Nigeria’s electoral commission will postpone next Saturday’s presidential and legislative elections for six weeks to give a new multinational force time to secure north-eastern areas under the sway of Boko Haram, an official close to the commission told the Associated Press on Saturday.
Millions could be disenfranchised if the voting went ahead while the Islamic extremists hold a large swath of the north-east and commit mayhem that has driven 1.5 million people from their homes.
Civil rights groups opposed to any postponement started a small protest on Saturday. Police prevented them from entering the electoral commission headquarters in Abuja, Nigeria’s capital. Armed police began deploying to block roads leading to the building.
The Nigerian official, who is knowledgeable of the discussions, said the Independent National Electoral Commission would announce the postponement later on Saturday. He spoke on condition of anonymity because of the sensitivity of the issue.
A major offensive with warplanes and ground troops from Chad and Nigeria already has forced the insurgents from a dozen towns and villages in the past 10 days. Even greater military strikes by more countries are planned.
African Union officials were ending a three-day meeting Saturday in Yaounde, Cameroon’s capital, to finalise details of a 7,500-strong force from Nigeria and its neighbours Chad, Cameroon, Benin and Niger. Details of funding, with the Africans wanting the United Nations and European Union to pay, may delay the mission.
Nigeria’s home-grown extremist group has responded with attacks on one town in Cameroon and two in Niger this week. Officials said more than 100 civilians were killed and 500 wounded in Cameroon. Niger said about 100 insurgents and one civilian died in attacks on Friday. Several security forces from both countries were killed.
International concern has increased along with the death toll; some 10,000 have been killed in the uprising in the past year compared with 2,000 in the four previous years, according to the US Council on Foreign Relations.
The United States has been urging Nigeria to press ahead with the voting. The US secretary of state, John Kerry, visited Nigeria two weeks ago and said that “one of the best ways to fight back against Boko Haram” was by holding credible and peaceful elections, on time.
“It’s imperative that these elections happen on time as scheduled,” Kerry said.
Officials in President Goodluck Jonathan’s administration have been calling for a postponement.
Any delay is opposed by an opposition coalition fielding former military dictator Muhammadu Buhari, though the opposition stands to take most votes in the north-east.
Supporters of both sides are threatening violence if their candidate does not win. Some 800 people were killed in riots in the mainly Muslim north after Buhari, a Muslim, lost 2011 elections to Jonathan, a Christian from the south.
A postponement will give electoral officials more time to deliver some 30 million voter cards. The commission had said the non-delivery of cards to nearly half of the 68.8 million registered voters was not a good reason to delay the vote.
Guardian
Sunday, February 8, 2015
Friday, February 6, 2015
Jumia gets official Apple istore
Jumia has rolled out their official Apple store online. According to Jumia, they are the first online retailer to be authorised by Apple to sell Apple related products.
According to the online retailer, it expects that the official authorisation will alleviate shoppers’ fears of purchasing counterfeit Apple products online.
Speaking on the launch of the online iStore, Jeremy Doutte, MD Jumia Nigeria stated that: “The collaboration between Jumia and Apple is a thing of beauty and can best be described as a big win for innovation and authenticity. Nigerians no longer have to be burdened by fears of using their hard earned cash to purchase a fake, stolen or reworked Apple device. Above all our continued commitment to seeing the Nigerian customer get top quality and premium retail keeps driving us to push new boundaries and break new frontiers.”
Darryl Linington
IT News Africa
Related story: Jumia is biggest e-commerce website in Nigeria
Nigeria's answer to amazon.com
According to the online retailer, it expects that the official authorisation will alleviate shoppers’ fears of purchasing counterfeit Apple products online.
Speaking on the launch of the online iStore, Jeremy Doutte, MD Jumia Nigeria stated that: “The collaboration between Jumia and Apple is a thing of beauty and can best be described as a big win for innovation and authenticity. Nigerians no longer have to be burdened by fears of using their hard earned cash to purchase a fake, stolen or reworked Apple device. Above all our continued commitment to seeing the Nigerian customer get top quality and premium retail keeps driving us to push new boundaries and break new frontiers.”
Darryl Linington
IT News Africa
Related story: Jumia is biggest e-commerce website in Nigeria
Nigeria's answer to amazon.com
Nigeria's $20 billion oil leak
In late 2013, Nigeria's then central bank governor Lamido Sanusi wrote to President Goodluck Jonathan claiming that the state oil company had failed to remit tens of billions of oil revenues it owed the state.
After the letter was leaked to Reuters and a local news site, Jonathan publicly dismissed the claim and replaced Sanusi, saying the banker had mismanaged the central bank's budget. A Senate committee later found Sanusi’s account lacked substance.
