Answers to our posers to PPPRA, unsatisfactory
–Senator Abe, Chairman Petroleum Resources (Downstream) Committee
By ADETUTU FOLASADE-KOYI
Thursday, January 26, 2012

• Sen. Abe

Senator Magnus Ngei Abe has the unenviable task of seeking answers to how the fuel subsidy scheme is being run by the Federal Government and how the N240 billion appropriated by the National Assembly snowballed into N1.3 trillion in the 2011 fiscal year.

In this interview with ADETUTU FOLASADE-KOYI, Senator Abe, Chairman of the Petroleum Resources (Downstream) Committee, reviews the role of the Nigerian National Petroleum Corporation (NNPC) in the oil sector and explains why a forensic investigation of government’s subsidy regime is necessary at this point in time. Excerpts:

Last year, your committee convened a public hearing on the management of the fuel subsidy scheme. What’s happening?
It’s not correct to say that you’ve heard nothing from the committee. We conducted public hearings and we’ve been holding series of meetings to try and clarify some of the issues that cropped up in the course of the public hearing. We intend to visit some of the facilities that we think the joint committee would need to see before we submit our report to the Senate.
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So, next week or the upper week, depending on the logistic arrangements that we are able to put in place, the committee would probably be visiting Lagos to look at some of the facilities that you heard them talk about in the course of the investigation. We’ve also decided that we would need to talk to some of the importers to hear their side of the story and put forward some of the concerns that have been expressed by not just members of the committee but also by the Nigerian public; to try and give them some opportunity to make their own case and then, we also have a few lingering issues that we want to clarify with the PPPRA before we can conclude.

So, we invited them to come on January 17 but because of the concurrent investigation in the House of Representatives, they couldn’t make that meeting with our joint committee but we are looking to fix another date where they can come and clarify those issues with the Senate. So, the Senate investigation is very much on course and as soon as we finish with these few remaining issues and any other that may come up from some of our other members, we would be submitting our report to the Senate.

What are the likely issues that you would discuss with the PPPRA?
There are some loose ends, arising from the public hearing that members want to tidy up before we can draw conclusions on those issues and as we were working on our documents, we saw some loose ends and we also saw outstanding questions they had promised to provide answers to and we are not satisfied with the answers they brought. So, those are the things we are planning to tidy up.

Would it be open?
Initially, we didn’t think it would be open but the meeting with the importers would be open; those that would be invited because we think that it is important that whatever we discuss with them should be visible to the Nigerian people and the Nigerian public. The meeting would be open. We have some companies that we have concerns about which we have listed and we also have some we are picking at random, not because we have any issues with them but because we want to give as many companies as possible an opportunity to have their say and to also, have an opportunity to speak on the issue. So, we would be inviting them and it would be in the open.

The security agencies are already moving in. Do you think the Senate probe is still necessary?
I don’t think that the involvement of the security agencies or the EFCC in anyway takes away from the fact that as a country, if there are lessons to be learnt from this, we need to learn those lessons, we need to chart a way forward. We are not just going to sit down and…if security agencies are investigating a matter that (should) end a Senate investigation that has been on-going since last year. If you would recall, we had invited EFCC to come for the public hearings. We actually sent letters, inviting them to be part of the public hearing. So, we expected that based on what they hear from the public hearing, if they wanted to invite people to ask questions, they are free to do so.

We didn’t expect that at any time that would mean that our investigation must stop. No. What they are pursuing are criminal aspects of this thing and if it’s uncovered…and if we see things that the country ought to learn lessons from, we would also point them out so that we can make corrections to move the country forward. If there were places where we would have invited the EFCC to come in, they are already there. That’s superfluous. We may no longer need to do that but we had invited them from the very beginning to be part of the process because we knew that Nigerians would need to be satisfied that a proper forensic examination of these issues are carried out by those who have the capacity and the required training and facilities and the legal backing to ask those questions properly in that manner. So, we envisaged that; we don’t think that interferes with the Senate investigation.

How would you describe the concurrent probe of the subsidy scheme in the National Assembly? Is it not duplication because there is one National Assembly?
Are you telling me or you are asking me?

Both; because it appears to be a duplication of efforts in the two chambers.
Well, you know, we are always very, very careful how we discuss issues within the National Assembly outside. But this investigation you know was ongoing and then, the House felt a need to look at the same issue. I can’t really comment on an issue that is within the National Assembly. Maybe, if I see the Speaker (of the House of Representatives) and if I have something to say, I would say it to him.

So, you agree there’s duplication of efforts?
No, I won’t agree. I won’t use the word: duplication, because you are dealing with convention. The House has its own legal rights and responsibilities and obligations. The Senate has its own. Usually, the convention is, we try not to do the same thing at the same time. So, it’s a convention. There is no legal authority. Mind you, the Senate investigation has been on since last year. It’s not appropriate for me as a Senator to make a public comment on a matter that is within the National Assembly. We have one National Assembly.

