Bloomberg News

Nigeria Police Investigate Subsidy Probe Bribe Allegations

June 13, 2012

Nigerian police are investigating allegations that the chairman of a parliamentary committee that probed illegal fuel subsidy payments took a bribe to influence the outcome, a spokesman said.

“That case is under investigation,” Frank Mba, a police spokesman in Abuja, said today by phone. The police will release details “when we reach a comfortable level in our investigation,” he said.

Farouk Lawan, the chairman of the House of Representatives’ committee that investigated fuel subsidy payments, denied in a statement yesterday sent to Bloomberg that he “demanded and received the sum of $600,000 as bribe from” a fuel retailer as reported in some Nigerian newspapers.

Lawan’s committee, in a report approved by lawmakers in April, said state agencies under the Petroleum Ministry paid 1.1 trillion naira ($6.7 billion) illegally to fuel importers between 2009 and 2011, the period covered in the report. The report called for the prosecution of officials who oversaw the payments of the subsidies, which were “fraught with endemic corruption and entrenched inefficiency.”

Lagos-based ThisDay newspaper cited Femi Otedola, the chairman of Zenon Petroleum & Gas Ltd., as saying that Lawan requested $3 million not to add Zenon’s name in the report, saying that several other retailers also paid him.

In cooperation with Nigerian officials, Otedola said he paid Lawan $620,000 in three installments with serialized dollar bills provided by security agencies, ThisDay reported on June 11.

‘Divert Attention’

“The present mudslinging isn’t unexpected in view of the caliber of people whose actions and inactions were found wanting in the report,” Lawan said in the statement. He accused them of trying “to discredit the report and divert the attention of the public from the real issues of large scale fraud in high places established in our report.”

Nigeria fixes gasoline prices by subsidizing oil importers such as state-owned Nigerian National Petroleum Corp. and Total Nigeria Plc. (TOTAL) Africa’s largest oil-producing nation doesn’t have the refining capacity to meet domestic needs.

President Goodluck Jonathan attempted to scrap the subsidy and was forced to partially reinstate it in January after a week of strikes and protests, raising the gasoline price to 97 naira a liter (0.26 gallon) from 65 naira.

Foreign Currency

According to the parliamentary report, more than 10 companies obtained foreign currency under the subsidy program and didn’t use the funds to import gasoline. The state Petroleum Products Pricing Regulatory Agency gave approval to 35 companies to import products before they were formally registered with the agency, the committee said.

NNPC received 310.4 billion naira in subsidies for kerosene, which is deregulated and shouldn’t attract state payments, and 285.1 billion naira in excess of the amount recommended by the PPPRA for 2011, the committee said. The regulatory agency paid itself 312.3 billion naira in excess of approved administrative charges in 2009 and 2010, it said.

To contact the reporter on this story: Maram Mazen in Abuja at mmazen@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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