Sanusi has since become Emir of Kano, the country's second highest Islamic authority, and has smoothed over relations with the president. He declined to discuss his earlier assertions. Before he was sacked, though, the central banker submitted to Nigeria’s parliament more than 300 pages of documentation in support of his claim. Reuters has reviewed that dossier, which offers one of the most comprehensive studies of waste, mismanagement and what Sanusi called “leakages” of cash in Nigeria’s oil industry. Detailed here, the dossier includes oil contracts, confidential government letters, private presidential correspondence and legal opinions.
Sanusi’s letter and documents do not state whether he thinks the money was stolen or lost through mismanagement. Nor did he make allegations of illegal acts against any specific individuals or entities. Both corruption and bad governance are perennial problems in Africa’s most populous nation, and central issues in elections due on Feb. 14.
Nigeria’s oil industry accounts for around 95 percent of the country’s foreign exchange earnings. If Nigeria continued to leak cash at the rate described in his letter to the president, Sanusi said at the time, the consequences for the economy would be disastrous. Specifically, the failure of state-owned Nigerian National Petroleum Corporation “to remit foreign exchange to the Federation Account in a period of rising oil prices has made our management of exchange rates and price stability ... extremely difficult," he wrote. "The central bank of Nigeria is always blamed for high rates of interest,” but “given these leakages, the alternative is a devalued currency ... and financial instability."
That is exactly what has happened. As oil prices have plummeted to around $55 a barrel, half their level at the beginning of 2014, Sanusi’s successor Godwin Emefiele has devalued the naira, Nigeria’s currency, by 8 percent, and raised interest rates for the first time in more than two years.
Nigerian foreign exchange reserves are down around 20 percent on a year ago, while the balance in the country's oil savings account has fallen from $9 billion in December 2012 to $2.5 billion at the start of this year, even though oil prices were buoyant over much of that period. Finance Minister Ngozi Okonjo-Iweala told reporters at a press conference in November that a significant portion of that money was distributed to the powerful governors of Nigeria’s 36 states instead of being saved for a rainy day.
Nigerians are rarely shocked by stories of billions going unaccounted for, or ending up with politically powerful individuals. Africa’s largest oil producer has for years consistently ranked toward the bottom of Transparency International’s Corruption Perceptions Index.
Sanusi handed his documents to a parliamentary inquiry set up last February to investigate the assertion in his letter that billions of dollars in oil revenue had not reached the central bank. He told the inquiry that state oil group NNPC had made $67 billion worth of oil sales in the previous 19 months. Of that, he said, between $10.8 billion and $20 billion was unaccounted for.
A spokesman for the president declined to comment on the specific contents of Sanusi’s dossier. He referred to a statement made at the time the banker was pushed out. It said the government “remains committed to ensuring integrity and accountability and discipline in every sector of the economy ... And indeed we look forward to a situation whereby Mr. Sanusi will continue to assist the legislature in their investigations.”
Those investigations include a “forensic audit” of the oil industry set up by Okonjo-Iweala. The audit was given to Jonathan on Feb. 2 and he said he would hand it on to Nigeria’s auditor general. NNPC said on Feb. 5 it had received a copy of the audit, before it was made public. The firm said the audit cleared it of wrongdoing, although it found NNPC owed the government $1.48 billion for a separate shortfall.
A spokesman for NNPC rejected Sanusi's allegations and referred Reuters to last August’s Senate inquiry. The inquiry expressed satisfaction that most of the money not remitted was withheld for legitimate reasons. But it urged the NNPC to remit $700 million that the committee said it could not account for.
Diezani Alison-Madueke, the oil minister who oversees NNPC, did not respond to a request for comment. She told the inquiry at the time that the correct sum for money not remitted was $10.8 billion, which was to pay for subsidies.
The NNPC has consistently said it did nothing wrong. The oil company said last year that Sanusi’s allegations came from his "misunderstanding" of how the oil industry works. The central bank is “a banking outfit ... how will they understand petroleum engineering issues?" then managing director Andrew Yakubu asked journalists. "They are not auditors."
Sanusi’s claims were seen by some Nigerians as part of the historic tensions between the country’s wealthy, Christian south and poorer Muslim north. Jonathan and oil minister Alison-Madueke are Christians from the oil-producing Niger Delta in the south. Sanusi is a Muslim from the country’s north, as is Muhammadu Buhari, a former military ruler of Nigeria who is the main presidential candidate running against Jonathan. The two regions have historically taken it in turns to hold the presidency. Since 2009, though, Jonathan has broken with this tradition.
