On Tuesday, the National Economic Council (NEC) spent much of its time during its meeting on the problems associated with the continued subsidy made on petroleum products by the Federal Government. The statistics are scary and the justification for such monumental waste not tangible. According to the NEC, the Federal Government is owing the sum of N880 billion in subsidy. This is only on petroleum products. That of Agriculture has not been added, including those of other sectors, where government is still compelled by economic or social necessity to subsidize costs for the people. Health is also one of them.
Briefing State House reporters after the council’s meeting held at the Presidential Villa, Abuja, Ogun State governor, Otunba Gbenga Daniel, said the money would be paid after it has been verified. The council was chaired by the Acting President Dr. Goodluck Jonathan. It reeled out figures to support the government’s plan to deregulate the oil sector, arguing that the debt crisis was affecting the federation accounts.
The Nigerian National Petroleum Corporation (NNPC), which runs the crude oil business on behalf of the government, is now enmeshed in big accounting mess such that the federation accounts is being seriously threatened. NNPC is being owed such huge amount, as the Federal Government is finding it difficult to remit N450 billion to the federation accounts for the three tiers of government to share and this is impacting negatively on the state governors’ who are now insisting that they would not suffer because of what the FG’s debt.
Delta State governor, Dr. Emmanuel Uduaghan, a member of the team from NEC, who briefed reporters, spoke on the worries of the state governors.
He said that “this is where the states are very concerned. If the N880 billion (owed independent marketers by government on subsidy)has to be paid to the NNPC, it will definitely affect the revenue coming to the states, because the money that is to be paid is supposed to be part of the money that is to be shared by the state so the states will be short changed.
“That is why the states are worried about this issue of paying money to some persons. And the people that get this money are very few in the society. So should we continue to enrich certain persons to the detriment of all of us?”
That is the crux of the matter – subsidy by government. Now, the total indebtedness of the federal government to NNPC is put at about N1.15 trillion, and some N880 billion of this amount is owed on subsidy. That is a year’s budget for the FG. This issue has, indeed, reached a crisis point and Nigerians must face the reality that the oil sector has to be deregulated now.
Finance minister (former), Dr. Mukhtar Mansur, a member of NEC in his contribution said, “right now, we have an invoice from the NNPC in the amount of N1.15trillion to the Ministry of Finance for various expenditures incurred on behalf of the Federal Government, including cost of crude and petroleum products lost due to pipeline vandalism and losses incurred from supplying petroleum products at regulated prices. So, this is the size of the hole we are talking about. Out of this, 450billion naira has not been remitted by NNPC to the federation account. This was in respect to previous months in terms of February to December 2008, were they were not able to pay. They had to make direct withholding of the N450 billion and of course, there is about N700 bi8llion or so that we are now talking about, in relation to the outstanding.
“When you consider the size of the capital expenditure of the Federal Government and even the amount that we have been able to spend as at the end of December 2009 for a budget that is just about N1.1trillion, that is less than what has been used for the subsidy,”he lamented.
This calls for sober reflection by all Nigerians, especially the organised labour who are opposed to deregulation or are insisting on conditions such as the repair of all refineries before deregulation takes off. After all, NITEL was not fixed before the telecommunication sector was deregulated. The oil sector must be deregulated without further delay.
Written by Okey Muogbo, Nigeria Tribune
