Govs Seek to Take Over Fuel Sub­sidy Pay­ments

Move could end in­ef­fi­ciency, graft, short­fall in NNPC re­mit­tances to trea­sury NEC un­cov­ers fraud­u­lent non-re­mit­tance of N526bn, $21bn by govt agen­cies Rec­om­mends in­dicted agen­cies for pros­e­cu­tion

THISDAY - - FRONT PAGE - Omololu Ogun­made and Onye­buchi Ezigbo in Abuja

The gov­er­nors of the 36 states of the fed­er­a­tion are can­vass­ing a novel ini­tia­tive that will see each state tak­ing re­spon­si­bil­ity for sub­si­dis­ing petroleum prod­ucts con­sumed within its ter­ri­tory.

Aris­ing from their dis­con­tent over the claim by the Nige­rian Na­tional Petroleum Corporation (NNPC) that it sup­plies a ridicu­lous 60 mil­lion litres of petrol daily to the do­mes­tic mar­ket, the gov­er­nors are con­tend­ing that in­stead of de­duct­ing the difference be­tween the land­ing cost of petrol and the of­fi­cial pump price of the prod­uct

be­fore re­mit­ting net crude oil re­ceipts to the Fed­er­a­tion Ac­count, ev­ery state should be re­spon­si­ble for pay­ing its own sub­sidy ac­cord­ing to its con­sump­tion.

The push by the gov­er­nors to take over the re­spon­si­bil­ity of pay­ing sub­sidy pay­ments on fuel in their re­spec­tive states could prove to be a ma­jor so­lu­tion to the in­ef­fi­ciency and graft that has char­ac­terised fuel im­ports and con­sump­tion in the coun­try for decades.

Other than the crip­pling im­pact fuel sub­si­dies have had on the trea­sury, the short­fall in re­mit­tances by NNPC to the Fed­er­a­tion Ac­counts of­ten leaves the three tiers of gov­ern­ment shar­ing less rev­enue than ac­tual oil re­ceipts ac­cru­ing to the cof­fers of the state-run oil firm.

Should states as­sume con­trol of sub­sidy pay­ments to oil mar­keters, they would get more rev­enue from the Fed­er­a­tion Ac­count and would have to ne­go­ti­ate with res­i­dents to de­ter­mine the price at which petrol should be sold in their ter­ri­to­ries, mean­ing that some states could pay more or less as petrol sub­sidy.

Con­trol by the states could also lead to ef­fi­ciency in the im­por­ta­tion of petroleum prod­ucts and could see daily con­sump­tion drop­ping to about 30 mil­lion litres a day.

How­ever, gov­er­nors un­able to use the ex­tra rev­enue at their dis­posal ju­di­ciously to en­sure that there is no fuel scarcity in their states would have to con­tend with irate res­i­dents.

Speak­ing with jour­nal­ists shortly af­ter the meet­ing of the Nige­rian Gov­er­nors’ Fo­rum (NGF) Wed­nes­day night, the chair­man of the fo­rum and gov­er­nor of Zam­fara State, Ab­du­laziz Yari, said the state chief ex­ec­u­tives ex­pressed reser­va­tions over the sud­den rise in petrol con­sump­tion and cash call ex­pen­di­ture, which now runs into tril­lions of naira.

Elab­o­rat­ing on the proposed ini­tia­tive, Yari said the move would ac­tu­ally help to re­duce the vol­ume of petrol im­ported and also the amount spent on sub­sidy.

He said the pro­posal was to be tabled be­fore yes­ter­day’s Na­tional Eco­nomic Coun­cil (NEC) meet­ing for de­lib­er­a­tion and ap­proval.

Yari, who de­scribed the NNPC’s claim of im­port­ing 60 mil­lion litres of petrol daily as un­be­liev­able, how­ever, said the three tiers of gov­ern­ment would need to ap­ply cau­tion in im­ple­ment­ing the new ini­tia­tive to avoid dis­rup­tion in fuel sup­ply.

“Well, we don’t want to play into the hands of these peo­ple so that there will be an­other fuel scarcity. You know the prob­lem is also from Nige­ri­ans, they would blame us for caus­ing the scarcity and they won’t know why there was a short­age.