Sanusi has said any notion there were religious or ethnic politics behind his allegations is absurd. He has declined to be interviewed since becoming the Emir of Kano.
But last April, two months after he was sacked but before he took on his new role, Sanusi told Reuters he worried that the sheer quantities of cash going missing were “unsustainable.”
“You are taking what doesn’t belong to you and transferring it to private hands,” he told Reuters. “The state is captive to vested interests.”
NO-BID CONTRACTS
Sanusi’s documents identify three key mechanisms through which Nigeria has allegedly allowed middlemen to channel oil funds away from the central bank. Among the recipients, Sanusi alleges, are government officials and high-flying society figures.
The three mechanisms are: contracts awarded non-competitively to two companies that did not supply services but sub-contracted the work; a kerosene subsidy that doesn’t help the people it is meant to; and a series of complex, opaque "swap deals" that might be short-changing the state.
Sanusi’s concerns around the first of these mechanisms center on the 2011 sale by RoyalDutch Shell of its interests in five oil fields. The blocks were majority-owned by NNPC. The government, keen to end the domination of the oil industry by foreign oil majors, had been encouraging Shell and others to sell to local firms.
Shell sold its interest in the fields to companies in Poland and Britain. But the new owners did not get the same rights Shell had. To promote local control, the NNPC gave the right to operate the fields to its own subsidiary, the Nigerian Petroleum Development Company (NPDC).
Without soliciting bids, the NPDC signed "strategic partnership agreements" worth around $6.6 billion with two other local firms to manage them.
One firm, Seven Energy, signed for three fields; another, Atlantic Energy, for two.
Seven Energy was co-founded in 2004 by Kola Aluko, an oil trader and Christian southerner. Aluko also co-owned Atlantic with another southerner, former oil trader Jide Omokore. Atlantic was incorporated the day before it signed the deals.
Geneva-based Aluko is a high-profile member of Nigeria's elite. He owns a fleet of supercars, including a Ferrari 458 GT2 that he races with Swiss team Kessel Racing. He also owns a $50 million yacht, according to Forbes magazine, and divides his time between a $40 million home in Los Angeles, an $8.6 million duplex on Fifth Avenue in New York, and homes in Abuja and Geneva. A colleague describes him as a "work hard, play harder kind of guy. He’s extravagant. That’s just his style.”
Aluko, whose stake in Seven is now minimal, did not respond to emailed questions.
Omokore has also become rich from oil and gas. Forbes has estimated annual revenue at another of his companies, Energy Resources Group, at $400 million. His jet-setting lifestyle is a regular feature in the local press. Omokore could not be reached for comment.
Reuters has reviewed the contracts the firms signed with NPDC. They give Seven Energy 10 percent of profits in the three oil blocks it operates, while Atlantic gets 30 percent of profits in its two blocks. The contracts also show that, unlike Shell, neither firm pays royalties, profit tax or duties to the state.
Both companies quickly sub-contracted production work to other operators, according to Sanusi's submission to parliament and several market sources. The companies did not disclose terms of these contracts.
Atlantic does not publish accounts, but Seven’s 2013 annual report shows its deal with NPDC helped its revenue more than triple to $345 million.
In May 2013, Nigeria’s parliament threatened to investigate the NPDC contracts because they were not issued through competitive tender. But the NNPC argued no tender was needed because the contracts involved no sale of equity in the oil fields; the probe did not go ahead.
Sanusi did not accuse Seven and Atlantic of any illegalities, but he did question why the NPDC chose those companies. His report said the deals’ only purpose seemed to be “acquiring assets belonging to the federation (state) and transferring the income to private hands."
Asked about this, NNPC referred to the Senate report, which found that no-bid partnership agreements are not new. It also said that "it may be good policy to encourage indigenous players by giving them greater participation," but called for such deals "to be conducted in a transparent and competitive manner."
Seven did not comment. It says on its website its agreement with NPDC pre-dated the Jonathan administration and included an allowance for taxes. The company says it has invested more than $500 million, more than doubled production from its three blocks, and paid $48.8 million in taxes in 2013. Atlantic did not comment.
KEROSENE SUBSIDIES
The second mechanism Sanusi’s report identifies as problematic is a decades-old state subsidy provided to retailers of kerosene, the fuel most Nigerians use for cooking.
Nigeria lacks the refining capacity to make kerosene, so imports it instead. The government then sells the kerosene to retailers at a cheaper price than the import price. This subsidy is meant to make kerosene affordable for the poor. In reality, though, retailers have long hiked prices so consumers pay much more than official levels.
