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FUEL SUBSIDY GULPED N3.7TRN IN 5 YEARS - PPPRA

By NBF News
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Governor Sylva
The Federal Government spent N3.7 trillion on fuel subsidy between 2006 and this year, the Petroleum Products Pricing Regulatory Authority (PPPRA) has revealed. The PPPRA disclosed this in its report submitted to the Senate Committee on Petroleum Resources (Downstream), Appropriation and Finance, investigating the management of Petroleum Support Fund (PSF), otherwise known as fuel subsidy.

President Goodluck Jonathan had in September this year indicated government's plan to withdraw the subsidy beginning from January 2012 when he submitted the 2012-2015 Medium Term Economic Framework (MTEF) to the National Assembly.

Stakeholders, activists, and opposition kicked against the move. For instance, the Action Congress of Nigeria (ACN), in rejecting the proposal, said the plan was the handiwork of those propelled by the philosophy of the Washington Consensus of rolling back the frontiers of the state.

In a statement issued in Lagos yesterday by the spokesman, Alhaji Lai Mohammed, the ACN condemned the debate on fuel subsidy removal, which neglected any plan to cushion the effect on the consumers.

But in justifying the need to do away with the subsidy, the PPPRA recommended in its report to the Senate that it 'has diligently discharged its duties in the implementation of the PSF scheme' and recommended 'full deregulation of the downstream petroleum industry while the funds may be used to improve other sectors of the economy.'

The agency informed the senators of some major constraints and challenges bedeviling the oil industry. Some of them include non-passage of the Petroleum Industry Bill (PIB), under-capacity utilisation of the nation's four refineries as well as the crippling debt owed oil marketers.

The agency admitted that its major challenge was in 'the delay of the passage of the bill which seeks to sanitise the country's petroleum sector for improved efficiency.'

Another challenge, said the regulatory agency, was 'the low level of production in refineries-less than 18 percent in the last three years.'

PPPRA also noted that there were challenges in its operation, which included an outstanding debt of N34,492, 455,253.08 to oil marketers in the country.

Other challenges as gathered by Daily Sun in the report were 'unresolved claims for marketers which are undergoing verification due to contention by marketers on applicable rules for subsidy calculations.

'The disputes are largely based on contention arising from differentials in Bill of Lading, dates of application and allowable delivery windows.'

In response to agitation by Nigerians calling on government to give details and expose those managing the oil subsidy scheme, it had emerged that multi-national and local oil companies had been major beneficiaries of the scheme.

In the report submitted by PPPRA, some indigenous marketers and oil companies (names withheld), with some close to government, benefitted from and managed the oil subsidy scheme.

Meanwhile, the ACN said 'primarily, the basic objective of any fiscal policy is to improve the living conditions of the people through poverty reduction and the provision of welfare services. The removal of subsidy must therefore go beyond the cheap argument of improving the solvency of the government.

'To reduce the responsibility of the government to its citizen to naira and kobo tokenism is tantamount to abdicating responsibility and this has far reaching consequences not only on the sustainability of our democracy but the continued existence of the nation as a unified entity,' it said.

The ACN said government's argument that the subsidy benefitted some members of a faceless cartel would begin to have meaning only if and when the government named the beneficiaries and told Nigerians why they could not be stopped from fleecing the state.

The party noted that the only reason the issue of fuel subsidy had continued to recur was because Nigeria imported petroleum products for domestic consumption, warning that so long as importation continued, the problem the government set out to confront would continue like a recurring decimal.

It said the template being used by the government, which put the pump price per litre of petrol at N144.70 instead of the current price of N65, was fraught with inaccuracies and amounted to making the ordinary Nigerian pay for the inefficiency of relevant government agencies.

'In any case, why should Nigeria, with huge crude oil deposits, have to import refined products? Why should Nigerians pay for the resources so bestowed on them by God through their noses? Why is the price of products, even among importer/exporter nations higher in Nigeria? The answer lies in the crude, prebendal, corruption-ridden state system that we run in this country.

'For example the pump price of petrol in Iran is N58.40, N30.66k in Kuwait, N32.12k in Qatar, and N17.52k in Saudi Arabia while it is a meager N5.84k in Venezuela. In Egypt, pump price of petrol is N46.72k, while it is N39.42k in Bahrain. It is N135 in the USA for high premium inclusive of all state and federal taxes,' ACN said.

As a way out of the subsidy conundrum, the party proposed the establishment of modular refineries with a total of 280,000 barrels per day refining capacity in nine cities- Gusau, Enugu, Ibadan, Kano, Makurdi, Maiduguri, Lagos, Auchi and Gombe, in addition to reviving the existing ones.

In a related development, an Islamic cleric, Sirajo Abubakar, has told Federal Government that it should be guided by public opinion on the issue of withdrawal of fuel subsidy by next year.

The Imam of GRA Mosque in Katsina, who made the declaration in this year's Eid-el-Kabir message, appealed to government to yield to the weight of public opinion against the removal of the subsidy.

The Muslim scholar also expressed confidence that the present democratic administration might not have taken a conclusive position on the controversial issue.

According to him, leaders owed it a duty to listen to the weight of public opinion in the interest of the citizens of the country.

Sirajo Abubakar, who called on Muslims to exercise the fear of Allah in their dealings, stressed the need for leaders to display similar attitude in the discharge of the duties entrusted to by God.

He also solicited for continued prayers for peaceful co-existence and harmony in the state and the country, while advising the people to cultivate the habit of assisting the less privileged in the society to complement the state government's effort towards harnessing the productive potentials in Katsina.

The Deputy Chairman, Senate Committee on Power and Steel, Senator Chris Ngige, has asked the government to fight the cabal responsible for the losses in the oil sector and forget about removal of fuel subsidy.

Speaking to newsmen in Awka, yesterday, Ngige who represents Anambra Central, Senatorial Zone said supporting removal of fuel subsidy amounted to supporting corruption and inefficiency.

He said, 'anybody supporting the removal of petroleum subsidy is supporting economic sabotage, bribery and corruption, acclamation of inefficiency and all things that are associated with it. So to that extent, I as Senator Chris Ngige will not support removal of subsidy. Rather, I will support for us to fight this cabal and cartel head on. It can be done if the government has the will.

'They don't have to shy away from it and then punish everybody. I don't need the subsidy but people in the village, workers, ordinary Nigerians, okada riders, they need the subsidy. If you remove the subsidy, petrol will sell in this country for N150 a litre.

'Why should our cost in Nigeria be in neighbourhood of $1.20 cents per litre? It is so because when they import the fuel and keep it in the high sea, the ship is acquiring demurrage and the cost of the demurrage is built into the cost of petrol or PMS as it's called. They take what they call light ocean vessel to go and remove the fuel from the big ship; they charge it into the cost of the petrol. The cost of insurance is built into it.'