In a move aimed at recovering a staggering $20 billion in lost revenue, the Nigerian House of Representatives is set to conduct a comprehensive audit of petrol subsidies. This ambitious initiative was announced by Honorable Ikeagwuonu Ugochinyere, the Chairman of the House Committee on Petroleum Resources (Downstream), on Friday.
The primary objective of this comprehensive audit is to assist the Federal Government in recovering a significant sum of revenue lost within the oil sector. Furthermore, the committee intends to ensure the adequate supply of domestic crude, ultimately contributing to energy security.
The House Committee on Petroleum Resources (Downstream) has outlined specific goals to achieve these objectives:
Prioritizing Timely Revenue Remittance: One key goal is to emphasize the early remittance of federal revenues and the recovery of any outstanding unremitted funds. This approach is geared towards ensuring that government revenues are remitted on time and any previously unremitted funds are retrieved.
Scrutinizing Subsidy Beneficiaries and Loan Transactions: The committee will investigate subsidy beneficiaries, closely examine loan transactions, and assess pre-export financing arrangements associated with crude oil.
Evaluating the Direct Sales and Direct Purchase Method: The audit will delve into the use of crude for importing refined petrol and assess other related value chains.
Collaboration Across Sectors: The committee will collaborate with relevant committees in the upstream, mainstream, gas, and petroleum training fund sectors to achieve its specific objectives.
Post-Petroleum Industry Act (PIA) Assessment: An examination of actions taken before and after the implementation of the Petroleum Industry Act, a review of the status of national assets, and the pursuit of energy security are part of the agenda.
Promoting Downstream Sector Competition: The committee will focus on evaluating the level of competition in the downstream sector, a vital aspect envisioned in the Petroleum Industry Act.
Addressing NNPC’s Dominance: The House of Representatives aims to tackle the challenges posed by the dominance of the Nigerian National Petroleum Corporation (NNPC) as the primary importer of petrol, moving away from the PIA’s vision of diverse downstream operators.
Support for Modular and Local Refineries: The committee will work to address the challenges related to providing domestic crude to modular and local refineries, aligning with the constitutional provisions laid out in the Petroleum Industry Act.
The move to audit petrol subsidies comes after President Bola Ahmed Tinubu officially announced the end of petrol subsidies during his inauguration on May 29, 2023. Prior to this decision, the Nigerian National Petroleum Company Limited disclosed that it was spending up to N400 billion monthly on petrol subsidies, a financial burden that was affecting the company’s resources.
Mele Kyari, the Group Chief Executive Officer of the NNPCL, previously emphasized the financial implications of the subsidy, stating that the landing cost of petrol was significantly higher than the selling price, resulting in substantial monthly subsidies.
