565,449.85 7 A.3/7/408/C.28/VOL. I/22/10 IMAD OIL AND GAS LTD 1,738,498,374.44 BATCHES F-I/09 OUTST ADMIN CHARGES DUE A/06-E/09) 2ND BATCH FOREX DIFF. FOR BATCHES F/08-F09 8 A.3/7/408/C.28/VOL. I/26/10 PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (REVENUE ACCOUNT) 114,099,550.05 ADMIN CHARGE FOR BATCH J/09 9 A.3/7/408/C.28/VOL. I/25/10 PEF (MGT) BOARD 2,845,952,244.05 BRIDGING CLAIM FOR BATCH J/09 AFRICAN PETROLEUM PLC, MRS OIL AND GAS LTD, SAHARA ENERGY RESOURCES LTD, CONOIL PLC, FOLAWIYO ENERGY LTD, NORTHWEST PET AND GAS LTD, AITEO ENERGY RESOURCES LTD. HEYDEN PETROLEUM LTD, TOTAL NIG. PLC, AMG PETRO 10 A.3/7/408/C.28/VOL. I/24/10 ENERGY LIMITED 24,536,024,428.77 BATCH J/09 SUBSIDY 11 A.3/7/408/C.28/VOL. I/29/10 PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (REVENUE ACCOUNT) 47,874,228.90 12 A.3/7/408/C.28/VOL. I/38/10 PEF (MGT) BOARD 1,260,688,027.70 AFRICAN PETROLEUM PLC, MRS OIL AND GAS LTD, SAHARA ENERGY RESOURCES LTD, DEE-JONES PETROLEUM AND GAS LTD, FOLAWIYO ENERGY LTD, NORTHWEST PET AND GAS LTD, AITEO 13 A.3/7/408/C.28/VOL. I/27/10 ENERGY RESOURCES LTD. 11,116,461,519.67 14 A.3/7/408/C.28/VOL. I/32/10 PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (REVENUE ACCOUNT) 5,729,189.40 15 A.3/7/408/C.28/VOL. I/30/10 IMAD OIL AND GAS LTD 2,732,441,384.98 ADMIN CHARGE FOR BATCH K/09-A/10 BRIDGING CLAIM FOR BATCH K/09-A/2010 BATCH K/09-A/10 SUBSIDY ADMIN CHARGE FOR BATCH K/09-A/10 BATCH K/09-A/10 SUBSIDY Page 8 of 17
16 A.3/7/408/C.28/VOL. I/38/10 PEF (MGT) BOARD 150,868,654.20 PEF BRIDGING CLAIM FOR BATCH K/09- A/2010 MRS OIL AND GAS LTD, FOLAWIYO ENERGY LTD, 17 A.3/7/408/C.28/VOL. I/32/10 CHEVRON OIL NIGERIA PLC 5,295,665,694.74 BATCH B/10 SUBSIDY 18 A.3/7/408/C.28/VOL. I/34/10 19 A.3/7/408/C.28/VOL. I/35/10 20 A.3/7/408/C.28/VOL. I/37/10 21 A.3/7/408/C.28/VOL. I/36/10 PETROLEUM PRODUCTS PRICING REGULATORY AGENCY (REVENUE ACCOUNT) 21,449,191.05 ACORN NIGERIA PLC, AFRICAN PETROLEUM PLC, AMG PETRO-ENERGY LTD, A-Z PET. LTD, CONOIL PLC, DEE JONES PETROLEUM AND GAS LTD, BRITTANIA-U NIG LTD, CAPITAL OIL AND GAS IND LTD, CHEVRON OIL NIG. PLC 2,813,701,728.67 OANDO PLC, RAHAMANIYYA OIL AND GAS, RYDEN OIL LTD, SAHARA ENERGY RESOURCES LTD, SHEILD PET. CO. NIG. LTD, AITEO ENERGY RESOUCES LTD, TONIQUE OIL SERVICES LTD, TOTAL NIG. PLC, TRIQUEST ENERGY LTD. 4,882,015,763.71 FOLAWIYO ENERGY LTD, HEYDEN PET, INTEGRATED OIL AND GAS, MATRIX ENERGY LTD, MOBIL OIL NIG. PLC, MRS OIL AND GAS CO. LTD, NORTHWEST PET. AND GAS CO. LTD 3,496,162,718.06 22 A.3/7/408/C.28/VOL. I/33/10 PEF (MGT) BOARD 564,828,697.65 ACORN NIGERIA PLC, AFRICAN PETROLEUM PLC, AMG PETRO-ENERGY LTD, A-Z PET. LTD, CONOIL PLC, DEE JONES PETROLEUM AND GAS LTD, FOLAWIYO ENERGY LTD, INTEGRATED OIL AND GAS, MATRIX ENERGY LTD, MOBIL OIL NIG. PLC, 23 A.3/7/408/C.28/VOL. I/38/10 MRS OIL AND GAS CO. LTD 6,146,266,172.64 ADMIN CHARGE FOR BATCH B/10 APPROVED INTEREST PAYMENT APPROVED INTEREST PAYMENT APPROVED INTEREST PAYMENT BRIDGING CLAIM FOR BATCH B/2010 BALANCE OF APPROVED INTEREST PAYMENT Page 9 of 17
24 A.3/7/408/C.28/VOL. I/38/10 25 A.3/7/408/C.28/VOL. I/40/10 26 A.3/7/408/C.28/VOL. I/41/10 NOPRTHWEST PETROLEUM AND GAS CO. LTD, OANDO PLC, RAHAMANIYYA OIL AND GAS, RYDEN OIL LIMITED, SHEILD PETROLEUM CO. NIG. LTD, AITEO ENERGY RESOURCES, TONIQUE OIL SERVICES LTD, TOTAL NIG PLC, TRIQUEST ENERGY LIMITED. 7,192,301,488.86 RAHAMANIYYA OIL AND GAS LTD, FOLAWIYO ENERGY LTD, AFRICAN PETROLEUM PLC, SHEILD PETROLEUM COMPNAY LIMITED, MRS OIL AND GAS LIMITED, AITEO ENERGY RESOURCES, AMG PETRO ENERGY LIMITED, OANDO PLC, TRIQUEST ENERGY LTD. 12,658,210,203.81 CHIEF REGISTRER, LAGOS STATE JUDICAIARY (IMAD OIL & GAS LTD) 2,105,309,295.62 2010 SUBTOTAL 157,894,317,834.01 PAYMENT SUMMARY BALANCE OF APPROVED INTEREST PAYMENT PAYMENT OF FOREX DIFFERENCE FOR BATCH F/2008 - F/2009 INTEREST AND FOREST DIFFERENTIAL FOR BACTH F/2--8 - F/2009 DETAIL 2009 2010 TOTAL PAYMENT TO MARKETERS 149,868,776,105.99 150,472,645,215.60 300,341,421,321.59 TOTAL PAYMENT TO PEF (MGT) BOARD 5,793,575,133.90 6,297,005,647.75 12,090,580,781.65 TRANSFER TO FEDERATION ACCOUNT 2,808,524,935.91-2,808,524,935.91 TOTAL PAYMENT TO PPPRA (ADMIN CHARGE) - 1,124,666,970.66 1,124,666,970.66 SUBTOTAL 158,470,876,175.80 157,894,317,834.01 316,365,194,009.81 Page 10 of 17
