VARIOUS SUBSIDY FIGURES…which is the true figure?

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The actual bill for fuel subsidy in 2011 was N1.73 trillion, the Central Bank of Nigeria (CBN) said Tuesday.

Various figures had been claimed by government officials, ranging from N1.3 trillion to N1.5 trillion as against the N245 billion provided for in the 2011 Appropriation Act.
Deputy Governor of the CBN, Mr. Kingsley Moghalu, who gave the latest figure with a sense of finality, said that as bankers to the Federal Government, the CBN was in a better position to give the true picture on the issue.

Moghalu spoke while giving testimony before the House of Representatives Committee on Monitoring of the Subsidy Regime.

Meanwhile, Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, Tuesday said the KPMG audit report on the Nigerian National Petroleum Corporation (NNPC) predated her tenure at the ministry, contrary to the accusation that she did nothing about it.

She also explained that there was no discrepancy between the figures given by her ministry and the Petroleum Products Pricing Regulatory Agency (PPPRA) on the average daily consumption of petrol in the country.

Alison-Madueke had at a previous appearance before the panel stated that the country consumes 35 million litres of petrol per day, while the Executive Secretary, PPPRA, Mr. Reginald Stanley, who appeared later, said subsidy was paid on the daily discharge of 59 million litres per day.

The minister said that the 35 million litres was for planning purposes and had been in use over the years.

She said she did not at any time state that the payment for fuel subsidy was based on this projection of 35 million litres per day. HIS WOMAN IS A TWO FACED THIEF.

Also Tuesday, the PPPRA restated its earlier position that subsidy payment was based on 58.9 million litres in the first 10 months of last year.

Moghalu said the CBN had about two years ago raised questions over the management of the fuel subsidy and the possibilities of some manipulation of the system.

He said the investigation by the House should be able to get to the root of this suspected manipulation.

“The concern arose mainly as a result of our perception of the implications of possible manipulations of the subsidy regime on the stability of the country’s exchange rate, our external reserves and the banking system. As we all know, non-performing bank loans to petroleum product marketing companies and for stock market transactions were a major contributory factor in the distress suffered by some Nigerian banks in 2008/2009, leading to the Central Bank undertaking extensive reforms in the banking sector,” Moghalu said.

He said that the deductions were made by NNPC at source before payments into the federation account after which the Federation Account Allocation Committee (FAAC) distributed the remainder to the three tiers of government.

He said because of the disturbing signals that some banks might have assisted some fuel importers on illegal foreign exchange deals, the CBN had commenced a special audit of the banks to ascertain their level of compliance with the extant financial regulations.

The results of the audit, Moghalu said, would be ready by the end of February 2012 and erring banks would be sanctioned.

Alison-Madueke assured Nigerians of the Federal Government’s resolve to implement the independent audit report conducted by KPMG into the activities of operators in the downstream sector of the oil industry.

The minister said the current resolve was geared towards ensuring transparency and accountability in the industry.

The minister, who appeared before the panel for the second time Tuesday, gave updates on the reforms initiated in the oil and gas industry and noted that the Governance and Control Task Force Team which was set up recently in the ministry would deal with fundamental issues from the KPMG audit report.

She said that some of the reforms so far initiated included change of leadership of two regulatory agencies such as the PPPRA; streamlining of downstream supply system which led to the increase in the capacity utilisation of the existing refineries from 30 per cent to 60 per cent; reduction in incidences of pipeline vandalism; setting up of the Task Force on the rehabilitation of the refineries.

Others included the inauguration of Special PIB Task Force; Task Force on Governance and Control meant to eliminate rent seeking and arbitrage as well as the award of contract for the Turn Around Maintenance (TAM) of the existing refineries to the original companies that built them.

She also said that President Goodluck Jonathan had directed the Economic and Financial Crimes Commission (EFCC) to look into the books of NNPC and other regulatory agencies as part of efforts to sanitise the system.

In a separate presentation, Group Managing Director of the NNPC, Mr. Austen Oniwon, disclosed that the directive given by former President Umaru Musa Yar’Adua to remove subsidy on kerosene was not implemented due to uncertainties in the sector.

The situation, he said, gave room for the supply of kerosene at a subsidised price up till now.

President of Trade Union Congress (TUC), Comrade Peter Esele, who also appeared before the panel Tuesday, described the PPPRA template as deficient and called for an overhaul of the system.

On the other hand, the Chief Economist of the Nigeria Labour Congress (NLC), Mr. Peter Ozon Eso, explained that organised labour had never disagreed with deregulation of the downstream sector of the oil industry, but had always emphasised the need for certain things to be put in place before any genuine reform could be implemented.

Eso said the government incurred the wrath of labour when it went ahead to deregulate without heeding the warnings of labour.

Via Nigeria Revolt.

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2 responses to “VARIOUS SUBSIDY FIGURES…which is the true figure?

  1. Pingback: House of Representatives under intense pressure over subsidy probe « yomzie·

  2. Pingback: House subsidy panel indicts NNPC management, board, seek refund of missing N1 trillion « TransformationWatch·

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