State run oil company, the Nigerian National Petroleum
Corporation, NNPC, yesterday was unable to account for
65,000 barrels of crude oil out of an official allocation of
445,000 barrels per day.
At a public hearing held by the Senate Committe
investigating the management of fuel subsidy funds by the
federal government, NNPC officials revealed that a whopping
20% of the cost of imported fuel represented the component
associated with importation, the Vanguard reported.
With Nigeria’s crude selling at $97.89, that translates to a
daily $6,362,850 (N939 million daily) that is unaccounted for.
Managing director of the NNPC group, Mr. Austin Oniwon
led senior oficials of the corporation before the Senate
committee hearing which was chaired by Senator Magnus
Abe, head of the Senate Committee on Petroleum,
Downstream.
The corporation attempted to give a breakdown of how the
445,000 barrels of oil allocated to it for use by local refineries
is utilized. Mr. Oniwon, in so doing, disclosed that the NNPC
sells 65,000 barrels of the allocation to a foreign oil
company, another 65,000 barrels is sent to an Ivory Coast
refinery Societe Ivoirienne De Refinnage.
The mother of all shockers, however, is the fact that the
NNPC could not account for 65,000 barrels sold daily, to the
tune of N939 million.
It was also revealed that off the oil barrels allocated to the
NNPC on a daily basis, only 170,000 barrels were refined
locally.
He said, “Warri refines 80,000 barrels; Port Harcourt, 90,000
barrels, while Kaduna refinery is shut down due to the
problems with the pipelines.”
The Vanguard further reported that the NNPC swapped
60,000 barrels daily for refined products with United
Kingdom based company Trafigura, while another 90,000
barrels per day was swapped for product with Duke oil, a
subsidiary of the NNPC.
On the retail price of crude, he told the committee that the
corporation before 2003 was buying crude oil locally at a
reduced price, paying between $9.50 and $22 per barrel
between 1999 and 2003, but a change of policy has led the
NNPC to buy crude at the international oil market price.
Mr. Oniwon also revealed to the committee that subsidy has
been abused at all levels saying, “Whether at the crude level
or at the product level, subsidy was subject to abuse,
phasing it out completely was the way forward.”
Senate members expressed concerns that the products
covered by subsidies were left in the hands of the
beneficiaries. They said as much to Mr. Reginald Elijah, the
Executive Secretary of the Petroleum Products Pricing
Regulatory Agency (PPPRA), however, he said it was not
within the purview of the agency to provide security at the
tank farms where imported products were stored even after
paying subsidies.
According to the Vanguard, Mr. Elijah, while listing the
components of the subsidy, noted that there were various
charges, as well as the actual price of crude in the
international market.
He said the price of crude accounted for 80 percent of what
becomes the pump price of PMS, adding that the other 20
percent presented charges from storage, finance,
administration, freight and distribution elements.
Contrary to wide spread belief that refining petroleum
product in the country will bring about cheaper products,
the Executive Secretary of the Petroleum Products Pricing
Regulation Agency (PPPRA), Mr. Reginal Elijah has revealed
that locally refined petrol in Nigeria will only save N11.87k per
liter.
He said the discount will come off the N140.78K landing
price of imported products. Mr. Reginald Stanley told
Senators today, at the oil subsidy hearing that because the
NNPC buys crude oil at the internation flat rate, the difference
in cost of subsidy between locally produced and imported
products is marginal.
Senator Abe, chairman of the committee concluded that the
subsidy on diesel and kerosene amounted to a sham by oil
companies.
He said, “I do not understand what talk about deregulation
because what we have in this country is for oil companies to
come together and connive to import AGO and sell to the
public. Clearly what is happening in the market is not
deregulation it is price fixing.”
source www.channelstv.com/home/2011/12/13/pppra-ignorant-of-total-crude-volume/