“Be­cause for us to com­mence the in­ves­ti­ga­tion on how much each state con­sumes, these peo­ple will in­sti­gate chaos that we would re­gret and Nige­ri­ans would look at it from that perspective and will start ac­cus­ing the gov­ern­ment of lax­ity and not be­ing proac­tive.

“So it is not about the in­ves­ti­ga­tion, it is about try­ing to re­po­si­tion things for the fu­ture,” he said.

Yari said the fo­rum agreed that the states should go and as­cer­tain the vol­ume of prod­uct that is needed in each of their ter­ri­to­ries.

The gov­er­nors, who met in Abuja ahead of the NEC meet­ing, also con­sid­ered issues re­lat­ing to rev­enue re­mit­tances to the Fed­er­a­tion Ac­count by rev­enue-gen­er­at­ing agen­cies, as well as other issues con­nected with the de­vel­op­ment and well-be­ing of res­i­dents in the states.

The dis­cus­sion on the pay­ment of the out­stand­ing Lon­don and Paris Club re­funds was how­ever stepped down since the re­port was not ready.

Sim­i­larly, the gov­er­nors agreed to step down de­lib­er­a­tion on the col­lec­tion of stamp du­ties since there is a pend­ing case at the Supreme Court.

Other issues on the agenda in­cluded the review of the NEC agenda and im­ple­men­ta­tion of health projects, up­dates on dis­ease out­breaks and the ex­pected roles of state gov­ern­ment in epi­demic re­sponse, and repli­ca­tion of the Edu­mar­shal ed­u­ca­tion project at the state level.

Edu­mar­shal is a com­pre­hen­sive school man­age­ment and ad­min­is­tra­tion soft­ware so­lu­tion that en­ables au­thor­i­ties to track and en­force com­pul­sory ba­sic and sec­ondary ed­u­ca­tion for chil­dren of school age in their do­mains.

Mean­while, at the meet­ing of NEC yes­ter­day in Abuja, the coun­cil adopted the au­dit re­port pre­sented to it by KPMG, which re­vealed that rev­enue-gen­er­at­ing agen­cies, notably the NNPC, failed to re­mit N526 bil­lion and an­other $21 bil­lion to the gov­ern­ment’s cof­fers.

Brief­ing jour­nal­ists at the end of the monthly NEC meet­ing presided over by Vice-Pres­i­dent Yemi Os­in­bajo in the State House, the gov­er­nor of Gombe State, Ibrahim Dankwabo, said KPMG pre­sented the con­clud­ing re­port of the tech­ni­cal au­dit of 16 rev­enue agen­cies which showed that the coun­try was short­changed by N526 bil­lion and $21 bil­lion that they failed to re­mit to the Fed­er­a­tion Ac­count.

Dankwabo, who said the au­dit re­port was the fall­out of the as­sign­ment han­dled by a NEC ad-hoc com­mit­tee that he chaired, added that the com­mit­tee rec­om­mended the re­fund of the un­remit­ted sums by the agen­cies to the Fed­er­a­tion Ac­count.

He also said NEC adopted the rec­om­men­da­tion of the com­mit­tee that where crim­i­nal acts had been dis­cov­ered in the agen­cies’ ac­tions, they should be re­ferred to the le­gal arm of NEC and the At­tor­neyGen­eral of the Fed­er­a­tion (AGF) for pros­e­cu­tion.

He also said the coun­cil would en­sure that the gover­nance struc­tures of the NNPC would be strength­ened to avert a re­peat of such “gross un­der-re­mit­tance” by the agency in fu­ture, point­ing out that whereas the au­dit only cov­ered the pe­riod 2010-2015, NEC yes­ter­day re­solved to ex­tend the au­dit to June 2017.

“Coun­cil adopted the pre­sen­ta­tion and re­ports of the KPMG and the recommendations of its ad-hoc com­mit­tee in­clud­ing a res­o­lu­tion to iden­tify in­stances where there ap­peared to have been crim­i­nal in­fringe­ments and for­ward such to the At­tor­ney-Gen­eral of the Fed­er­a­tion and the Le­gal Com­mit­tee of the Na­tional Eco­nomic Coun­cil for fur­ther ac­tion.

