The Economic and Financial Crimes Commission has seized almost N13 billion as proceeds of fraudulent payments made under the subsidy regime between 2017 and 2021.
This was based on a paper obtained by the Punch correspondent from the Nigeria Financial Intelligence Unit’s website, titled “National inherent risk assessment of money laundering and terrorism financing in the Nigerian extractive sector.”
“The Economic and Financial Crimes Commission, the agency responsible for the investigation and prosecution of fraudulent subsidies in the oil and gas industry in Nigeria, recovered N12,998,963,178.29 as proceeds of illegal payments made under the subsidy regime between 2017 and 2021,” according to the report.
A tabular breakdown revealed that roughly N4.67 billion was recovered in 2017, N4.29 billion in 2018, N2.41 billion in 2019, N416.51 million in 2020, and N1.22 billion in 2021.
The research also stated that there were several potential for fraudulent actions in the oil and gas sector.
“Opportunities for fraudulent actions exist in the oil and gas sector, from extraction to sales of refined goods to consumers,” according to the research.
The lack of dependable equipment to quantify the volume of crude oil extracted makes estimating the volume of crude oil extracted and even stolen through oil theft and vandalism impossible.
Oil theft also occurs in the downstream sector, as petrol pumps at gas stations are rigged or contaminated.
“It should also be mentioned that the sale of petroleum goods on the ‘black market’ has resulted in petroleum products being offered at outrageous rates.
The rising habit of fueling station workers acting as money agents without proper consumer due diligence is cause for concern.
However, it should be noted that in most circumstances, the amount sold to an individual is not questionable. However, if uncontrolled, this conduct could endanger the country.”
It further stated that petroleum products had been diverted to non-designated retail outlets, which is fraudulent conduct that takes advantage of the fuel subsidy regime.
“Other fraudulent actions include the diversion of petroleum goods to non-designated retail outlets to acquire an unfair financial advantage,” the report continued.
“This practise may be intra-state, inter-state, or cross-border to neighbouring countries.
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“The Joint Border Exercise in August 2019 with operation code-named ‘Exercise Swift Response’ resulted in huge number of seizures of trucks and other vehicles used to smuggle refined goods outside the nation.
“The National Security Adviser’s Office coordinated this exercise. This is also related to the subsidy policy, as the cost of PMS is substantially lower in Nigeria than in neighbouring nations.
“Another fraudulent practice is the smuggling of petroleum products. The NNPC recorded daily Premium Motor Spirit evacuation spikes in various depots across the country, against government projected volumes of daily consumption.
”These spikes led to the reactivation of Operation White II – an inter-agency task team comprising the NNPC, stakeholders and LEAs in May 2021.
” It was further reported that these volumes were being smuggled out to neighbouring countries like Benin Republic, Cameroun, Niger republic etc., with higher PMS prices compared to Nigeria.
”The OPW II team was mandated to curtail the smuggling, diversion and hoarding of PMS to ensure the Nation’s energy security. Intelligence-driven investigations are ongoing.”
The World Bank stated in its biannual report, Africa’s Pulse, released in April this year, that increased gasoline subsidies put the Nigerian economy at risk since subsidy payments might significantly damage public finance and pose debt sustainability risks.
The Nigerian National Petroleum Corporation reported N1.43 trillion in fuel subsidies in 2021, despite no evidence of under-recovery in January.
The National Assembly approved N4tn as the gasoline subsidy bill for 2022, a 179.72 percent increase over the previous year’s subsidy cost.
However, experts have warned the Federal Government that the N4 trillion gasoline subsidy bill will have a negative impact on the country’s economy.
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