Fuel Subsidy and corruption in Nigeria

Lately we have had so many stories around the CABAL exploiting Nigerians and benefiting from the subsidy paid by the Federal Government to Oil Marketers. The whole issue borders on Corruption especially from NNPC. Recently Dr. Levi Ajuonoma, their spoke person resigned claiming that the level of corruption and intriques in the Corporation is the worst he has ever seen. In the Nigerian Business News as posted below, we will see how one of them exposed some of these actrocities committed against Nigeria and Nigerians. Read and make your comments.

International Fuel Trade “Mafias” Behind failure of Refineries – Femi Otedola January 12, 2012 at 8:29 am by Afolabi Ogunde Tags: femi otedola, fuel subsidy, sahara energy, trafigura, vitola According to leaked United States diplomatic cables, the fraud associated with the cabal that has brought Nigeria’s fuel subsidy system to its knees has been ongoing for close to a decade and has remained virtually unchecked. The US cable coded 04LAGOS767 was created on the 8th of April 2004 and refers to discussions on April 2nd, 2004, between the then Chairman and Managing Director of Shell Petroleum Development Corporation of Nigeria (SPDC), Mr. Chris Finlayson and the then US consul general. Finlayson of Shell had told the US envoy that a scandal was imminent in the NNPC due to overpayments made by Nigeria’s apex oil body to international fuel marketers as a result of falsification of shipping documents on the part of the fuel marketers. He disclosed that the unscrupulous marketers had been amending the dates fuel shipments were loaded in order to “take advantage of particularly high market prices”. This was due to the NNPC’s contractual obligation pay marketers the market price of the refined cargoes on the day the cargoes were loaded. The US cable also highlights discussions on April 6th, 2004 with Femi Otedola, described as “President and CEO of Zenon Petroleum and Gas, the largest supplier of diesel fuel in Nigeria.” The cable states that Mr. Otedola “essentially corroborated” what Finlayson of SPDC had earlier revealed to the US consul general. The cable reveals, “Otedola said over $300 million has been overpaid by NNPC for fuel imports, and that many leading international traders are involved. According to Otedola, NNPC contracts to pay its suppliers the market price on the day a ship is loaded with fuel. He said NNPC recently discovered, however, that bills of lading were altered to reflect loading on days of high market prices. Discrepancies were found when comparing dates on the bills of lading with dates of landing in Lagos.” NNPC Headqaurters, Abuja...where many of these over-payments were approved The cable goes on, “Pointing to examples, Otedola said that while a tanker loading fuel at a refinery in Bahrain usually takes four weeks to arrive in Lagos, comparisons between the bills of lading and dates of arrival of some shipments reflected only a four-day difference, and in other cases, if taken at face value, indicated the journey took nine months. Otedola said 73 shipments from refineries in the Persian Gulf, England, and Venezuela listed delivery times of only one day. NNPC is attempting to get compensation for the over-charge. Otedola went on that most of the fuel traders supplying Nigeria are implicated in over-charging NNPC, and showed a list of 17 companies that supplied fuel in the first quarter of 2004, several of which, he said, are significant players in international markets, such as Trafigura and Vitol. Otedola added that three companies clearly not involved in the scandal are British Petroleum, ChevronTexaco and Shell.” “Otedola recommended that NNPC stop contracting with international fuel traders and negotiate purchases directly from refineries worldwide. According to him, such a move would have two positive effects. Otedola calculates that NNPC would save some four billion dollars a year in expenditures on imported fuel. (Note: Prior to deregulation in October 2003, NNPC, then the sole importer of fuel, lost two billion dollars per year because it sold stock to retailers below purchase price. After October 2003, NNPC initially stopped subsidizing fuel sales, letting marketers import fuel to be sold at market prices. However, sources agree that NNPC is back in the business of subsidizing gasoline sales while it maintains a facade of deregulation by encouraging private marketers to import fuel that NNPC purchases at market price. NNPC then sells the fuel to marketers and retailers at a reduced price to ensure that those companies maintain a profit margin while holding consumer prices to informal caps set by the Department of Petroleum Resources.” “Otedola added that by cutting out the international traders, NNPC would also enhance the environment in which Nigeria’s refineries could be restored and operated. Otedola said he believes international fuel trade “mafias” are behind the failure to bring Nigeria’s refineries back on-line and to capacity. Otedola is convinced these traders arrange for the vandalization of crude oil feeder pipelines, which keep the refineries at Port Harcourt, Warri and Kaduna closed or under-capacity. He said the international traders generally receive at least one million dollars per shipload of fuel to Nigeria and have grown accustomed to the easy money Nigeria offers as long its refineries remain down.” Finally the cable touches on discussions centering on Sahara Energy, an indigenous energy firm, no stranger to media scandal, recently in the news for allegedly passing on DPK (household kerosene) to airlines as ATK (aviation fuel). Speaking on Sahara, the cable discloses, “Otedola described an arrangement the National Electric Power Authority (NEPA) had with Sahara Energy for the provision of diesel to an emergency power generation plant in Abuja. He said that while a pipeline was under construction to deliver fuel to the main power plant, NEPA paid some five billion dollars to Sahara over four years for diesel to the back-up plant. It was later discovered that NEPA had received only about one billion dollars worth of fuel, according to Otedola. Otedola said that he, too, was contracted to deliver diesel fuel to the plant on occasion; however, he petitioned the president to investigate the matter after becoming suspicious of NEPA’s ongoing contract with Sahara and the fact that the pipeline for the power plant was never finished. He said his intervention led to an investigation that ultimately resulted in the cancellation of NEPA’s contract with Sahara.”