Nigeria Senate to Probe $3.5 Billion Spent by State Oil Firm

(Bloomberg) -- Lawmakers in Nigeria will investigate $3.5 billion allegedly spent by the state oil firm on gasoline subsidies and expressed concern that the sum was not included in the national budget.

The amount was used by the Nigerian National Petroleum Corp. under a so-called Subsidy Recovery Fund managed only by the NNPC’s managing director, Maikanti Baru, and a senior finance official, according to the senator who brought up the motion Tuesday, Biodun Olujimi.

“This fund is too huge for two people to manage,” she said during a plenary in the capital, Abuja, according to transcriptions posted on the Senate’s Twitter account after the motion was passed. “The $3.5 billion is too huge to be managed without appropriation.”

The NNPC denied any wrongdoing and said it wasn’t in the custody of a $3.5 billion fund. A $1.05 billion “National Fuel Support Fund” was established by the firm less than a year ago “to ensure stability in the petroleum products supply,”spokesman Ndu Ughamadu said in a statement. The fund is jointly managed by the NNPC, the central bank and the finance ministry among others and the firm “did not independently spend a dime of the fund.”

Capped Pump Price

It wasn’t immediately clear over which period of time the money was allegedly spent according to the senators. Nigeria used $1.3 billion for gasoline subsidies in the six months through June, said Renaissance Capital in a note sent to clients Tuesday.

Despite being Africa’s top oil producer, Nigeria imports almost all the fuel it consumes since its refineries are in a decrepit state. The NNPC imports the bulk of the gasoline and the pump price is capped by the government at 145 naira, or $0.40, a liter ($1.52/gallon).

NNPC officials will be summoned by the senate committee on the downstream sector, upper house president Bukola Saraki said Tuesday, and the committee will report back by next week.

The NNPC has often been criticized for its opaque management and inefficiency. In July, Nigeria’s House of Representatives, the parliament’s lower chamber, said it would investigate the firm for not sending enough funds to the government.

To contact the reporters on this story: Sophie Mongalvy in Lagos at smongalvy@bloomberg.net;Tope Alake in Lagos at talake@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Paul Wallace, Andre Janse van Vuuren

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