Transfer to Federation Account is for over recovery collected from Marketers. Payment to PPPRA is admin charge net off from Marketers subsidy claims which had been collected upfront by Marketers as part of Ex-depot price. Payment to PEF is for bridging claims net off Marketers subsidy claims which had been collected upfront by Marketers as part of Ex-depot price. From the above N1.1billion accrued to PPPRA as admin charge and not N316billion as reported. 4. SUBSIDY DETERMINATION OF BUDGETARY ESTIMATE FOR 2012 It is also in this context that we wish to refer to reports in the media which indicate that the committee recommendation for 2012 budgetary provision is based on a PMS subsidy N44 of per litre. This is not an informed decision as the volatility associated with the Hydrocarbons market make determination of such projections very difficult and unreliable for planning purposes. Please find below the subsidy trend from January April, 2012 based on N79/ltr and N50/ltr for PMS and HHK respectively. MONTH PMS HHK January 51.41 113.13 February 59.87 118.70 March 71.91 122.35 April (As At 20 th April, 2012) 74.43 119.66 From the above it is clear that any projection based on N44 per litre subsidy on PMS is unachievable. 5. NON-PROVISION OF RELIABLE INFORMATION DATABASE BY THE PPPRA We wish to inform that in line with the Mandate of the PPPRA Act, to establish an information data bank through liaison with all relevant agencies to facilitate the making of informed and realistic decisions on pricing policies, the Agency developed a database for tracking and verifying all transactions under the scheme. This is to enable the Agency determine the veracity of Marketers claims for re-imbursement from the Fund. It is worthy of note that this device (Analyser) was used to recall transactions from the commencement of the Scheme when the House of Representatives Ad-Hoc Committee requested for information. The committee itself acknowledged this in its report in the listings of the inputs from the Agency to it. Page 11 of 17
The role of the data provided by the Agency in the making of informed decisions by government and other stakeholders has been acknowledged by various institutions including International organisations over the years. Prior to the advent of the Agency, information on consumption, pricing and other key market parameters were not available in the Downstream Sector. The PPPRA has since 2004 grown to become a reliable data hub for the Downstream Sector. 6. MISLEADING / SUPPRESSED SUBSIDY PAYMENT FIGURE It will be recalled that the information on the sum of N1.3 trillion subsidy expenditure provided by the Agency at the investigative hearing was for claims processed and paid as at September 2011. Also it will be recalled that the Agency updated the figure to N1.7trillion as at October 2011. Importation verification and payment under the PSF scheme are ongoing processes and therefore logical to reasoning that the figure will not be static. Supply and payment figures are updated based on the verification of Marketers submissions which come after conclusion of Imports and documentation. It is equally important to note that the CBN reported payment at the time of subsidy deduction as applicable in Bank transactions while the Agency only reports subsidy payment during verification period. It is worthy of note that the latest figure for subsidy for 2011 as at 20 th April, 2012 is N2.090 trillion and this does not include outstanding claims that are still in dispute. 7. MISLEADING INFORMATION ON PRODUCTS CONSUMPTION The verifiable data available to the Agency indicate, unambiguously, the average daily discharge of PMS from 2006 to 2011 is as follows: 2006: 25,924,227.49 2007: 26,384,697.00 2008: 33,526,633.94 2009: 36,812,148.40 2010: 46,905,969.54 2011: 59,907,010.37 Page 12 of 17
8. MISMANAGEMENT OF SUBSIDY FUND Equally, we wish to restate for the umpteenth time that the PSF Account and payment is not managed by the Agency, but by Federal Ministry of Finance through the Debt Management Office, CBN and office of the Accountant General of the Federation. The Agency stopped payments by cheques to Marketers when in 2010 the alternative method of subsidy payment was adopted by government. This is in order to ease payment procedure that characterised the earlier system especially where delay in payment was witnessed for a consistency period of not less than 150 days after Marketers submission of documents. Also any payments under the Scheme are made by the Federal Ministry of Finance based on due process