Monday, 20 February 2012

Hidden Details Of Fuel Subsidy You Must Read

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 It can be remembered that fuel subsidy removal in Nigeria was followed by violence and fierce resistance from the members of the public. While vast majority of the people believe the government had not been fair to the people for several years, the giant of Africa-Nigeria is currently facing different challenges ranging from corruption, bad governance, insecurity, bad roads, poverty etc. However the recent development in the fuel subsidy challenge is very shocking and sad.
As recently reported the ongoing public sitting by the House of Representatives ad hoc committee throws up fresh facts on fuel subsidy scandals
Fresh facts are now emerging on the mismanagement of subsidy paid on imported petroleum products in the country. The Farouk Lawan-led ad hoc committee of the House of Representatives on Wednesday, January 18, was told that the  Nigerian government wasted N667 billion annually to subsidise millions of litres of petrol that Nigerians never needed with much of that amount enriching corrupt oil officials and marketers.
The implication of this is that  the federal government was subsidising as much as 24 million litres of petrol  daily that Nigerians did not use, with much of that smuggled into other countries through a mesh of high-wired sleaze that  has been going on in the importation and subsidy of refined petroleum products.

Reginald Stanley, executive secretary of the Petroleum Product Pricing Regulatory Agency, PPPRA, testifying before the committe on Wednesday, said that before the removal of subsidy on January 1, the country was importing up to 59 million litres of petrol daily when the country actually needed 35 million litres, with government subsidy covering all of the imports.

With the government paying N76 per litre in subsidy to lower the cost of fuel imported into the country, that translated to N1.9 billion daily, and N667 billion annually. Stanley’s revealation on Wednesday added a new page to shocking revelations from the hearing since Monday, January 16, 2011. These revelations, many of them not new having been aired at a similar sitting at the Senate last year – have gone to prove the need for the anger and frustration of a nation that has just returned from the streets after a week of strikes and protests against the removal of fuel subsidy and the attendant raise in prices.

The PPPRA boss presented fresh figures on the importation of fuel and subsidy different from those given the senators last year.  Figures of daily consumption of fuel products in the country changed and he admitted the agency had made mistakes in its computation last year. He earned the condemnation of the lawmakers.
                                                                           

But the most intriguing disclosure was that government subsidies cover an extra 24 million litres of petrol that are not accounted for, which lawmakers believe end up being smuggled out of the country, while some officials reap heavily at the expense of the nation.

Stanley could not explain why the nation had to import that much while the consumption is far lesser. He said, however, that the computations were not based on actual user data, but on the gross domestic product indicators.

The lawmakers directed the agency to forward to the committee a list of importers and other details of importation of fuel from 2006 to date, vowing to unearth the details of the deal. “Because if the subsidy you pay is for 59 million litres per day and the consumption is 35 million litres per day, then you are talking of 24 million litres which Nigerians are paying for but for which they do not consume,” said Farouk Lawan.

The PPPRA  and the Nigerian National Petroleum Corporation have been accused of aiding the abuse of government subsidy on petrol, approving and paying false claims from importers and marketers thereby skyrocketing the cost of subsidy.

On Tuesday, the Nigeria Customs Service, NCS, accused the NNPC of embarking on importation without documentation, making it difficult to ascertain actual amount of import. The corporation has also been accused of illegally deducting subsidy claims at source, at times, overpaying the claims. The PPPRA boss denied on Wednesday that the agency was involved in paying marketers.

On the other hand, Austin Oniwon, the NNPC group managing director,  told the lawmakers that the corporation acted within the law in deducting the monies at source. Oniwon said the Act establishing the NNPC allowed it to deduct such funds before paying same into the Federation Account. “We don’t take money from the Federation Account and we do not intend to take money from the Federation Account. I only deduct what is authorised by the Petroleum Products Pricing Regulatory Agency,” he said.

Earlier, Ngozi Okonjo- Iweala, finance minister,  told the committee that all monies made from crude oil through NNPC and partners – are not paid directly into the Federation Account of the nation. The minister stated that money for the oil subsidy is withdrawn before it gets into the national account.

Diezani Allison-Madueke, minister of Petroleum, admitted under questioning from Farouk that the N1.3 trillion was not only paid for petrol subsidy – that the sum contained arrears for Kerosene and Petrol subsidy dating back to 2008 – thus giving the impression to the Nigerian public that the nation was disbursing money for the payment of petrol subsidy. She admitted also that only N250 billion of the N1.3 trillion was paid for petrol subsidy.

The petroleum minister admitted that she did not know the total volume of petrol consumed in Nigeria. She also complained that the federal government was virtually subsidising the entire ECOWAS community  as illegal transporters of petrol move subsidised petrol out from Nigeria to neighbouring ECOWAS countries. But the  petroleum minister was pinned on an embarrassing note – as it was pointed out to her that the petroleum ministry should know the total volume of petrol consumed locally – that it would amount to a rudimentary embarrassment should the ministry not have the data. Source: Newswatch

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