Senators quiz Baru over ‘$3.5bn subsidy fund’

Senators yesterday grilled the Group Managing Director (GMD) of the Nigeria National Petroleum Corporation (NNPC) Maikanti Kachalla Baru over an alleged existence of the sum of $3.5 billion as subsidy fund‎.

Members of the Senate ad hoc panel probing the allegation, chaired by Senate Leader Ahmad Lawan (APC, Yobe), ‎at a public hearing in Abuja asked Baru to explain if the corporation was still paying subsidy without appropriation.

Senators re-echoed ‎the allegations made on the floor of the Senate a fortnight ago, saying available records showed that the corporation was indeed still paying subsidy.

But Baru, in his presentation before the panel, said ‎the allegation that the corporation has $3.5bn was not true, pointing out they only had $1.05bn set aside from the NNPC’s dividend from the Nigeria Liquefied Natural Gas (NLNG) to augment the shortfall of landing cost.

He said ‎the current landing cost of premium motor spirit (PMS) in Nigeria is about N180 per litre, hence the need to augment it since the commodity was capped at N145 a litre.

“NNPC will continue to ensure the supply of pms at the approved 145. NNPC doesn’t operate any account for subsidy as there’s no provision for subsidy.

‎”The 1.05bn dollars is being administered under two committees: steering and working committees with representatives from all relevant government agencies.‎ We will provide the documentation as advised by this committee,” he added.

But senators questioned the legality of the under-recovery fund, with some of them saying the $1.05bn NLNG dividend was subsidy in another way.

‎”Augmentation comes from a shortfall, which has to be paid by somebody. If you augment, that means you subsidise. So, it appears it’s just a question of semantics,” Sen Ibrahim Gobir (APC, Sokoto) said.

But Baru said as far as they were concerned, there is nothing like subsidy since there was no such provision or approval by the National Assembly in the Appropriation Act.

On his part, Sen Abubakar Kyari (APC, Borno), said ‎a document before the panel indicated that at some point, the landing cost was down to about N126 per litre, demanding explanation on the differential.

Baru said the only time that such scenario obtained was when some Nigerian refineries functioned for a short period, and that despite that, the corporation still imported fuel from other countries.

At the end of the about two-hour session, the committee chairman, Lawan directed NNPC to provide all documents relating to the transactions made on the payment made from the $1.05bn, among others.