verification and authentication by the government appointed auditors engaged for this purpose. These auditors also are actively involved in import volume verification. Even while cheques payment lasted, the payments were verified by the Federal Ministry of Finance appointed-auditors, after which sourcing of Funds and the auditing of the PSF account was done by the Federal Ministry of Finance through the office of the Accountant General of the Federation and the CBN. Also, contrary to insinuations of fraudulent maintenance of a multiplicity of PSF Accounts by the Agency, we wish to state that there is only one subsidy account domiciled in the CBN which is the custodian of the fund. Transactions in this account are effected through CBN cheque and e-payment only. The suggestion that another undisclosed subsidy account exists is unfounded. 9. UNJUSTIFIED SUBSIDY PAYMENT CLAIMS TO MARKETERS It is note-worthy to state that the Agency does not verify payments to Marketers without receiving Import documents which include Letter of Credit, Form M, Pro forma Invoice, Bill of Lading, ullage-report at load port, Vessel-discharge documents; Custom, Navy and DPR Certificates. Moreover, the Agency equally requests an Indemnity Letter from Marketers against overpayments and/or misrepresentation to safeguard Government fund. 10. VOLUME ALLOCATION IN VIOLATION OF THE PSF GUIDELINES The PSF guidelines stipulate the requirements for participation under the scheme which include the following: Page 13 of 17
1. Applicant must be an Oil Marketing/Trading Company registered in Nigeria with the Corporate Affairs Commission (CAC) to conduct Petroleum Products business 2. Beneficiary/Claimant must possess the following: i. Proof of ownership or a valid throughput agreement of storage facility with a minimum of 5,000 metric tons for the particular product.ownership of retail stations is an added advantage. ii. Possessions of a valid DPR import permits. 3. Having satisfied 1 and 2 above, an applicant shall submit application for participation in the scheme to the PPPPRA. 4. Successful applicants shall sign an agreement with the PPPRA to become a participant under the scheme. The Agency discharged this obligation with all sense of responsibility by ensuring that only Marketers who satisfied the above stated condition were given approval to import. The introduction of throughput agreement in the guidelines by the PPPRA Board was to address the supply glut due to the inability of Facility owners to meet supply requirements, leading to intermittent scarcity in the earlier years of the scheme. 11. DETERMINATION OF DAILY CONSUMPTION VOLUME We observed that the figure presented as 2011 total PMS consumption is 14.7billion Litres which by our records do not take into consideration the consumption figure for Q4 2011 and part of Q3 2011. The PPPRA verified PMS consumption figure for 2011 is 21.866billion litres and any computation of expected daily consumption and subsidy exposure not based on this figure is incorrect and will distort assumptions and computation arising. 12. SUBSIDY COMPUTATION FOR LOCALLY PRODUCED PMS It is pertinent to state that contrary to the impression created, the cost savings derivable from local production are optimally captured as saving by government as the following cost elements are excluded in the computation of subsidy for local production for NNPC; which is not the case for Imports. Freight Traders Margin Page 14 of 17
Lightering Financing 13. MONITORING AND VERIFICATION The modality of subsidy processing and payment cuts across different Agencies and Stakeholders. No vessel comes into the country without the knowledge of the Nigerian Port Authority and Nigerian Custom Services. All vessel discharges in the country are usually monitored by NPA and Port Authority tug boats are usually used to navigate the Nigerian Waters. Also about 30 documents are required to be produced by a Marketer apart from the certificate issued by the Cargo Inspectors that witnessed the discharge. 14. PADDED TEMPLATE For avoidance of doubt, the general public is invited to note that in line with the provision of the PPPRA Act, the Board approved the cost elements on the Template in 2003. The review is usually done in conjunction with the Industry s Stakeholders while implementation is based on government approval. 