…As Nigeria spends N190b on petrol subsidy in one year***
… EFCC arraigns oil marketers for alleged diversion, theft of N1.042b***
Vice President Yemi Osinbajo has called on African countries to look diversify their economies and look beyond an oil-based revenues for future prosperity.
Osinbajo stated this in Abuja on Monday while declaring open the Extraordinary Session of the Council of Ministers of African Petroleum Producers Organisation (APPO).
According to the vice president, while oil and gas have continued to remain the mainstay of African economies, there is the need for the re-investment of oil revenues through diversification to prevent economic crises resulting from over-dependence on the product
“The lesson here is that, while oil and gas will continue to be critical to our revenue bases and our national economies, we must also redouble our efforts to achieve the following:
“One, to diversify our economies away from the dangerous overdependence.
“And two, to ensure that we invest as much as is possible of today’s current oil and gas revenues in the infrastructure and human capital that will underpin future economic growth and development.
“We must keep in mind that oil and gas are only guaranteed as today’s resources, and not necessarily tomorrow’s.
“We cannot bet on the fact that even a few decades ago from now these natural resources will be as central to the global economy as they are today.
“All serious economies around the world have realized this, and are making determined plans for a world beyond oil or as they say a zero-oil wealth.
“As African countries we cannot afford to act differently.’’
Osinbajo observed that the oil and gas industry was a capital intensive one, noting that as individual countries, there was lack of the resources required to make the necessary investments to grow the industry.
According to him, this is especially so because these investments are competing with infrastructure and social services, for the limited resources available to governments.
He said that by serving as a platform for increased collaboration and cooperation among member countries, the organisation would go a long way towards helping overcome such financial challenges.
Osinbajo stated that increased synergy would help mobilize the investments needed to deliver the major infrastructure required by the industry, such as trans-border gas and oil pipelines, joint refineries and gas plants.
“Nigeria, as most of you know, is already leading by example, with our work on the West Africa Gas Pipeline Project, and the Nigeria-Niger collaboration on refining.
“In the increasingly interdependent world in which we live, greater levels of regional economic integration are required, allowing the free flow of the dividends of research and technology,’’ he added.
The Vice President also said that APPO needed to seriously look beyond public sector ownership of its activities and tap into private sector competencies and models to a greater degree.
Osinbajo praised the organization for embracing reforms of the sector to confront the challenges facing the organization and the choice of Nigeria’s oil Minister (State), Dr Ibe Kachukwu, to drive the reforms.
He gave the assurance that Kachikwu would not let the organization down having carried out some far reaching reforms in Nigeria’s petroleum industry to the admiration of the administration.
The vice president also harped on the APPO Fund for Technical Cooperation which was undergoing recapitalization to enable it to better fulfill the role for which it was established.
He stated that the financial model of the Fund might need some fine-tuning.
He suggested that the fund could be modeled after similar institutions that succeeded, such as the OPEC Fund to enable non-APPO member countries and private institutions to invest in it.
“The APPO Fund ought to operate as an autonomous entity, independent of the APPO Secretariat, in the same way that the OPEC Fund operates independent of OPEC.
“If institutions similar to APPO and APPO Fund have succeeded and are continuing to succeed in other parts of the world, then we have no reason, and no excuse, to fail as a continent,’’ Osinbajo stressed.
In the meantime, with continued plummeting of crude oil prices, Nigeria now records a monthly average of N15.859 billion as under-recovery on importation of petrol or Premium Motor Spirit (PMS) into the country.
Though the Federal Government claimed it had exited the era of subsidy payment on imported PMS, data from the NNPC showed an under-recovery of N190.314 billion between January 2017 and January 2018.
Under-recovery has been described as the losses that oil companies incur due to the difference between the subsidised price at which oil-marketing companies sell certain products and the price, which they should have received for meeting their cost of production.
Under-recovery or over-recovery in petroleum products import was introduced after the Federal Government scraped subsidy on PMS.
Apart from the huge cost of subsidising the product, the country’s consumption increased from 28 million litres in 2017 to 60 million during the first quarter of 2018, according to latest consumption data from the National Bureau of Statistics.
This has stifled efforts by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who claimed to have brought down PMS consumption from 50 million litres a day to about 28 million litres per day in 2017.
Kachikwu had said that the current administration was able to block fraud impacted volume of petrol in 2016, which was nearly 40 per cent of the country’s consumption, reducing consumption to 28 million litres.
The Guardian learnt that the same forces the minister claimed have been tackled have returned and are now diverting petrol from Nigeria to neighbouring countries.
This means half of the petrol being imported into the country finds its way into neighbouring states.
Specifically, a breakdown of the monthly under-recovery suffered by NNPC showed that the country incurred under-recovery of N45.782 billion in January 2018 alone.
Further analysis from NNPC’s Financial Report in January 2018, revealed that the country’s under-recovery stood at N37,263,846,591.
This automatically translates to under-recovery of N60 per litre. Facts from the NBS disclosed that Nigeria’s average daily PMS consumption was 60 million during the first quarter of 2018.
Kachikwu had adopted the price modulation policy for products, to ensure the price of petrol reflects the price of crude oil in the international market as close as possible.
Meanwhile, An Ikeja High Court heard yesterday how two oil marketers, David Nwachukwu and Frank Okeke allegedly diverted N1.042billion meant for rentals accrued to a leasing company and haulage services of three companies for personal use.
Nwachukwu and Okeke are facing a 14 count charges bordering on conspiracy and stealing contrary to section 409 and punishable under 281(1) of the Criminal Code, Law of Lagos State 2011 preferred against them by the Economic and Financial Crimes Commission (EFCC) before Justice Raliat Adebiyi.
They were arraigned before the court alongside their companies, Haulage Oil and Gas and Franviok Limited.
The defendants were also charged for retention of proceeds of criminal conduct contrary to Section 17 (b) of the EFCC (establishment) Act, 2004.
Led in evidence by the prosecuting counsel, Rotimi Oyedepo, a witness of the commission, Orji Chukwuma, told the court that a petition, written by Leasing Company of Nigeria Limited (now LECON Financial Service Limited) over alleged diversion of funds was assigned to his team to investigate.
He said: “Upon receiving the petition, a lot of investigations were carried out. We investigated staff of Total Plc, LECON, Bank of Industry. We recovered some documents such as internal memo. Some of the people we interrogated made statements. I came across one Bassy Effiong, we interviewed him on the product he sold.”
Additional report from Guardian NG and The Nation