In June 2009, Jonathan’s predecessor, Umaru Yar'Adua, ordered a halt to the scheme on the grounds that it was not working. But the subsidies carried on regardless. The NNPC told parliament last February that it still deducts billions of dollars a year from its earnings to cover it.
In his report, Sanusi called the kerosene subsidy a "racket" that lines the pockets of private kerosene retailers and NNPC staff. The report estimated the cost of the subsidy at $100 million a month. It said kerosene retailers – there are hundreds of them around the country – routinely charged customers much higher prices than the government pays to import the fuel.
Sanusi’s report included an analysis of kerosene prices across Nigeria’s 36 states over two years. It found that the government buys kerosene at 150 naira per liter from importers and then sells it to retailers at just 40 naira per liter. Sanusi’s analysis found consumers pay an average of 170-200 naira per liter, and sometimes as much as 270 naira.
“The margin of 300 percent to 500 percent over purchase price is economic rent, which never got to the man on the street,” Sanusi wrote.
NNPC said in a statement last year that it can't force retailers to sell kerosene at the subsidized price.
SWAP DEALS
The third mechanism Sanusi identified involves other types of refined petroleum products, such as gasoline. Like kerosene, these are also imported. Nigeria is Africa’s biggest oil producer but it depends on imports for 80 percent of its fuel needs because its refining capacity is tiny.
To pay for the imported products, Nigeria barters its crude oil. Sanusi’s dossier focuses on these barter exchanges, which are known as "swap deals." The idea is that importers who bring in refined fuel worth a given amount receive an “equivalent value” in crude oil.
How that equivalent value is determined is unclear. Sanusi said he was uncertain how much, if anything, is lost in these deals. But he expressed concern at the sheer value of oil that changes hands and the lack of oversight. His report estimated that between 2010 and 2011, traders involved in swap deals effectively bartered 200,000 barrels of crude a day – worth nearly $20 million at average crude prices over the period - for a loosely determined equivalent value in refined products. It is impossible to tell, he said, if all the refined products were delivered, let alone if the terms were fair.
“It was clear to us that these transactions ... were not properly structured, monitored and audited,” he wrote.
Sanusi wrote in his report that mismanagement and “leakages” of cash in the industry cost Nigeria billions of dollars a year.
Since the price of oil has fallen by around half since the start of 2014, such losses are even more significant. As it approaches elections, Nigeria faces plummeting oil revenues and a lack of buffers to shield the economy. Construction projects are on hold and the government is struggling to pay its sizeable workforce.
Multiple scandals in the oil sector since Jonathan took power have boosted the popularity of his rival, former military leader Muhammadu Buhari. Remembered by some for deposing a civilian government in a 1983 coup and trampling on civil liberties, the sandal-wearing general often promises to "free Nigeria from corruption."
Jonathan, too, says he will “clean up” Nigeria. By using technology and strengthening institutions, “I will solve the problem of corruption in this country,” he told a crowd in Ibadan in January.
Written by Tim Cocks and Joe Brock
Reuters
Related story: Video - Finance minister Okonjo-Iweala talks about alleged missing $20 million
After the letter was leaked to Reuters and a local news site, Jonathan publicly dismissed the claim and replaced Sanusi, saying the banker had mismanaged the central bank's budget. A Senate committee later found Sanusi’s account lacked substance.
Sanusi has since become Emir of Kano, the country's second highest Islamic authority, and has smoothed over relations with the president. He declined to discuss his earlier assertions. Before he was sacked, though, the central banker submitted to Nigeria’s parliament more than 300 pages of documentation in support of his claim. Reuters has reviewed that dossier, which offers one of the most comprehensive studies of waste, mismanagement and what Sanusi called “leakages” of cash in Nigeria’s oil industry. Detailed here, the dossier includes oil contracts, confidential government letters, private presidential correspondence and legal opinions.
Sanusi’s letter and documents do not state whether he thinks the money was stolen or lost through mismanagement. Nor did he make allegations of illegal acts against any specific individuals or entities. Both corruption and bad governance are perennial problems in Africa’s most populous nation, and central issues in elections due on Feb. 14.
Nigeria’s oil industry accounts for around 95 percent of the country’s foreign exchange earnings. If Nigeria continued to leak cash at the rate described in his letter to the president, Sanusi said at the time, the consequences for the economy would be disastrous. Specifically, the failure of state-owned Nigerian National Petroleum Corporation “to remit foreign exchange to the Federation Account in a period of rising oil prices has made our management of exchange rates and price stability ... extremely difficult," he wrote. "The central bank of Nigeria is always blamed for high rates of interest,” but “given these leakages, the alternative is a devalued currency ... and financial instability."
