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Fuel Subsidy Payments Tops N2.19 Trillion In 6 Months - Okonjo-Iweala

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ABUJA, July 02, (THEWILL) - Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala on Monday revealed that subsidy payments on imported petrol has topped N2.19 trillion from January till date, surpassing the budgeted N888 billion earmarked for the scheme for 2012.

In 2011, fuel subsidy payments topped N2.7 trillion.

The Minister made the disclosure at a public hearing organized by the Joint Committee of the Senate probing the management of the Federal Government’s fuel subsidy initiative.

Okonjo-Iweala gave the breakdown as N1.7 trillion arrears, which was brought forward from 2011, and the subsidy payment between January and June this year which stood at N451 billion.

She however did not disclose the total sum the scheme would cost taxpayers till year-end saying the Petroleum Products Price Regulatory Agency (PPPRA) handles data for products allocated to market.

Commenting on the status of a crude oil foreign account operated by the Nigerian National Petroleum Corporation (NNPC) at JP Morgan Chase Bank North America, the Finance Minister, while responding to a question by the committee which described the account as unconstitutional, said she does not have specific details on the account.

Her position was corroborated by the Accountant General of the Federation, Mr. Jonah Otunla and the Director General of Budget Office, Dr. Bright Okogwu, who both said data on the account have not been made available to them.

Okonjo-Iweala further stated that the Finance Ministry is only aware of the revenue in the Federal Allocation Account, which accrues from the Federal Inland Revenue Service (FIRS), the NNPC and duties from Customs Service.

"I know that since NNPC deals with marketing of petroleum products, it has external account and I also know that it has an account with JP Morgan but I don't have the details. I am not aware of the specifics of the account.

"We rely on three main agencies to get money; that is the FIRS, NNPC and the Customs. The agencies give us money with estimates we set for them each month that is how we operate. We rely on them to remit monies. Minister of Finance can't go abroad to collect it. Every single month at FAAC we have a technical meeting to get the money."

She however explained that the NNPC, being a commercial transactor probably needs an account where payments are made into before they are transferred to the federation account.

The committee said the illegal account was brought to their attention by the CBN but did not disclose the balance on the account nor when the account was opened.

According to the committee chairman, Senator Magnus Abe, the operation of the account is unconstitutional as it runs contrary to section 81 and 84 as well as section 162 which mandates that all revenue accruing to the federal government should be domiciled in the federation account in the Central Bank of Nigeria, CBN.

"The NNPC can't have more powers than the federation. If the federation can't have an international account then who is the NNPC," he asked.

Abe however stated that there was no justification for the operation of such accounts as whatever business practice should not alter the provisions of the constitution.

He further questioned why a middleman should be brought in to collect the federal government revenue stressing that all such transactions can be done by the CBN.

Meanwhile, the Group Managing Director of the NNPC, Andrew Yakubu Monday disagreed with the CBN over the operator of the JP Morgan account.

Reacting to the position of the CBN that the NNPC operates the account, Yakubu disclosed that the CBN were signatories to the account.

Due to the lack of clarity surrounding the operation of the account, the Senate Committee ordered the GMD to appear before the committee (tomorrow) Tuesday alongside the NNPC’s Executive Director in charge of Finance to shed more light on the account.