Nigeria’s upper house of parliament plans to investigate an alleged $3.5 billion fuel subsidy fund at state-oil firm NNPC, lawmakers said on Tuesday.
The Senate alleges NNPC used the fund to subside the price of imported petrol without the house’s approval, the lawmakers said.
Fuel subsidies are a contentious issue in Nigeria, where prices are kept artificially low at N145 ($0.48) per litre, often as a populist tool.
That has meant that as fuel prices increase globally, it has become unprofitable for private petrol marketers to import, forcing NNPC to step in to prevent major shortages.
However, state oil firm money spent on subsidies is meant to be included in Nigeria’s national budget, subject to approval by the national assembly.
The Senate President, Bukola Saraki, said parliament would set up a committee to look into the issue.
A spokesman for NNPC said the oil company would await a decision from lawmakers and then decide how to respond.
“We have to call for the resolution (by the Senate), analyse it and respond accordingly,” he said.
In April, the Senate said the state oil firm illegally paid 216 billion naira ($707 million) in fuel subsidies in 2017, which should be reimbursed to the government.
Fuel shortages are a recurrent issue in Nigeria’s energy sector due to the country’s limited refining base and its cap on prices. This often creates long queues lasting hours at petrol stations whenever there is talk of fuel price increases.
But the NNPC has denied being in possession of $3.5 billion subsidy fund.
In a statement in Abuja, the corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, explained that at the peak of the shortage of products supply at the close of last year, the National Assembly asked the NNPC to do everything possible to overcome the challenge.
Ughamadu revealed that the NNPC initiated the move to raise a revolving fund of $1.05 billion, since the corporation was, and still is, the sole importer and supplier of white products in the country.
The NNPC spokesman said ever since, the fund had been domiciled in the Central Bank of Nigeria, saying at no time was it in the custody of the NNPC. Ughamadu said the fund, dubbed the National Fuel Support Fund, had been jointly managed by the NNPC, the Central Bank of Nigeria (CBN), the Federal Ministry of Finance, the Petroleum Products Pricing Regulatory Agency (PPPRA), Office of the Accountant General of the Federation, (OAGF), the Department of Petroleum Resources (DPR), and the Petroleum Equalization Fund (PEF).
Ughamadu clarified that the NNPC did not independently spend a dime of the fund which he said was to ensure stability in the petroleum products supply in the country.