That is exactly what has happened. As oil prices have plummeted to around $55 a barrel, half their level at the beginning of 2014, Sanusi’s successor Godwin Emefiele has devalued the naira, Nigeria’s currency, by 8 percent, and raised interest rates for the first time in more than two years.
Nigerian foreign exchange reserves are down around 20 percent on a year ago, while the balance in the country's oil savings account has fallen from $9 billion in December 2012 to $2.5 billion at the start of this year, even though oil prices were buoyant over much of that period. Finance Minister Ngozi Okonjo-Iweala told reporters at a press conference in November that a significant portion of that money was distributed to the powerful governors of Nigeria’s 36 states instead of being saved for a rainy day.
Nigerians are rarely shocked by stories of billions going unaccounted for, or ending up with politically powerful individuals. Africa’s largest oil producer has for years consistently ranked toward the bottom of Transparency International’s Corruption Perceptions Index.
Sanusi handed his documents to a parliamentary inquiry set up last February to investigate the assertion in his letter that billions of dollars in oil revenue had not reached the central bank. He told the inquiry that state oil group NNPC had made $67 billion worth of oil sales in the previous 19 months. Of that, he said, between $10.8 billion and $20 billion was unaccounted for.
A spokesman for the president declined to comment on the specific contents of Sanusi’s dossier. He referred to a statement made at the time the banker was pushed out. It said the government “remains committed to ensuring integrity and accountability and discipline in every sector of the economy ... And indeed we look forward to a situation whereby Mr. Sanusi will continue to assist the legislature in their investigations.”
Those investigations include a “forensic audit” of the oil industry set up by Okonjo-Iweala. The audit was given to Jonathan on Feb. 2 and he said he would hand it on to Nigeria’s auditor general. NNPC said on Feb. 5 it had received a copy of the audit, before it was made public. The firm said the audit cleared it of wrongdoing, although it found NNPC owed the government $1.48 billion for a separate shortfall.
A spokesman for NNPC rejected Sanusi's allegations and referred Reuters to last August’s Senate inquiry. The inquiry expressed satisfaction that most of the money not remitted was withheld for legitimate reasons. But it urged the NNPC to remit $700 million that the committee said it could not account for.
Diezani Alison-Madueke, the oil minister who oversees NNPC, did not respond to a request for comment. She told the inquiry at the time that the correct sum for money not remitted was $10.8 billion, which was to pay for subsidies.
The NNPC has consistently said it did nothing wrong. The oil company said last year that Sanusi’s allegations came from his "misunderstanding" of how the oil industry works. The central bank is “a banking outfit ... how will they understand petroleum engineering issues?" then managing director Andrew Yakubu asked journalists. "They are not auditors."
Sanusi’s claims were seen by some Nigerians as part of the historic tensions between the country’s wealthy, Christian south and poorer Muslim north. Jonathan and oil minister Alison-Madueke are Christians from the oil-producing Niger Delta in the south. Sanusi is a Muslim from the country’s north, as is Muhammadu Buhari, a former military ruler of Nigeria who is the main presidential candidate running against Jonathan. The two regions have historically taken it in turns to hold the presidency. Since 2009, though, Jonathan has broken with this tradition.
Sanusi has said any notion there were religious or ethnic politics behind his allegations is absurd. He has declined to be interviewed since becoming the Emir of Kano.
But last April, two months after he was sacked but before he took on his new role, Sanusi told Reuters he worried that the sheer quantities of cash going missing were “unsustainable.”
“You are taking what doesn’t belong to you and transferring it to private hands,” he told Reuters. “The state is captive to vested interests.”
NO-BID CONTRACTS
Sanusi’s documents identify three key mechanisms through which Nigeria has allegedly allowed middlemen to channel oil funds away from the central bank. Among the recipients, Sanusi alleges, are government officials and high-flying society figures.
The three mechanisms are: contracts awarded non-competitively to two companies that did not supply services but sub-contracted the work; a kerosene subsidy that doesn’t help the people it is meant to; and a series of complex, opaque "swap deals" that might be short-changing the state.
Sanusi’s concerns around the first of these mechanisms center on the 2011 sale by RoyalDutch Shell of its interests in five oil fields. The blocks were majority-owned by NNPC. The government, keen to end the domination of the oil industry by foreign oil majors, had been encouraging Shell and others to sell to local firms.
Shell sold its interest in the fields to companies in Poland and Britain. But the new owners did not get the same rights Shell had. To promote local control, the NNPC gave the right to operate the fields to its own subsidiary, the Nigerian Petroleum Development Company (NPDC).
Without soliciting bids, the NPDC signed "strategic partnership agreements" worth around $6.6 billion with two other local firms to manage them.
