ONE of the new features that have crept into this year’s Federal Government budget proposals, currently awaiting the approval of the National Assembly, is the provision of N91 billion for kerosene subsidy payment, an item that never appeared in the previous years’ budgets. Although making provision for it in this year’s document is the appropriate thing to do, it is only a step, belatedly taken, to legalise a fraudulent practice through which the government had spent huge sums of taxpayers’ money in the past four years that were never appropriated by the National Assembly.
Last year, while investigating the payment of kerosene subsidies dispensed between 2010 and 2013, the Speaker of the House of Representatives, Aminu Tambuwal, was justifiably alarmed when he learnt, from records available to him, that over N1 trillion was doled out to questionable importers as subsidy during that period. It was even more mortifying that the spending did not get the approval of the National Assembly, a constitutional requirement. This forced the Deputy Speaker, Emeka Ihedioha, to lament, “Curiously, since there was no budgetary provision for subsidy on kerosene, the people of Nigeria will obviously be interested in knowing the source of funding of kerosene subsidy and on whose authority such monies were appropriated.”
The administration of subsidy on any item in Nigeria has always been steeped in opacity and controversy. Kerosene subsidy is no different. It is part of a larger petroleum subsidy regime that also involves Premium Motor Spirit (petrol) through which trillions of naira have been siphoned off from government coffers to line private pockets. This, regrettably, happens with the active connivance of government officials who are supposed to protect the interest of the state.
Although subsidy is meant to make the cost of kerosene cheaper for Nigerians, it has failed to achieve that purpose. According to the Nigerian National Petroleum Corporation, Nigerians are supposed to be buying kerosene at N50 per litre as a result of the subsidy, but the product sells for between N120 and N150 at petrol stations, leading to calls for an end to the charade.
It is indeed shameful that Nigeria, one of the largest producers (and exporters) of crude oil in the world, does not boast a functional refinery, resulting in the overreliance on imports of refined products to meet local needs. With four moribund refineries, Nigeria now imports over 90 per cent of refined products from practically every part of the world.
In what would come not only as a surprise, but also an embarrassment to many Nigerians, the country is now the biggest importer of kerosene from the United States, according to reports quoting the US Energy Information Administration. In a classic case of role reversal, America, which used to be the biggest importer of Nigerian crude oil, now has Nigeria as the biggest buyer of its kerosene. To complete the shame, the Americans, whose refineries are now awash with shale oil and other new oil finds, are no longer buying a drop of oil from Nigeria.
Not surprisingly, the Speaker’s claim did not go unchallenged by the NNPC, the government agency that was in the midst of the subsidy scandal, even when its officials failed to come up with what they would want Nigerians to believe as the authentic amount involved. In one of the attempts to throw light on the issue, the Chairman of the House of Representatives Committee on Petroleum (Downstream), Dakuku Peterside, reportedly said that subsidy on kerosene gulped N110 billion in 2010 and N324 billion in 2011.
He explained, “Although we have yet to reconcile this, we spent N200 billion in subsidising kerosene in 2012. So, by 2012, we had spent N634 billion susidising kerosene.” If the records for 2013 and 2014 are presented, it is likely that what the government has spent as subsidy on kerosene will be far in excess of the N1 trillion the Speaker said was spent on the item.
In 2011, it was discovered that, while N245 billion was provided for in the budget for petrol subsidy, the government ended up spending over N2.53 trillion on it. During the investigation by the House, it was discovered that people were paid indiscriminately on presentation of documents, whether fuel was imported or not. Even among those that imported, no effort was made to verify claims of the quantity imported. Not even the amount of money involved could be reconciled as the NNPC, Central Bank of Nigeria and the Office of the Accountant-General of the Federation gave conflicting figures.
Unfortunately, that investigation ended the way of many others. Nobody has been jailed for that massive fraud; only a few people are presently undergoing trials, apparently to create a false impression that the government is acting on the report. Thereafter, the government still continues with the subsidy bazaar that has cost the economy so dearly.
Notably, the late President Umaru Yar’Adua had through a memo that was presented to the House ordered a stop to further subsidy on kerosene. But for some obvious reasons, the subsidy was retained. It raises more questions that a government that has been threatening to remove subsidy on petrol is now the government that is stridently defending the retention of subsidy on kerosene. Also, for reasons that are very obvious, when a former CBN governor, Lamido Sanusi, raised the alarm about missing billions of dollars, officials of the Ministry of Petroleum Resources were able to answer Ihedioha’s poser by claiming that the missing billions were actually used to pay kerosene subsidy.
With the tumbling prices of crude oil in the international market, the government needs no further prompting to become more prudent in its expenditure. This is not the time to put kerosene subsidy in the budget, but the time to face the reality and do away with it completely. It is also an opportunity to start planning for new refineries. The government must encourage those private operators who collected licences but have not been able to build refineries to do so. With oil prices dipping under $50, Nigeria will no longer be in a position to waste trillions of naira on subsidies of any kind.
