Nigeria fuel subsidy scheme hit by corruption

http://www.guardian.co.uk/world/2012/apr/19/nigeria-fuel-subsidy-scheme-corruption

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Corruption in Nigeria's state-run fuel subsidy scheme drained $6.8bn from the country's coffers over a three-year period, a parliamentary report said on Thursday.

A 200-page inquiry revealed underhand practices fuelled a sixfold increase in spending on oil handouts between 2009 and 2011. Fuel subsidies, part of a decades-old programme meant to keep fuel prices low for millions of ordinary Nigerians, jumped to 2, 587 trillion naira from 384bn in the period.

The report by a house of representatives committee identified the shadowy Nigerian National Petroleum Company, ranked the world's least transparent state oil firm, as the key culprit. The firm was single-handedly responsible for almost half of the siphoned subsidy funds and was "found not to be accountable to any body or authority". Seventy-two fuel importers, some with allegedly close links to senior government officials, were also singled out. In one case, payments totalling exactly $6.4m flowed from the state treasury 128 times within 24 hours to "unknown entities".

The report recommended an overhaul of powerful directors in NNPC. "Government officials made nonsense of the [subsidy regime] due mainly to sleaze and, in some other cases, incompetence. The insistence by top government officials that the subsidy … was for products consumed was a clear attempt to mislead the Nigerian people," the report said.

A spokesperson for the NNPC declined to comment, but Austin Oniwon, the head of the firm, denied allegations of corruption last month. "Corruption in NNPC is in the imagination of some people," he said.

President Goodluck Jonathan has set up several committees to investigate the notoriously opaque oil sector after an attempt to scrap the subsidy programme in January triggered an outpouring of popular protest. Sceptical Nigerians, who have rarely benefited from the 2-million barrel-per-day oil industry, feared that money saved by scrapping the scheme would end up lining government pockets rather than bolstering infrastructure for a booming population.

A rattled government partially reinstated subsidies at a cost of $5.6bn this year. But Lamido Sanusi, the central bank chief, warned that the funds were unlikely to last the year amid continuing high oil prices. Analysts said that raised the prospect of raiding a windfall oil account in order to dampen renewed protests.

Kayode Akindele, a partner at Lagos-based finance firm 46 Parallels, said: "The key here is the response of government. If the report is just brushed under the carpet like countless others, it suggests business as usual under this government."

Nigerians aren't holding their breath. At a filling station in the commercial capital, Lagos, motorist Andrew Ofhik said: "How do you clean that much dirt? Thinking of it makes a person's head hurt, doesn't it?"