Nat Confab: fuel subsidy splits delegates

The proposed removal of subsidy by the national conference’s Committee on Public Finance has split delegates at the ongoing national conference.

At the resumed plenary on Monday, some delegates kicked against the removal of fuel subsidy by the government, saying there was nothing wrong if the government continued to subsidise petroleum products  in Nigeria, while some, who supported the removal of fuel subsidy argued that Nigerians were not benefitting from fuel subsidy.

Chairman of the committee, Senator Adamu Aliero, while opening debate on the report of his committee, noted that subsidy on petroleum products had been a major financial burden the nation had been made to bear.

According to him, for the period of 2006 to 2011, subsidy accounted for 30 per cent of government expenditure, which translated to 118 per cent of capital budget and 4.18 per cent of gross domestic product (GDP).

“Subsidy payment of N2.527 trillion in 2012 and 2013 averaged 1.263 trillion. This is a burden too heavy to bear.  The committee also noted that Nigeria had the lowest fuel pump price compared with other countries in sub-Saharan Africa, saying “this is in spite of the fact that the per capita income of Nigeria is one of the highest in Sub-Saharan Africa,” he said.

The committee also revealed that this “anomalous” situation encourages smuggling and that government resource which should have been used to undertake more developmental projects programmes are being utilised to pay subsidy.

Aliero, further stated that the removal of subsidy would most certainly ensure product availability at all times and significantly mitigate illicit cross-border activities.

“In fact, the poor and rural dwellers to whom the subsidy scheme was initially targeted were not reaping the benefit. Accordingly, the removal of subsidy would encourage investments in refineries and the downstream sector, generally,” he said.

Aliero further said that the Nigerian National  Petroleum Corporation (NNPC), Nigeria Extractive Industry Transparency (NEITI), Federal Inland Revenue Service (FIRS), Debt Management Office (DMO) and other stakeholders had expressed concern about the continuation of fuel subsidy.

Chief Mike Ozekhome opposed the recommendations of the committee on the removal of fuel subsidy.

“I have always argued in the last 25 years, when we were still selling a litre of fuel for about 25 kobo, that we cannot talk about removing of subsidy from a product you own.  God has given us oil in his infinite wisdom and surprisingly, we are exploring this oil in the form of crude and export the crude and buy the refined product back to Nigeria.

“It is one of the greatest ironies in this country. Does a farmer subsidise a piece of yam he wants to eat in his family? Do you begin to take a knife and begin to measure and say for me to eat this, I must find out how much it was sold in the Utako Market or at Ogbete Market in Enugu, before I can allow my family to eat it?

“We do not subsidise our own product. I think it is high time we dropped this issue of fuel subsidy, because it encourages our elite, who have held us by the jugular to continue to exploit the common man. I do not agree that there should be removal of any fuel subsidy,” he said.

Speaking on the subsidy removal, Senator Ibrahim Idah, said there was nothing wrong if government continued  to subsidise fuel for its citizens.

Sergeant Awuse,  in his submission, supported the removal of fuel subsidy, saying most Nigerians were not benefitting from it.

Also, Jonathan Temlong, supported the removal of fuel subsidy, arguing that there was no where outside Abuja, where you could buy fuel for less than N120, even as he advised that government should stop importing the products it was producing.

In his own submission, the former Peoples Democratic Party (PDP) chairman, Ahmadu Ali, advised that the removal of the subsidy should be gradual, as any attempt to remove it absolutely would cause crisis.

But a leader of the Ondo State delegates to conference, Mr Remi Olutobora, insisted that fuel subsidy should be removed on the ground that poor masses were not benefitting from the huge sum of money used to subsidise the product.

A delegate, Mr Gaskiya Jaye, representing the civil society, vehemently kicked against the recommendation by the committee for the removal of fuel subsidy, saying this would ignite more crises and threaten national security in view of what was already happening in the country.

He noted that what government should do was to build new refineries and begin to refine the nation’s crude oil, instead of the continued paradox fuel importation.

Mr Isa Aremu, representing the Nigeria Labour Congress (NLC), in his contribution, supported the committee’s  recommendation that remunerations of the public officers should pass through the quality control of the Revenue Mobilsation and Fiscal Commission, but disagreed with the recommendation for the removal of the fuel subsidy.

The Public Finance Committee also decried the huge loss of oil revenue to oil theft and pipeline leakages, which the chairman of the committee estimated to be at N134 billion between 2009 and 2011.

He revealed that the Budget Office of the Federation, at its peak, lost 300, 000 barrels per day to pipeline vandalism and oil theft.

The committee also recommended the passage of the Petroleum Industry Bill in the form it was originally presented to the National Assembly.

Meanwhile, the national conference’s Committee on Public Finance and Revenue has made startling revelations that the Nigerian Ports Authority (NPA) has failed to remit a total of N713 billion into the Federation Account for a period spanning six years.

Chairman of the committee, Senator Adamu Aliero, who made the allegation in Abuja, on Monday, while opening debate on the committees’ report at the plenary, also alleged that the authority operated under an ambiguous and faulty framework, which needed to be subjected to amendment.

He stated that the committee discovered that the level of  remittance when compared to revenue was abysmal, “though the authority’s representatives explained that a larger percentage of the revenue was to cover operating and capital expenditure.”

According to statistical findings by the committee, in 2009, the NPA generated N91billion, but remitted N5.2 billion; in 2010, it generated N102 billion and remitted N3.5 billion.

In 2011, N120 billion was generated, but a paltry N1billion was remitted. In 2012, it generated N128 billion, but remitted N17.8 billion, while in 2013, the agency generated N131 billion, but remitted N3.2 billion.

As of May 2014, N172 billion had so far been generated although, no remittance had been made to the federation account, according to the committee.

Aliero cited lack of information on the form and content of concessioning agreement as part of the high-handed fraud in the sector.

He observed that the level of remittance when compared to revenue generated was ridiculously low and unstable, in spite of the authority’s claim that a large percentage of the revenue was expended on operating cost and capital expenditure.

Part of the recommendations of the committee before the plenary was that the enabling law of the Nigerian Ports Authority regarding remittance of its surplus, be amended to remove any provision that contravenes section 162 of the 1999 Constitution.

The committee also recommended that the concessioning agreements be revisited to address any provision, clause that are not in the interest of the nation.

“The laws of the Nigerian Ports Authority and Nigerian Maritime and Safety Agency should be harmonised to avoid conflicts and promote collaboration and synergy,” Aliero said.

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