Senate queries PPPRA for failing to recover N1.6 billion overpaid to oil marketers

An audit of the accounts of the Petroleum Products Pricing Regulatory Agency (PPPRA) has revealed that N1.6 billion (1,596,803,859.97), being the “over recovery” due from the oil marketers in 2015 is yet to be collected by the agency.

Although the state oil company, NNPC, is now the main importer of petrol in Nigeria, oil marketers used to import petroleum products with their funds and recover their money afterwards, through the PPPRA. But in 2015 the oil marketers recovered N1.6 billion more than was required, the audit report noted.

Over a year after the money was overpaid to the marketers, the PPPRA did not recover it, contrary to usual practice in the industry, the auditors noted

This is contained in the in the annual report of the Auditor-General of the Federation (AuGF) for 2015.

The report was submitted to the Senate by its Committee on Public Account in June.

The PPPRA is part of the 114 Ministries, Departments and Agencies (MDAs) indicted and queried by the auditor-general for incessant violation of extant rules, some of which include non-retirement of personal advances within a financial year and grant of cash advances above approved limit.

In the report obtained by PREMIUM TIMES, all 114 MDAs were queried by the auditor-general. About 84 responded, made submissions and appeared before the Senate panel to defend the queries raised. Another 21 MDAs sent in written reports but did not appear before the committee.

PREMIUM TIMES reported how seven MDAs including the Ministries of Information, Police and Health, refused to appear before the Senate Committee.

This paper also reported how the Code of Conduct Bureau (CCB) was queried by the Senate for spending N995 million on “store items” and paying salaries to dead officers.

The Query

Although the names of the oil marketers involved were not mentioned in the report, the auditor-general stated that they were overpaid and required to explain the non-collection of the over-recovered amount.

“The practice has been that Oil Marketers will pay for the product and later recover their money from the federal government (through PPPRA). In the case under review, the Oil Marketers over recovered what was due to them by N1,596,803,859.97 and that amounted to over payment to the marketers.

“Consequently, the Management of PPPRA is required to provide explanation for the non-collection of the “over recovered amount” by the Oil Marketers for over two years since this occurred and show evidence of the recovery of N1,596,803,859.97 outstanding amount from the Oil Marketers and forward to the Auditor-General for the Federation for appropriate verification,” part of the report read.

However, in its response, the PPPRA stated that “over recovery” under the Petroleum Support Fund (PSF) scheme was the period at which the PPPRA’s recommended ex-depot price was higher than the landing cost of products.

“Marketers were therefore required to pay back the differentials between the landing cost and the ex-depot price to the government. On the other hand, “under recovery” was when the recommended ex-depot price was lower than the landing cost of products.

“In this case, marketers were reimbursed by the government with the differentials (subsidy).”

The agency further explained that in 2015, the PSF scheme experienced a brief period of over recovery for which the sum of N1,576,382,310.61 was computed.

Marketers, they said, were duly advised and the sum of N938,933,616.17 recovered and paid into the PSF Account domiciled with the CBN.

“The delay in full recovery of the ‘over recovery’ was due to the marketers’ insistence of settlement or of netting-off on their long outstanding claims (Subsidy, Interest charges and Foreign Exchange Differentials) with Government.

“However, the total over-recovery is N1,576,382,310.61 as against N1,596,803,859.97 reported and that over-recovery is not overpayment to the OMCs as stated in the report,” the PPPRA said in its response.

But the Senate Committee chaired by Matthew Urhoghide (PDP, Edo), observed that the PPPRA was not diligent and proactive on what it termed ‘over recovery’ under the PSF Scheme.

It, therefore, recommended that the agency recover the outstanding sum of N1.6 billion from the indebted oil marketers within six months and forward the recovery particulars to the auditor-general for audit and also to the committee for its note.

More discrepancies in other MDAs

Apart from frivolous spendings, failure to recover necessary funds and payment of salaries to dead officers, many other MDAs flouted key rules which, according to the report, required urgent parliamentary and executive attention to enable easier audit process.

Some of the violations include consistent contravention of relevant constitutional provisions and other extant laws by the Office of the Accountant-General of the Federation and late submission of the Annual Financial Statement – a violation of the provisions of Section 49 (1) and (2) of Fiscal Responsibility Act, 2007 and Section 85 (5) of the Constitution of the Federal Republic of Nigeria.

The panel also said the executive withdrew funds from Special Fund Accounts for purposes other than the objectives the funds were created, and without recourse to the National Assembly for authorisation – contrary to Section 80 (4) of the Constitution.

The lawmakers noted the lack of collaboration between the two key agencies involved in the management and review of public funds; that is, the Office of the auditor-general and the Office of the accountant-general.

They said such attitude of lack of cooperation between the offices, constitutes a barrier to efficient, effective, economic and transparent audit process of the nation’s federation account and thus gives room for negative corruption perception index, thereby rubbishing government efforts in fighting grafts in the society.

The committee also discovered the prevalence of unwholesome financial practices by some principal revenue agencies which, it said, have negative implications on the revenue generation efforts of the government.

They faulted the deliberate delay in the submission of financial transcripts by the Accountant-General of the Federation to the Auditor-General for the Federation – describing it as a conscious effort at undermining the Office of the Auditor-General for the Federation and by extension, the supreme law of the land.

Empty threats

Although recommendations were made and some agencies were given a timeframe to correct the issues they were queried about, this is not the first time.

The Senate, especially its Public Accounts Committee, is known for issuing threats to heads of MDAs over one discrepancy or the other, but not much is done to carry out these threats.

The panel in February 2020, threatened to demand the sack of heads of agencies like Central Bank of Nigeria (CBN), Department of Petroleum Resources (DPR), Federal Inland Revenue Service (FIRS), National Bureau of Statistics (NBS), among others.

In June of the same year, it threatened to order the arrest of the ministers of information, petroleum resources, power, women Affairs, solid minerals and the head of the National Population Commission (NPC) for failing to appear before it.

Apart from the committee, the Senate President, Ahmad Lawan, had also vowed to publish the names of the MDAs that failed to respond to the queries and account for public funds. However, two months later, nothing has been done to that regard.

One of the major recommendations by the committee is the passage of the Audit Service Bill into law which the panel said, will help strengthen and streamline the audit process with a view to ensuring prudence in public finance and transactions.