The policy of deregulation of the downstream oil industry in Nigeria from an economic point of view considers the enormous subsidy pay out to petroleum marketers as Nigeria in the last five years has consistently spent over N1 trillion, that is about $5 billion, on petrol subsidies.
The deregulation of the sub-sector, government argues, will open up the sector to private investors who had been discouraged by heavy government interference.
Government further argues that for a country that is deficient in almost all critical infrastructures, paying over a trillion naira on petrol subsidy is a waste of resources as such monies if committed to health, education, policing, roads and railways, among others, would help prop the economy.
The IPMAN was among the first to show an interest in the refining business when government announced its readiness to go full blast with the deregulation exercise. The national president, IPMAN, Mr Chinedu Okoronkwo, elated by the move, announced that the association had acquired more than 1,000 hectares of land in Kogi and Bayelsa states for its $3 billion (N495 billion) refineries.
The IPMAN had earlier in July 2014, said that it had concluded a business deal with some international investors to build two refineries worth about N3 billion at Itobe, Kogi, and Abbe, Bayelsa. These foreign investors said that they had conducted feasibility studies on the project in August and Okoronkwo said that the federal government had, through the then minister of petroleum resources, Mrs Diezain Alison-Madueke, welcomed the investor’s initiative to commence work on the two refineries.
Hoping to realise the huge project, Okoronkwo urged the Ministry of Power to support the IPMAN refinery initiative by providing the sites access to the national grid. He said that when completed in 24 months, the refineries would initially produce about 200,000 barrels of petrol per day. He said that the IPMAN’s aim was to contribute in the management of existing national capital flight that characterised the oil and gas sector following the absence of a functional refinery.
“The cost of taking crude and bringing it back as refined products will be reduced. We want government to give us the necessary licences and enabling environment to operate,” he said.
Perhaps, based on the anticipated upcoming refinery projects, including the gigantic Dangote Refinery in Lagos, Ibe Kachikwu projected that by 2018 Nigeria would drastically reduce product importation and by 2019, the country would cease petrol importation and become a net exporter of the product.
The White Elephant Project
Today, the IPMAN is struggling to have a stable leadership. The association is today led by two presidents, each laying claim to its presidency. While Elder Chinedu Okoronkwo is leading a faction of the group, Obasi Lawson is also controlling another group, both seeking government recognition and proposing initiatives that operators see as unharmonised approaches.
Beyond the leadership tussle, the association is enmeshed in subsidy payment crises. Okoronkwo has alleged that IPMAN Investment Limited cannot account for N10.9 billion subsidy payment although the allegation was quickly debunked by the managing director of IPMAN Investment Limited, Tunji Adeniji, who described as falsehood the allegation that the company’s board of trustees chairman, Alhaji Aminu Abdulkadir, embezzled the proceeds of the petroleum subsidy claim of the association amounting to over N10.9 billion.
He said that the allegation, which was recently levelled against Abdulkadir by one of its factional leaders, Okoronkwo, is untrue, insisting that Abdulkadir is not guilty of the crime alleged to have been committed by him through IPMAN Investment Limited.He challenged anyone with evidence of wrong doing in the IPMAN to come forward with such information., saying that there was nothing like N10 billion subsidy claims.
Adeniji stated that IPMAN Investment Limited was legally instituted with credible members managing the company, and that Okoronkwo has testified to the credibility of the business group.He stated that all permits given to IPMAN Investment Limited by the Petroleum Products Pricing and Regulatory Agency (PPPRA) were duly executed. He said that IPMAN Investment Limited is a company registered in Nigeria and engages in the importation of refined petroleum products under the Petroleum Support Fund (PSF) scheme of the Federal Government of Nigeria.
“The Petroleum Support Fund (PSF) scheme was set up to enable adequate payment of subsidy to marketers through the Petroleum Produce Pricing and Registry Agency, Debt Management Office and Central Bank of Nigeria by the Federal Government of Nigeria. It is regrettable for an individual of his calibre to be talking of a subsidy payment executed, verified, and probed in 2011 by the Economic and Financial Commission (EFCC), National Assembly and Aig-Imokuede-led Committee set up by the Federal Government of Nigeria where IPMAN Investment Limited was duly cleared. It is very important to put the record straight that other agencies of the federal government involved in the subsidy scheme, including the Department of Petroleum Resources, Petroleum Equalisation Fund and Debt Management Office and Central Bank of Nigeria did not find IPMAN Investment Limited involved or participating in any criminal or fraudulent act with respect to subsidy claims,” he said.
However, when contacted Okoronkwo told LEADERSHIP on phone that he stands on his position and that as a director and shareholder in the company he could not link the payment to any executed project.
“I am a director in the company, I am also a shareholder and if any one claims that any product was procured in which payment was made, the person should be bold to tell us the country where the product was imported from, the vessel that brought it in and the marketers who benefited from it. I am not making a spurious allegation, I am only saying that I did not see the product and was not part of its execution. So I want people to account for the money,” he insisted.
He said that from every indication a financial fraud was committed by the other faction and that N10.9 billion was paid into IMPAN Investment Company by the federal government as subsidy claim.
A new twist
The crises, however, took a new twist when Okoronkwo and another member of the IPMAN, Danladi Pasali, were detained by the EFCC over alleged fraud and forgery of the company’s registration documents with the Corporate Affairs Commission.
Reacting to the development, Okoronkwo told LEADERSHIP that his accusers were simply intimidating him to cover up the alleged subsidy fraud he had earlier raised. He said that he had conducted due diligence on the IMPAN Investment Company and remain resolute in his request that the N10.9 billion scam be thoroughly investigated.