One firm, Seven Energy, signed for three fields; another, Atlantic Energy, for two.
Seven Energy was co-founded in 2004 by Kola Aluko, an oil trader and Christian southerner. Aluko also co-owned Atlantic with another southerner, former oil trader Jide Omokore. Atlantic was incorporated the day before it signed the deals.
Geneva-based Aluko is a high-profile member of Nigeria's elite. He owns a fleet of supercars, including a Ferrari 458 GT2 that he races with Swiss team Kessel Racing. He also owns a $50 million yacht, according to Forbes magazine, and divides his time between a $40 million home in Los Angeles, an $8.6 million duplex on Fifth Avenue in New York, and homes in Abuja and Geneva. A colleague describes him as a "work hard, play harder kind of guy. He’s extravagant. That’s just his style.”
Aluko, whose stake in Seven is now minimal, did not respond to emailed questions.
Omokore has also become rich from oil and gas. Forbes has estimated annual revenue at another of his companies, Energy Resources Group, at $400 million. His jet-setting lifestyle is a regular feature in the local press. Omokore could not be reached for comment.
Reuters has reviewed the contracts the firms signed with NPDC. They give Seven Energy 10 percent of profits in the three oil blocks it operates, while Atlantic gets 30 percent of profits in its two blocks. The contracts also show that, unlike Shell, neither firm pays royalties, profit tax or duties to the state.
Both companies quickly sub-contracted production work to other operators, according to Sanusi's submission to parliament and several market sources. The companies did not disclose terms of these contracts.
Atlantic does not publish accounts, but Seven’s 2013 annual report shows its deal with NPDC helped its revenue more than triple to $345 million.
In May 2013, Nigeria’s parliament threatened to investigate the NPDC contracts because they were not issued through competitive tender. But the NNPC argued no tender was needed because the contracts involved no sale of equity in the oil fields; the probe did not go ahead.
Sanusi did not accuse Seven and Atlantic of any illegalities, but he did question why the NPDC chose those companies. His report said the deals’ only purpose seemed to be “acquiring assets belonging to the federation (state) and transferring the income to private hands."
Asked about this, NNPC referred to the Senate report, which found that no-bid partnership agreements are not new. It also said that "it may be good policy to encourage indigenous players by giving them greater participation," but called for such deals "to be conducted in a transparent and competitive manner."
Seven did not comment. It says on its website its agreement with NPDC pre-dated the Jonathan administration and included an allowance for taxes. The company says it has invested more than $500 million, more than doubled production from its three blocks, and paid $48.8 million in taxes in 2013. Atlantic did not comment.
KEROSENE SUBSIDIES
The second mechanism Sanusi’s report identifies as problematic is a decades-old state subsidy provided to retailers of kerosene, the fuel most Nigerians use for cooking.
Nigeria lacks the refining capacity to make kerosene, so imports it instead. The government then sells the kerosene to retailers at a cheaper price than the import price. This subsidy is meant to make kerosene affordable for the poor. In reality, though, retailers have long hiked prices so consumers pay much more than official levels.
In June 2009, Jonathan’s predecessor, Umaru Yar'Adua, ordered a halt to the scheme on the grounds that it was not working. But the subsidies carried on regardless. The NNPC told parliament last February that it still deducts billions of dollars a year from its earnings to cover it.
In his report, Sanusi called the kerosene subsidy a "racket" that lines the pockets of private kerosene retailers and NNPC staff. The report estimated the cost of the subsidy at $100 million a month. It said kerosene retailers – there are hundreds of them around the country – routinely charged customers much higher prices than the government pays to import the fuel.
Sanusi’s report included an analysis of kerosene prices across Nigeria’s 36 states over two years. It found that the government buys kerosene at 150 naira per liter from importers and then sells it to retailers at just 40 naira per liter. Sanusi’s analysis found consumers pay an average of 170-200 naira per liter, and sometimes as much as 270 naira.
“The margin of 300 percent to 500 percent over purchase price is economic rent, which never got to the man on the street,” Sanusi wrote.
NNPC said in a statement last year that it can't force retailers to sell kerosene at the subsidized price.
SWAP DEALS
The third mechanism Sanusi identified involves other types of refined petroleum products, such as gasoline. Like kerosene, these are also imported. Nigeria is Africa’s biggest oil producer but it depends on imports for 80 percent of its fuel needs because its refining capacity is tiny.
To pay for the imported products, Nigeria barters its crude oil. Sanusi’s dossier focuses on these barter exchanges, which are known as "swap deals." The idea is that importers who bring in refined fuel worth a given amount receive an “equivalent value” in crude oil.
