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Nigeria lost $6.8bn because of corruption and mismanagement of its controversial fuel subsidy programme from 2009 to 2011, according to a report presented to parliament on Tuesday.
Though high-level graft has been rampant for decades in Nigeria, the scale and details of alleged malpractices revealed in recent days have created uproar. Lawmakers shouted over one another when the report was discussed on Tuesday and some stormed out of the session, which was carried live on television.
The report comes just three months after a failed attempt to remove fuel subsidies and vindicates government critics who had argued that unchecked corruption, not rising demand for fuel, had caused the costs of the fuel subsidy programme to spiral.
In their conclusion, the house of representatives committee said the subsidy regime was “fraught with endemic corruption and entrenched inefficiency” and that much of the subsidy payments were for petrol that did not exist or was not consumed in Nigeria.
In one detail, the accountant-general made 128 subsidy payments of 999m naira ($6.35m) each within 24 hours in 2009. At the time, there were only 36 official oil marketers, who would have imported different quantities of fuel.
Among the firms fingered for taking payments for non-existent fuel was the state-owned Nigerian National Petroleum Commission. “We are fighting against entrenched interests whose infectious greed has [hurt] our people,” said Aminu Waziri Tambuwal, speaker of the house, on Tuesday. “Therefore, be mindful they will fight back and they normally do fight dirty.”
The parliament report was commissioned in January during the nationwide strike called in response the removal of fuel subsidies, which caused prices to more than double. The government later backed down. It claimed at the time that the subsidy programme was costly and deterred investment in Nigeria’s oil sector.
Though it is Africa’s largest oil producer, Nigeria imports most of its petrol because its refineries are so decrepit.
While demonstrators said that cheap fuel was one of the only benefits they saw from the government, they also pointed to the large-scale graft and inefficiencies in the oil sector.
The 209-page report showed that the fuel subsidy cost 2.6 trillion naira in 2011 – double what the government claimed it was when removing the subsidy, and nearly ten times what it cost in 2006.
Over the same period, the number of companies licensed to import fuel jumped from five to 140. Fuel licences are a key vehicle for patronage. The NNPC received much of the blame. “The operations of the [state-run oil company] were opaque and not transparent,” the report reads. “The implication on this is that it created room for abuses, inefficiencies and manifest lack of accountability.”
The report’s authors said the NNPC, private oil marketers and the regulator should refund the government 1.07 trillion naira ($6.8bn) “for various violations”. It also called for the prosecution of officials involved in the theft. But cases against senior officials in Nigeria are rarely, if ever, followed through.
Successive Nigerian governments have pledged to overhaul the oil sector, privatising the NNPC and increasing transparency. But the Petroleum Industry Bill remains stalled thanks to vested interests in the government as well the oil companies who have objected to proposed increased royalty rates.
Uncertainty over the legislation has caused stagnation in the sector, with little new investment in recent years.