We have a Chairman of the National Assembly who is the President of the Senate; we have a deputy chairman who is the Speaker of the House of Representatives. So, if we have any issues within the National Assembly, it would be handled by the National Assembly Service Commission. It cannot be handled by an individual senator addressing the press. I don’t think that is how issues of that nature can and should be handled. But what I would want you to appreciate is that the House of Representatives is a legal entity with its own constitutional rights and powers and the Senate is a legal entity with its own constitutional rights and powers also. So, there is a whole lot happening.

Will there be a convergence later?
Well, we will talk but we won’t talk in the media.

In the course of the subsidy scheme, you promised Nigerians that you would get answers. Has the committee been able to do that?
When we started this investigation, we promised the country that the investigation would be open, all questions would be asked in the open and it would be a transparent process that would be visible to the Nigerian people. I think the question you are asking me can be better asked from the Nigerian people. Did they get the answers that they expected to get? I think that if you review the (public) hearing, you would know that a lot of light was shed on the whole issue of subsidy and how it is managed and what it is. I think substantially, we got a lot of answers. But, are we satisfied with all the answers we got? Definitely not. But, did we get answers? I think Nigeria and not just the committee got a lot of answers from that process.

When are you inviting the marketers?
Right now, we have challenges with time in the Senate but we are looking at next week, January 23-28, because we first wanted to do some site inspection of some of the facilities for receiving these products and storing them so that we can make some on-the-spot assessment of some of what we heard at the public hearing. So, after that, we would talk with the marketers before we decide on what exactly the report would say.

The Nigeria Customs Service (NCS) has told the House of Representatives committee on the probe of the subsidy scheme that NNPC imports crude oil. Was your committee told about that in your investigative hearing?
I don’t want to comment on the importation of crude oil for Kaduna refinery because I really don’t see it as a dramatic revelation because when Kaduna was built, there was some subtle knowledge that it may refine products other than Bonny Light. So, I don’t think that’s a very dramatic issue because if you have a refinery that has capacity to refine other products than crude, you have to get it to refine it. That’s an issue that NNPC would have to clear. Our own investigation substantially is the management of the fuel subsidy scheme…As far as the issue of subsidy management is concerned, the committee was able to, as a committee, get a clear understanding of the management of subsidy, its challenges, problems and I think the Nigerian people also saw that. That was the purpose of the hearing and I’m very satisfied with the progress we’ve made so far.

In the course of the public hearing, some names were released. Are you going to forward these names to the EFCC to aid it in its investigation?
First of all, there is a law and there are rules for the importation of petroleum products into this country and for payment for those who do so. It is not everybody who imported petroleum products that is a criminal. There are challenges with the way the scheme was managed; there are those who are alleged to have, of course, used unethical practices in order to enrich themselves at the expense of the Nigerian people but this is something that has to be determined by a clear forensic investigation of the situation. On the face of it, between you and I, or as a layman, clearly, I believe that things went wrong with the management of the fuel subsidy regime. But who exactly committed what crime and what laws were broken would be determined by a criminal investigation process which, as you pointed out, is on-going.

On the names we read, Nigerians wanted to know those who were participating in the scheme, those who were benefiting and being paid and I didn’t think that in a country of 160 million people, we should be asking such questions in a democracy! I felt that that information should be open to everybody. I didn’t see why we were behaving as if it was something that you needed to belong to a member of a cult to have access to that information. I didn’t see it that way. As part of the investigation, we gave that information to the public. That is not, therefore, to say that everyone who was named is necessarily a criminal. I don’t think so. So, the issue of forwarding this information to EFCC is quite unnecessary because they were part of the investigation from the beginning. They were assumed to have been there when the names were read. They don’t have to wait for us to forward the information to them.

Whatever information we had, they also have. That was why they were invited to the investigative hearing in the first place. So, whatever information is available to us is also available to them at the same time it was also available to you and the Nigerian public. What I’m trying to say is that first, there is no basis to conclude that because you took part in the importation of petroleum products under the subsidy scheme you are a criminal. That would not be fair neither would it be correct. But there is a basis for seeing clearly that there were certain irregularities in the way these things were managed.

There were loopholes through which these people took advantage of; which you may not be able to find actually but there were also some…These things would be determined by forensic investigation which the Senate really doesn’t have the capacity to carry out and we are glad that those who are empowered by law and have the tools and the resources to carry out that kind of examination are already on which is what we would have asked for anyway. So, they are already on and I think that at the end of the day, all of us who are Nigerians would like to know what the outcome of that investigation would be.

