Presidency: we will borrow to meet obligation
It will cost N3trillion to fund petrol subsidy this year at N270 billion per month, the Federal Government said yesterday.
This is based on the projection submitted by the Nigerian National Petroleum Company (NNPC) Limited after the government announced a stay of action on petrol subsidy removal.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said N443 billion was budgeted for subsidy from January to June.
This will have to be increased and sourced, she added.
The minister spoke with State House Correspondents after the week’s Federal Executive Council (FEC) meeting at the Presidential Villa, Abuja.
The Federal Government on Monday put subsidy removal on hold to allow for relief measures. It said it would provide for subsidy payment beyond June.
The decision has affected the implementation of the Petroleum Industry Act (PIA).
Mrs Ahmed said FEC approved a proposed amendment to the 2022 Budget to accommodate the additional subsidy funding.
According to her, council proposed a year-long provision for subsidy, taking into consideration the prevailing economic realities.
She said: “We presented to council a request for consideration to make additional funding provisions to enable us to meet incremental fuel subsidy request in the 2022 Budget.
“In the 2022 Budget, as appropriated, we made a provision of N443 billion for subsidy for January to June.
“Having taken into account the current realities, increased hardship on the population, heightened inflation, and that the measures that needed to be taken to enable a smoother exit from the fuel subsidy are not yet in place, it was agreed by Council that it is undesirable to exit fuel subsidy now.
“The NNPC has presented to the ministry a request for N3 trillion as fuel subsidy for 2022.
“What this means is that we have to make an incremental provision of N2.557 trillion to be able to meet the 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.
“In 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because NNPC assesses that the country is consuming 65.7 million litres per day, now we’ll end up with the incremental cost of N3 trillion in 2022.
“So, this has been considered by Council and we’ve also been asked to approach the National Assembly for an amendment to the fiscal framework as well as the Budget, to also further discuss with NNPC on how to make provisions for this and also how to rationalise this expenditure.”
The minister gave an insight into how the N3 trillion for subsidy will be sourced.
She said: “We’re going to engage NNPC to further interrogate the request that they presented to see how we can scale it down.
“We agreed with the view of governors, that there is a need to scale down on the size.
“Even as the government is not immediately removing the fuel subsidy, we have to make sure that what the nation is incurring is efficient, and that it is a real cost that has been consumed by the country.
“How do we fund it? We’ll have to reduce it from that N3 trillion.
“Secondly, we have several reconciliations with NNPC and NNPC itself is owing (the government) in some cases.
“We want to be able to settle some of the subsidy costs through this reconciliation process.
“When we’re done with that, whatever is left that we’re not able to apply to what an NNPC is owing the Federation will not be increasing the deficit.
“That means increased domestic borrowing. But we haven’t finished the reconciliation. This is just the second day.”
Obaseki: it’s a waste
Edo State Governor Godwin Obaseki, speaking during a meeting with Organised Labour in Abuja, was of the view that N3trillion for subsidy was unsustainable.
“We have a choice of continuing to behave like Father Christmas (Santa Claus) or take concrete actions on a problem that is permanent with us rather than throwing away N3trillion on subsidy,” he said.
House to probe petrol consumption
The House of Representatives said it would investigate the volume of petrol consumed daily by Nigerians to verify what is paid as a subsidy.
Speaker Femi Gbajabiamila, who set up two ad-hoc investigative committees, said the House would also investigate the state of the four refineries and what it will cost to fix them and reduce dependence on importation.
Speaking at the resumption of plenary yesterday, he said: “We have had figures bandied here and there without any authenticity. Before we can even begin to talk subsidy, we need to know how much we are consuming.
“The second is to look into refineries and state of repair and determine what will be needed to bring our refineries back to life again.”
Nigeria Labour Congress (NLC) President Ayuba Wabba reiterated the call to the Federal Government to resuscitate the refineries and build new ones before withdrawing subsidy.
Wabba, represented by National Auditor, Benjamin Anthony, spoke in Jos while addressing the Plateau Executive Council of NLC.
“If the subsidy is going to be removed, then the Federal Government should put our four refineries in use,” he said.
NLC said it would remain vigilant despite the government’s suspension of subsidy removal.
At a briefing in Kaduna, the NLC Deputy National Secretary, Comrade Bello Ismail said: “We will not go to sleep despite the reversal of the subsidy removal by the government. We will continue to be vigilant over the issue.
“Going forward, we will continue to engage with the government on the very critical issues of ensuring local refining of petroleum, creation of sustainable jobs and provision of petrol at an affordable price for Nigerian workers and people.”
CNG, PANDEF to govt: get refineries working
The Coalition of Northern Groups (CNG) urged the Federal Government to rehabilitate and revamp the four comatose refineries and block all forms of smuggling of petroleum products outside the country.
In a statement by Director of Strategic Communications, Samaila Musa, the group warned against imposing hardship on the masses through subsidy removal.
“As stakeholders in the Nigerian Project, the CNG advises the Federal Government to never contemplate removal of subsidy again as it is the only direct benefit that many poor Nigerians enjoy from the Government.
“The Federal Government should block all the leakages through which selfish politicians and civil servants corner public resources for their aggrandisement.
“The Federal Government should use its security architecture to block smuggling the fuel just like it does to stop the importation of rice into the country. It is being done for rice; it is doable for fuel too.
“The government should rehabilitate and revamp our four comatose national refineries that were jettisoned. The four refineries have a maximum capacity of refining 450, 000 barrels per day.
“The government should apply some austerity measures to cut some unnecessary expenses, purchases, travels and tours within and outside the country.
“Foreign trips with a large entourage should also be discouraged by the presidency to set an example for others to emulate,” the group said.
The Pan Niger Delta Forum (PANDEF) described the extension of petroleum subsidy as a “good” development for Nigeria.
Its spokesman, Ken Robinson, told correspondents that removing subsidy at this time would have affected a majority of citizens.
He believes the government failed to carry out a “sufficient analysis of situations” before coming up with the policy.
“Majority of citizens would be affected by that policy of subsidy removal and so clearly, they didn’t think enough,” Robinson said.
He blamed the government for the moribund refineries.
“Why must citizens pay for the failures of government which is what subsidy removal represents?
“Let the government, going forward, properly analyse and evaluate issues before they hastily come up with programmes.”
