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Does the Nigerian Government Need to Remove Fuel Subsidy?
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Submitted by IQ4News on Sun, 11/12/2011 - 1:20pm
President Goodluck Jonathan, at the opening ceremony of the second quarterly meeting of the Nigeria Inter-Religious Council (NIREC) held in Ilorin during the week, hinted at the inevitability of oil subsidy removal next year, the Tribune newspaper reported.
The ruling party, People's Democratic Party (PDP) has also echoed the resolve of the Federal Government that “there is no alternative” to oil subsidy removal.
The acting national chairman of the ruling party, PDP, Alhaji Kawu Baraje, was quoted in the national media last month saying “the removal of the subsidy was the only way to revamp the economy”.
However, Nigerians have questioned the rational of this position, especially now that the Nigerian National Petroleum Corporation (NNPC), the government agency that manages the nation’s earnings from oil, has been exposed as a cesspit of corruption in a forensic report prepared by KPMG.
In the report, which was released this week by Premium Times, NNPC has been revealed to defraud the country in subsidy claims totalling N28.5 billion between 2007 and 2009.
The report also hinted on over-deduction running to several billions of naira from its remittance to the federation account for 2010 and 2011.
“For example, N25bn was deducted as subsidy estimate for September 2009 from domestic crude sales proceeds while PPPRA approved a subsidy of N23.8bn. N35bn was also deducted as subsidy estimate from November 2009 but PPPRA approved of N21.3bn,” the report explains.
In the previous week, the Will revealed the names of over 100 companies that shared N1.426 trillion petroleum subsidy funds between January and August 2011, a figure which reportedly contradicts the amount (N1.348 trillion) quoted by Petroleum Product Pricing Regulatory Agency.
Considering the level of fraud at the NNPC, observers wonder why subsidy removal is “the only way to revamp the economy” as the ruling party argued.
One of the questions frequently asked by Nigerians is: Why are the four refineries in the country not working after twelve years of democracy?
Nigeria has two refineries in Port Harcourt and one each in Warri and Kaduna. The plants have a total capacity of 445,000 barrels per day (bpd) but all are lying prostrate.
According to the Nigerian National Petroleum Corporation (NNPC), the refineries operate at about 30 per cent of installed capacity of 438,750 bpd because of interruptions in the supply of crude.
In 2010, Nigeria imported $7.966 billion worth of oil according to an IMF 2011 report on World Economic outlook.
Nigeria is said to be the only OPEC member country that sends her crude oil abroad for processing and then imports same.
The former Minister of Petroleum, Tam David-West in a recent interview with the Guardian, Nigeria, said “some persons with vested interest had destroyed the refineries so that they can import refined petroleum products into Nigeria even at the detriment of the economy”.
Anti-subsidy removal groups say because Nigeria refines less than one-third of the petroleum it consumes, the dealers control the importation of fuel to keep the pump price at 65 Naira per liter.
The Federal Government has explained that it is unwise to continue to fund subsidies in the oil sector that does not have direct benefit on the masses. The government in fact assured Nigerians that removing oil subsidy, rather than affecting the economy negatively, will enable the government concentrate on infrastructure development and social programmes.
“In the quest for a better society, we may have to take decisions which would, at inception, be unpleasant in some cases. But we must face the reality, be honest with ourselves and ensure that we do our best for our country at all times,” Jonathan told VOA recently.
In the same report, President Jonathan’s argument was countered by Prince Ohini, an economist who said removing the fuel subsidy is right in theory, but wrong in practice because of Nigeria's long history of corruption and mismanagement.
One question that the Jonathan administration is yet to answer was posed by a petition group, Nigeria for Change. The group in a petition being prepared to send to the presidency is asking: “Why is the removal of the subsidy the best option in a country that majority of its citizens are living in object poverty?”
Civil society in Nigeria is particularly wondering why the government would not prosecute those alleged of fraud in the petroleum industry instead of insisting to make Nigerians pay more for fuel by removing subsidy.
It is yet unclear whether the Economic and Financial Crimes Commission (EFCC) will invite the heads of companies whose names appear in the list of those that share N1.4 trillion petroleum subsidy funds.
However, what appears more clearly is that Nigerians may have to pay more for fuel in 2012.
Between the two possibilities, only President Jonathan has the executive power to choose who pay the price for the staggering economy.
Oando Nigerian Plc. – N228.506 billion
MRS – N224.818 billion
Enak Oil & Gas – N19.684 billion
CONOIl – N37.960 billion
Bovas & Co. Nig. Ltd. – N5.685 billion
AP- N104.5billion
Obat –N85 billion
Folawiyo Oil – N113.3billion
IPMAN Investment Limited –N10.9billion
ACON – N24.1billion
Atio Oil –N64.4billion
AMP – N11.4billion
Honeywell –N12.2billion
Emac Oil –N19.2billion
D.Jones Oil –N14.8billion
Capital Oil – N22.4billion
AZ Oil –N18.613billion
Eterna oil –N5.57 billion
Dozil oil – N3.375 billion
Fort oil –N8.582 billion.
Comments
#1 The government should not remove the subsidies
Submitted by Osita (not verified) on Mon, 02/01/2012 - 5:33pm.
Pls i beg the fg,dey should nt remove d subsidies,cause d mases is goin to sufer,rather they should persecute d people involve in d fraud nd always take proper acc of subsidies taken by various companies nd d ones d company use in executin d project,pls fg ve mercy on d poor,cme to tnk of it,after removin dis subsidies inorder to meet up wit the country watever,wat if dis fg goes nd anoda gvt cmes nd d new gvt is nt able to meet up wit,den d country wil be in a mess,pls fg tink about d future,tink abt d mases,tink abt d orphans tink abt d jobles
#2 fuel Subsidy
Submitted by Anonymous (not verified) on Thu, 29/12/2011 - 3:16pm.
The present crop of Nigerians leaders are slave managers Greedy and Callous they want to run Nigeria down
#3 pls fellow masses of
Submitted by Pascal power (not verified) on Wed, 21/12/2011 - 6:36am.
pls fellow masses of nigeria,human right organization pls kindly fight for d masses,don't allow the federal gov to remove fuel subsidy,bcos it going to cause hazard to this country.let the gov build our refineries.
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