“Coun­cil re­solved to pur­sue the strength­en­ing of NNPC gover­nance struc­tures to pre­vent fur­ther re­cur­rence of such gross un­der-re­mit­tance by the NNPC and other rev­enue gen­er­at­ing agen­cies,” he said.

Dankwabo listed the agen­cies au­dited to in­clude NNPC, Nige­rian Petroleum De­vel­op­ment Com­pany (NPDC), Depart­ment of Petroleum Re­sources (DPR), Nige­rian Cus­toms Ser­vice (NCS), Fed­eral In­ter­nal Rev­enue Ser­vice (FIRS), Nige­rian Ports Author­ity (NPA), min­istries, de­part­ments and agen­cies (MDAs), and other mar­itime agen­cies.

In his brief­ing, Osun State gov­er­nor, Rauf Aregbesola, said the coun­cil com­mended the courage of Pres­i­dent Muham­madu Buhari and the vice-pres­i­dent in en­sur­ing the probe of fed­eral gov­ern­ment agen­cies, say­ing this would pro­mote trans­parency and the an­ticor­rup­tion efforts of the ad­min­is­tra­tion.

The Min­is­ter of Bud­get and Na­tional Plan­ning, Udoma Udo Udoma, said he briefed the coun­cil on the just con­cluded Eco­nomic Re­cov­ery and Growth Plan (ERGP) fo­cus labs which he said: “Were con­ducted suc­cess­fully and the out­comes pre­sented to the pub­lic last Tues­day, May 15, 2018.”

Ac­cord­ing to him, the labs iden­ti­fied 164 projects to be spread across the six geopo­lit­i­cal zones of the coun­try, adding that the out­come of the labs showed that over 500,000 jobs could be cre­ated by 2020.

He also said more labs would be con­ducted in due course in other sec­tors of the econ­omy and states had been en­cour­aged to adopt the same model.

Re­spond­ing to ques­tions on whether the coun­cil dis­cussed the sub­sidy be­ing paid on im­ported petroleum prod­ucts, which was tabled by the gov­er­nors on Wed­nes­day at the NGF meet­ing, Yari said NEC would take an as­sertive de­ci­sion on the sub­sidy regime next month.

He in­sisted that the claim of 60 mil­lion litres daily fuel con­sump­tion by NNPC and the huge sub­sidy be­ing paid on petrol by the corporation was un­ac­cept­able and must be re­dressed.

“Yes, the item was brought up for dis­cus­sion but it was re­ferred back to the sub-com­mit­tee which I chair. We are look­ing at the nitty gritty with the NNPC in terms of re­mit­tances.

“Don’t forget that the rea­son we got it right in 2016 on the NNPC side was be­cause oil prices were low.

“It was easy for ev­ery­one to get fuel into the coun­try and then make his profit. So, when the price started climb­ing, oil mar­keters started ad­just­ing be­cause they needed to have a tem­plate on cost re­cov­ery and how they were go­ing to make up the difference be­tween the land­ing cost and the pump price.

“Our prob­lem is the vol­ume, the quan­tity of con­sump­tion which is not ac­cept­able. In work­ing with the gov­er­nors, so many de­ci­sions were taken but by next month, we are go­ing to adopt a po­si­tion ei­ther for the gov­er­nors to take re­spon­si­bil­ity for sub­sidy pay­ments in their states based on con­sump­tion or we look at other ways.

“For in­stance, if you said we paid N800 bil­lion sub­sidy in one month, you will ask, who are we pay­ing the sub­sidy to? And if you look at in­fra­struc­ture de­vel­op­ment and the cap­i­tal bud­get of the fed­eral gov­ern­ment, it is about N1.1 tril­lion, so that means al­most 70 per cent of what you are spend­ing to de­velop the econ­omy is go­ing to fuel sub­sidy.

“N800 bil­lion is a huge amount that we must look at and de­ter­mine who is ben­e­fit­ing from it? So, we are com­ing up with a strat­egy. We are go­ing to meet in the month of May and June.

“In the next meet­ing, we will def­i­nitely come up with a po­si­tion of gov­ern­ment at both lev­els on the vol­ume of what is be­ing brought into the coun­try and what the state and fed­eral gov­ern­ments col­lab­o­rate to check,” Yari said. NIGERINSURE

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.