How that equivalent value is determined is unclear. Sanusi said he was uncertain how much, if anything, is lost in these deals. But he expressed concern at the sheer value of oil that changes hands and the lack of oversight. His report estimated that between 2010 and 2011, traders involved in swap deals effectively bartered 200,000 barrels of crude a day – worth nearly $20 million at average crude prices over the period - for a loosely determined equivalent value in refined products. It is impossible to tell, he said, if all the refined products were delivered, let alone if the terms were fair.
“It was clear to us that these transactions ... were not properly structured, monitored and audited,” he wrote.
Sanusi wrote in his report that mismanagement and “leakages” of cash in the industry cost Nigeria billions of dollars a year.
Since the price of oil has fallen by around half since the start of 2014, such losses are even more significant. As it approaches elections, Nigeria faces plummeting oil revenues and a lack of buffers to shield the economy. Construction projects are on hold and the government is struggling to pay its sizeable workforce.
Multiple scandals in the oil sector since Jonathan took power have boosted the popularity of his rival, former military leader Muhammadu Buhari. Remembered by some for deposing a civilian government in a 1983 coup and trampling on civil liberties, the sandal-wearing general often promises to "free Nigeria from corruption."
Jonathan, too, says he will “clean up” Nigeria. By using technology and strengthening institutions, “I will solve the problem of corruption in this country,” he told a crowd in Ibadan in January.
Written by Tim Cocks and Joe Brock
Reuters
Related story: Video - Finance minister Okonjo-Iweala talks about alleged missing $20 million
Thursday, February 5, 2015
Audit report by PricewaterhouseCoopers indicts NNPC and states the Nigerian petroleum corporation should refund $1.48 billion
The forensic audit conducted by the audit firm of PriceWaterHouseCoopers on behalf of the Federal Government on the operations of the Nigerian National Petroleum Corporation [NNPC] has indicted the management of the national oil company for various questionable transactions.
Part of the recommendations include that the Nigerian Petroleum Development Company, NPDC, the upstream subsidy of the NNPC should refund about $1.48billion to the Federation Account for various unreconciled transactions.
More details of report to come.
President Goodluck Jonathan had on Monday publicly received the report a day after a former Governor of the Central Bank of Nigeria [CBN], Chukwuma Soludo, wrote a long, acerbic article accusing the managers of the Nigerian economy of misappropriating over N30trillion of public funds, including several billions in oil money.
The forensic audit was commissioned following allegation by the immediate past Governor of the CBN, Lamido Sanusi, that about $20 billion oil money was missing from the NNPC.
The Presidency had on March 12, 2014 announced, through a statement by the president’s spokesperson, Reuben Abati, that it had authorised the engagement of reputable international firms to carry out the forensic audit of the accounts of the NNPC.
The allegation that the huge amount had been stolen was raised in 2013 by a former governor of the Central Bank of Nigeria, Lamido Sanusi, who is now the Emir of Kano.
Mr. Sanusi said as much as $49 billion was diverted by state oil company, Nigerian National Petroleum Corporation, NNPC.
He later reviewed the amount to $20 billion, and called for investigations after writing to President Goodluck Jonathan.
A Senate probe into the allegation yielded no result. Mr. Sanusi was later fired by President Jonathan after he was accused of “financial recklessness”.
The government said no money was missing, but promised a forensic investigation of NNPC.
In April 2014, the Minister of Finance, Ngozi Okonjo-Iweala, announced the appointment of the accounting firm, PriceWaterHouseCoopers (PwC), to conduct a detailed investigation into the accounts and activities of NNPC.
The minister said the investigation, under the supervision of the Office of the Auditor-General of the Federation, would take about 16 weeks.
That schedule meant at most by September 2014 ending, the report should have been ready. A two-month delay meant the report should have been ready by November.
But the government only publicly received the report on Monday.
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Related stories: Video - Finance minister Okonjo-Iweala talks about alleged missing $20 million dollars
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Part of the recommendations include that the Nigerian Petroleum Development Company, NPDC, the upstream subsidy of the NNPC should refund about $1.48billion to the Federation Account for various unreconciled transactions.
More details of report to come.
President Goodluck Jonathan had on Monday publicly received the report a day after a former Governor of the Central Bank of Nigeria [CBN], Chukwuma Soludo, wrote a long, acerbic article accusing the managers of the Nigerian economy of misappropriating over N30trillion of public funds, including several billions in oil money.
The forensic audit was commissioned following allegation by the immediate past Governor of the CBN, Lamido Sanusi, that about $20 billion oil money was missing from the NNPC.