On the price regime o f PMS which the filling stations are finding difficult to adjust to
They will adjust. What the new price regime means is that subsidy is still with us in reduced volume or reduced price. We have not yet achieved full deregulation which is what will end subsidy. So, as long as subsidy is here and the PPPRA has fixed the price regime, any marketer who sells outside of that price is breaking the law and the full force of the law would be brought to bear on such marketers.

That is the law. I have been in touch with PPPRA and I think they have a hotline; so, anybody you see selling above the stipulated price of N97, you call PPPRA and disciplinary measures would be taken against such a marketer because right now, we have not achieved deregulation. So, there is no basis for anyone to sell at N141. There is still price regulation in place which is fixed right now at N97.

On the PIB as it affects deregulation. What are your expectations as far as that bill is concerned?
Quite frankly, there is no way you would make such a revolutionary re-organisation of the oil industry in this country without going through challenges. I think it would be naïve of any Nigerian to think so. I know for a fact that there a lot of interests, economic interests, political interests, social interests that are tied into the oil sector. In dealing with a subject like the PIB which seeks to reshape the industry, re-create it and quite frankly, remake it on a commercial basis and take out a lot of the wastes and a lot of the unnecessary patronage that is presently associated with the industry, I don’t think you can achieve that without some level of turbulence.

I think you would have some of those challenges but the important thing is that if those key actors in this, namely the federal government, the National Assembly, our own people, if we all put the interest of Nigeria first, finding a common ground and passing a law that would actually enable the petroleum industry to develop to the benefit of the Nigerian people would not be too difficult an assignment. I know that oil industry players would have their own interests which they would like to see written into the law but we are Nigerians; the resource belongs to us and it is the interest of our people that we should promote over and beyond anything else. And you also have to remember that in promoting the interest of our people, you must make sure that those who participate in the industry can get fair returns for their investment because if they don’t get it, then even trying to get something for your own people would be useless. It’s not rocket science.

There are existing models in other societies they have used that has worked and is working very well. You can take the case of Malaysia, which has Petronas, that of Brazil which has Petrobas; even the Libyan Oil Company; all these are reforms in their oil sectors which have resulted in national oil companies themselves becoming major economic and big time players in the industry. They are even investing in other societies outside their countries and bringing home profit from their investments. Instead, our own NNPC is a source of debt, it’s a source of patronage, it’s a source of waste, it’s a source of mismanagement of the oil industry. So, the PIB is supposed to take care of all that and anytime you want to change something that people are benefiting from, there’s bound to be challenges and many of you know that that is always the case. People don’t give up their benefits easily.

What’s your opinion about the task force set up by the Petroleum Minister?
I don’t work in the Ministry of Petroleum Resources; I’m a senator of the Federal Republic of Nigeria. When the bill is brought to the Senate, I would have my opportunity as a senator and as chairman of the Petroleum Resources (Downstream) to make my input. Whatever processes the executive wants to use to clarify their own thoughts and sieve through whatever proposals they have in order to arrive at a document that they are comfortable with, that they understand properly, that they believe would work in the best interest of the Nigerian people is exactly and totally within the purview of the executive.

If the minister decides to do that by a task force, by a committee, by a technical team or whatever, that is her prerogative as a minister. I can’t sit here and comment on it but what I know is that before any PIB would become a law in this country, it would come to the Senate and every senator would have an opportunity to make contributions and so would the House of Representatives. It’s the National Assembly that ultimately would pass the law and as I said earlier, as we speak today, it has not been re-introduced but I’m glad and happy that the executive is working hard to the knowledge of Nigerians to speed up efforts to see that the PIB is re-introduced into the National Assembly.

How soon should Nigerians expect your report?
We are very, very mindful of the fact that the country would benefit from speedy conclusion of this assignment because the subsidy regime is still in place and whatever we can do to make it work better and more efficiently, I think would be to the benefit of the Nigerian people. We are all very conscious of that and that is why we are ready to do whatever it would take and as quickly as it would take to get it done so that whatever recommendations the Senate would have to make to government and the operators of the subsidy regime to make it more efficient and useful to the people and more transparent, we would make those recommendations.

I believe that given the amount of interest that this has generated, I think that even without waiting for the recommendations; I believe that the NNPC, Petroleum Ministry, PPPRA and the Presidency are already working on ways of trying to make the process more transparent. I know for one that they’ve dispensed with the pool arrangement and working directly with tank farm owners. They’ve brought in some form of innovations to try to improve on what they are doing. I met with the Executive Secretary of the PPPRA and he told me about some of the actions they have taken on their own at this time, including bringing in international inspectors at the point of discharge.

They have done some things to try and improve on public confidence in the process. So, everybody is working and we believe that whatever recommendations we can make that would help that process would benefit this country. But, definitely, the way it was run before, I don’t think it’s going on like that after the public hearing and I don’t believe it can go on like that given the interest of the people in a more transparent and accountable subsidy regime.

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