The controversies surrounding continued payment of fuel subsidy may not have ended as the Nigerian National Petroleum Corporation (NNPC) Limited, yesterday, presented a bill of N3 trillion for deliberations at the Federal Executive Council (FEC) meeting chaired by President Muhammadu Buhari.
According to the Minister of Finance Budget and National Planning, Zainab Ahmed, N3 trillion is the amount required to continue to subsidise petroleum products for the 18 months extension recently approved by the Presidency.
Ahmed, who broke the news to State House correspondents, explained that FEC considered the request so as to make additional funding provisions that will enable government meet incremental fuel subsidy payment in the 2022 budget.
According to her, only N443 billion is currently available in the 2022 budget meant to accommodate subsidy from January to June.
Buttressing the position of the government, she said with current realities on ground, especially the poverty rate on the part of Nigerians, the NNPC presented a request for N3 trillion to the Ministry of Finance for 2022.
“What this means is that we have to make incremental provision of N2.557 trillion to be able to meet subsidy requirement, which is averaging about N270 billion per month.
“In 2021, the actual under-recovery that has been charged to the Federation was N1.2 trillion, which means an average of N100 billion, but in 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because an NNPC’s assessment shows that the country is consuming 65.7 million litres per day, we will end up with an incremental cost of N3 trillion in 2022.
“Having taken into account the current realities; increased hardship in the population, heightened inflation and also that measures needed to be taken to enable a smoother exit from the fuel subsidy regime are not yet in place, it was agreed by Council that it is desirable to exit fuel subsidy at a conducive time.”
She revealed that the Council directed the ministry to approach the National Assembly for an amendment to the fiscal framework, including the budget.
BUT the Nigeria Governors’ Forum (NGF) and the leadership of the Nigeria Labour Congress (NLC) have blamed the NNPC for the mismanagement of the proceeds accruing from oil.
They have also resolved to enter into working partnership to investigate consumption and distribution figures released by NNPC regarding petroleum products. The NGF disclosed this, yesterday, at its meeting with labour leaders, led by NLC President, Comrade Ayuba Wabba, to deliberate on the fuel subsidy removal issue.
A statement by NGF’s media adviser, AbdulRazaque Bello Barkindo, disclosed that “both parties agreed that the lacuna in the subsidy removal agenda was hidden in the untruths bandied by the administrators of the subsidy, particularly the NNPC, which both groups identify to be at the forefront of the mismanagement of the proceeds that accrued therein.”
Delivering his opening remarks at the meeting, which was also attended by the Trade Union Congress (TUC) president and a host of other leaders of organised labour in the country, NGF chairman and governor of Ekiti State, Kayode Fayemi, argued that the nation’s economy is at the precipice and that it has become necessary for the two groups to carefully verify all NNPC’s estimates, to ensure that whatever action is taken on subsidy will be to the benefit of the people and not a few wealthy individuals and their cronies.
The NGF chairman, who led a delegation of governors Simon Bako Lalong of Plateau State and Godwin Obaseki of Edo State, to the meeting, stressed that governors cannot ignore the economics of petroleum, arguing that all the countries surrounding Nigeria, including Niger, Mali, Cameroun and Ghana have their fuel pump price at the equivalent of a U.S. dollar.
“Nigeria has a pump price that is far less than a dollar and is uncomfortable with the removal of subsidy until the challenge of what the NNPC is telling the country is confronted frontally.
“We need a partnership with the NLC to confront the challenges of what the NNPC is about, because there is a lot of fraud in the consumption and distribution figures that the country is getting and we can only move forward if the NLC engages all those who are knowledgeable in the field like PENGASSAN to conduct a thorough research into the sector before any further action is taken on subsidy,” Fayemi said.
He added that only about eight states are benefitting directly from the subsidy while all the others have to contend with the situation on their own.
Commenting, Obaseki warned that the country has a choice of continuing to behave “like Father Christmas (Santa Claus) or take concrete actions on a problem that is permanently with us rather than throwing away N3 trillion on subsidy.”
The Plateau governor, who like Obaseki, joined the meeting virtually, recalled that the NGF had spent three years on this matter. He stated: “We must find options and create opportunities that address the hardships that stare our people in the face.”
The unionists, according to the statement, argued that the conflicting figures that always came from managers of the petroleum sector had always tended towards inefficiency, which have remained, and to organised labour, completely objectionable.
Wabba and TUC president, Quadri Olaleye, wondered why the subsidy issue had always been shrouded in secrecy on the part of government.
Also, NLC National Deputy President, Comrade Bello Ismail, has advised the Federal Government against any attempt to increase the pump price of petroleum products during the tenure of this administration that would terminate in 2023.
Ismail, who addressed Kaduna State workers on the outcome of the suspension by the Federal Government of its initial plan to hike the pump price of petrol, said labour would continue to watch any action of the Buhari administration and ensure it did not increase pump price of fuel in future.
MEANWHILE, the Presidency, yesterday, reiterated the concerns of the Organised Private Sector (OPS) that Nigeria would have to pay a price to continue subsidising petrol, adding that the country may be left with no other choice than to continue borrowing to shoulder its fiscal overhead.
The President’s Special Adviser on Media and Publicity, Femi Adesina, said this when he featured on Channels Television’s Sunrise Daily programme yesterday. He said petrol is not deregulated by the Federal Government, as the price is sold at between N162 and N165/litre at filling stations, far lower than the actual cost of the commodity.
In June 2021, the Group Managing Director of NNPC, Mele Kyari, stated that petrol price should be more than N280/litre, while the commodity had been subsidised and sold at N162/litre since last year.
While the Nigerian Bar Association (NBA), among others, had described the decision of the All Progressives Congress (APC) government to suspend its planned petrol subsidy removal as an election strategy, the presidential spokesman said the decision of the Federal Government to propose an extension of fuel subsidy removal by 18 months was not political.
“It is a valid thing to do. The suspension was not done because of elections next year. It was done because as the Minister of Finance stated, the timing is not auspicious, inflation is still high. In the past eight months, we saw inflation reducing but the last month, it went up again; further consultations need to happen with all the stakeholders. The timing is not right, it will exacerbate the hardship of the people and the President genuinely cares,” Adesina added.
Asked about the financial cost of the 18-month extension on the economy, the presidential aide said: “Head or tail, Nigeria will have to pay a price; it is either we pay the price for the removal in consonance and in conjunction with the understanding of the people.
“The other cost is that borrowings may continue and things may be difficult fiscally for both the state and the federal government. You know how much could have been saved if the subsidy was removed and how it could have been diverted to other spheres of our lives. We have to pay a price.”
Recall that the Buhari administration hopes to push its public debt stock to N50.22 trillion in 2023, with domestic debt at N28.75 trillion and external debt at N21.47 trillion, according to the projections in the National Development Plan 2021-2025.
The Debt Management Office (DMO) had disclosed that Nigeria’s public debt was N38 trillion as of the end of the third quarter of 2021.
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