The Presidency had on March 12, 2014 announced, through a statement by the president’s spokesperson, Reuben Abati, that it had authorised the engagement of reputable international firms to carry out the forensic audit of the accounts of the NNPC.
The allegation that the huge amount had been stolen was raised in 2013 by a former governor of the Central Bank of Nigeria, Lamido Sanusi, who is now the Emir of Kano.
Mr. Sanusi said as much as $49 billion was diverted by state oil company, Nigerian National Petroleum Corporation, NNPC.
He later reviewed the amount to $20 billion, and called for investigations after writing to President Goodluck Jonathan.
A Senate probe into the allegation yielded no result. Mr. Sanusi was later fired by President Jonathan after he was accused of “financial recklessness”.
The government said no money was missing, but promised a forensic investigation of NNPC.
In April 2014, the Minister of Finance, Ngozi Okonjo-Iweala, announced the appointment of the accounting firm, PriceWaterHouseCoopers (PwC), to conduct a detailed investigation into the accounts and activities of NNPC.
The minister said the investigation, under the supervision of the Office of the Auditor-General of the Federation, would take about 16 weeks.
That schedule meant at most by September 2014 ending, the report should have been ready. A two-month delay meant the report should have been ready by November.
But the government only publicly received the report on Monday.
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Stolen crude oil in Nigeria exceeds Ghana's daily production
The vice-presidential candidate of the All Progressives Congress (APC) Prof. Yemi Osinbajo says the volume of crude oil being stolen from Nigeria on a daily basis far outweighs what Ghana produces in a day.
He was delivering a speech as the guest speaker at a lecture organised to mark the 73rd birthday of the General Overseer of the Redeemed Christian Church of God (RCCG) Pastor Enoch Adeboye in Lagos yesterday.
Osinbajo, a senior pastor of the RCCG, spoke on the topic: "Harmonising Virtues to Gain Heaven and Earthly Prosperity." He said part of the many challenges confronting Nigeria today is the problem of oil theft.
"In our society, we have certain challenges including corruption, described by Hillary Clinton as unbelievable, missing funds NNPC petroleum subsidy scam, kerosene subsidy scam and so on. Missing excess crude amounts to $1 billion, that is, 400,000 barrels of oil stolen every day. This is more than what Ghana struggles to produce as a nation. Since becoming an oil producing country, Ghana produces 120,000 barrels per day", he said.
Osinbajo also lamented some statistics he said had become part of Nigerian history in recent years.
He said: "Challenges such as poverty is what we face today in Nigeria. Today, over 112 million Nigerians are categorised as extremely poor despite being the largest economy in Africa. In fact, we are one of the 33 poorest countries in the world. Also, on infant mortality, about 3.9 million children have died between 2009 and 2014. Similarly, 55,000 women die every year, which accounts for our maternal mortality. On the other hand, Nigeria records 110,000 deaths as a result of diarrhoea while 10.4 million children are out of school. Again, 80 percent of our graduates are jobless".
To surmount the challenges, Osinbajo said Nigeria needs a personality that has integrity, "because integrity is at the centre of everything we do."
Daily Trust
He was delivering a speech as the guest speaker at a lecture organised to mark the 73rd birthday of the General Overseer of the Redeemed Christian Church of God (RCCG) Pastor Enoch Adeboye in Lagos yesterday.
Osinbajo, a senior pastor of the RCCG, spoke on the topic: "Harmonising Virtues to Gain Heaven and Earthly Prosperity." He said part of the many challenges confronting Nigeria today is the problem of oil theft.
"In our society, we have certain challenges including corruption, described by Hillary Clinton as unbelievable, missing funds NNPC petroleum subsidy scam, kerosene subsidy scam and so on. Missing excess crude amounts to $1 billion, that is, 400,000 barrels of oil stolen every day. This is more than what Ghana struggles to produce as a nation. Since becoming an oil producing country, Ghana produces 120,000 barrels per day", he said.
Osinbajo also lamented some statistics he said had become part of Nigerian history in recent years.
He said: "Challenges such as poverty is what we face today in Nigeria. Today, over 112 million Nigerians are categorised as extremely poor despite being the largest economy in Africa. In fact, we are one of the 33 poorest countries in the world. Also, on infant mortality, about 3.9 million children have died between 2009 and 2014. Similarly, 55,000 women die every year, which accounts for our maternal mortality. On the other hand, Nigeria records 110,000 deaths as a result of diarrhoea while 10.4 million children are out of school. Again, 80 percent of our graduates are jobless".
To surmount the challenges, Osinbajo said Nigeria needs a personality that has integrity, "because integrity is at the centre of everything we do."
Daily Trust
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