15. NON-TRACEABILITY OF VESSEL TO NIGERIAN WATERS The committee was said to have utilised Lloyds listing in tracking Vessels and found that Vessels scheduled for delivery were not traceable to Nigerian waters within the period. It was said that a particular vessel meant for Nigeria was traced to South Africa on Lloyds listing within the period. It is observed that the conclusion on Non-traceability of some vessels as listed in the table shown was as a result of a wrong premise. The vessels were crosschecked by the Committee using wrong reference period. The Committee wrongly assumed and misinterpreted the columns Template Start Period and Template End period as the start and end of discharge duration for the vessels. Also, there were misrepresentations of data on the said Table. The examples below demonstrate the use of these inaccurate data by the Committee as basis for their conclusions: From records available to the Agency, the transaction involving MT OKHOSTSK SEA EX MT ALPINE MAGNOLIA by A-Z Petroleum LTD discharged into Integrated Page 15 of 17
Oil Depot and not Ever Oil Depot. Also, the discharge was completed on 13th February, 2011 and not between 14 th December 2009 and 15 th January 2011. The 14 th December 2009 and 15 th January 2011 quoted in the report was the applicable pricing template period. The Item 4 in the Table showing 6,163,578.00 litres as discharge figure for MT TREASURE EX MT FAITHFUL was wrong. The same figure which was supposed to be for Item 3 on the Table but was erroneously repeated giving a false impression of double counting. The actual discharge figure for Item 4 is 6,337,753 litres which was discharged into A-Z Apapa Depot and completed on 7th May 2009. It was alluded in the report on Item 13 of the Table that MT VERA CRUZ EX MT CHANCE took one month (1 st November 2009 30 th November 2009) to discharge 21,434,243 litres of PMS. This is another error as the one month average of the Pricing Template, Template Start Period and Template End Period, was mistaken to be the start and end of discharge duration for the vessel, as in the case of all other vessels in the Table. Items 15 and 16 on the Table showed wrong Mother Vessel BL dates. The Mother Vessel BL Date available in the Agency s database for the transaction is 20 th September, 2011. Item 21 in their Table showed Mother Vessel BL Date of 31 st June 2009 (June should have only 30 days) and a Discharge date of 16 th June 2009 giving the impression that the Mother vessel discharged before it even loaded. The correct Mother Vessel BL date is 31s t May, 2009. It was based on this premise among others that non-delivery was concluded and Marketers asked to refund the subsidy reimbursement. However, the details of the checks and conclusions on Vessel by Vessel base are not provided to enable the Agency verify this claim. The data that will be used to allege such huge fraudulent transaction and demand for refund from Marketers must be accessible and verifiable by all parties. 16. ISSUING OF PERMITS PRIOR TO ALLOCATION On the issue of giving allocations to eighteen (18) unregistered Marketers, it is worth noting that the permit-allocation process was designed in such a manner Page 16 of 17
that the verification of companies commences upon submission of expression of interest letter alongside other eligibility requirements. The verification process involves confirmation by the Agency on the following areas: CAC registration Audited account Throughput/depot license Bank reference/financing MOU Companies profile As its normal practice, even with NNPC allocations, companies which fulfil basic minimum requirements may be awarded allocations, while the Agency s Legal team concludes its findings. It is only when a company has satisfied all requirements, that allocation letters are released and agreement signed by the Marketer. It is also worth mentioning that the length of time between when a Permit is prepared and an agreement is subsequently signed is dependent on the length of due diligence carried out by the Agency to ensure only eligible and reputable companies are beneficiaries of the PSF scheme. This explains the minimal day s disparity for the twenty (20) Marketers concerned. Secondly, the report states that four (4) Marketers received allocations without applying to participate in the scheme. We wish to state that all four companies mentioned, properly applied to the Agency for participation. Page 17 of 17