Discussions in Nigeria’sHouse of Representativesregarding the probe into fuel subsidy payments were concluded earlier this week.

altThe committee, tasked with unravelling the discrepancies between what the federal government paid to fuel importers and the actual amount of fuel imported since 2009, exposed massive fraud in the oil sector. It revealed that $6.8 billion was unaccounted for.

Chaired by Farouk Lawan, the investigation uncovered a series of irregular payments and forged importation documents which the committee blamed on the ministries of finance, petroleum resources and several oversight and regulatory agencies. Prominent national figures were also mentioned in the findings while the Nigerian National Petroleum Corporation was accused of being engaged in collusive practices.

The report’s findings are to be submitted to President Goodluck Jonathan who, Nigerians hope, will take the necessary actions to combat this kind of corruption and agree appropriate compensation. Some, however, remain far from optimistic about the seriousness of the Jonathan administration in tackling endemic corruption in the petroleum industry and remain sceptical of the effectiveness of the national assembly in addressing important issues.

Fuel subsidy

Nigeria’s fuel subsidy policy – whereby the government pays petrol importers the difference between market costs and state-regulated prices – has been a source of contention for numerous administrations. Last September, Bukola Saraki, former governor of Kwara state and chairman of the Senate Committee on Ecology and Environment, tabled a motion to investigate the wisdom of spending around $8 billion in 2011 on the fuel subsidy when that same money could be channelled into development projects which would enhance employment and economic growth. He noted that the fuel subsidy, just one line of spending in the budget, had overspent by 700% without National Assembly oversight.

The fuel subsidy and its excessive costs were further put under the spotlight after the government decided to remove the costly fuel subsidy at the turn of 2011/12. Nationwide protests and strikes this January eventually forced the government to compromise by reinstating part of the subsidy. It was during the general strike and protests that the House of Representatives held its first emergency session and set up the fuel sector probe.

Friends in high places

The investigation suggests that a high-level ‘cabal’ in Nigeria’s oil industry were able to conduct their illegitimate and fraudulent business practices largely unchecked and that they had co-conspirators in all tiers of government. This collusion between government and those in oil sector was at the heart of the fraudulent practices and helps explain how corruption was able to run so deep for so long.

Indeed, those who benefited from the subsidy fund are well-known in government and local circles. Some are major financiers of the ruling People’s Democratic Party (PDP), and a recent investigation by the Nigerian newspaper Punch claimed to have found that “many PDP big shots are chairman of oil companies that had been asked to refund fuel subsidy collected without supplying any products”.

According to committee chairman Lawan, “anybody who knew someone in government could just walk in, pick an allocation paper and walk out”. And it was such practices that accounted for the astronomical rise in the number of fuel importers from 49 in 2010 to 140 by December, 2011.

Equally, if not more worryingly, Lawan claimed that enormous pressure was mounted on members of the panel to deal with the oil industry cabal kindly before its finding were made public. “There was pressure from government officials and marketers who wanted to reach us through some of our colleagues” Lawan said. “If we had compromised, we wouldn’t have had the courage to ask them the questions we asked them.”

Fortunately, the committee seems to have been able to resist those external and internal pressures – and, quite possibly, the temptations therein too. Unfortunately, however, this kind of restraint is far from characteristic or usually expected of the national assembly. In the past, the assembly has repeatedly failed to rise above partisan politics in the conduct of its business, allowing the issues like the war on corruption to become deeply politicised. It has not been rare for initiatives and reports to be shot down in parliament due to reasons other than the public interest. This has eroded public confidence in government and its institutions.

Trust and action

Even though the national assembly appears to have exercised relative objectivity and autonomy in the case of the fuel subsidy probe, the process of rooting out fraudulent practices and compensating the cheated Nigerian population is far from over.

The national assembly committee itemised the amount that should be refunded by the rogue importers and government agencies and listed those it believes were responsible. But the house itself does not have direct powers to enforce its recommendations. It must wait for the Economic and Financial Crimes Commission and other crime and corruption fighting agencies to be given the green light from the executive.

The report now goes to President Jonathan's office and there are no guarantees that it will implement the committee’s recommendations and try those implicated. The 2009 power sector probe into how the pumping of $16 billion into Nigeria’s electricity industry failed to yield considerable improvements, for example, remains shrouded in bureaucratic mystery; most of those prominent figures indicted remain free and the anti-graft agencies Nigerians hoped would be created remain pipe dreams. There are fears that the fuel subsidy probe will remain similarly lost in limbo. As with the legislative branch, the executive has its own alliances and self-interests, and its members are also often influenced by political and personal allegiances.

President Jonathan, speaking through his Special Adviser on Media and Publicity Reuben Abati,promised Nigerians that he will act on the House of Representatives panel report. The resolution is, however, at best advisory rather than binding and whether appropriate actions are taken remains in Jonathan’s hands and according to his interpretation of the report. The House of Representatives’ job is done and its limits reached – now Nigeria must trust in its executive. Sadly, its past actions may not have inspired a great deal of trust.

Lagun Akinloye

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