Wednesday, October 26, 2011


THE Federal Government yesterday admitted that it has lost the battle against those it said were the sole beneficiaries of fuel subsidy. Petroleum Minister, Mrs. Diezani Alison-Maduekwe, who revealed this, said all punitive measures put in place to curtail racketeering in the oil sector did not yield the desired result, hence, the planned removal of subsidy. The government says it has spent about N1.5 trillion on subsidy this year alone.

But, Mrs. Alison-Maduekwe stated that “it has become pertinent that we find other ways to utilise the vast resources that are being channelled into the subsidy, which are not reaching the masses. This time around, once we meet with the various stakeholders and agree on a formula, setting major deregulatory benefits would be put on the table. The government would not handle the implementation of these benefits, so that it would be opened and transparent”.

Besides, the minister said a list of eminent Nigerians, dubbed 'think-tank', that will manage the proceeds from the planned subsidy removal is ready, but still being kept close to President Goodluck Jonathan's chest.

Speaking to newsmen at the on-going Commonwealth Business Forum in Perth, Australia, Mrs. Alison-Maduekwe, however, declined to mention the names of members of the panel, which she says will comprise mainly non-governmental officials to ensure transparency.

She said members of the ‘think-tank’ would be saddled with the responsibility of managing the gains that will accrue from subsidy removal.

alison-maduekeHer words: “As we speak, a committee of highly-respected Nigerians is being put together, who would monitor and advice. And there are major benefits that will cut across all major sectors of the economy. Some of them involve road works, major public maintenance works, ongoing mass transportation, schemes for skilled youths and also for unskilled youths and, of course, there will be areas for maternity and child care, among others.

"But, we shall ensure that across the board, the package is robust and monitored and advised on by Nigerians of high integrity so that it is clear that it is a credible and transparent process. In the area of public works, we shall not go through the government channels as usual, as Special Purpose Vehicle (SPV) would be set up specifically to handle it so that we don’t get bogged down in the usual manner of process and procurement issues.

"We shall mobilise upfront, because in deregulation, subsidies are paid monthly and we cannot wait to collect money monthly. So, the money would be borrowed upfront from the CBN (Central Bank of Nigeria) and mobilisation will start immediately so that it would be clear that we intend to put our money where our mouth is this time around."

According to her, “Mr. President is adamant that if we remove subsidy, we must give Nigerians the full benefits and the full impact of that removal.

"We have fought hard to try to ensure that it does. I think that all Nigerians will be very happy; we cannot please all the people all the time, but I think most Nigerians will be happy with the quantum and impact of all the parameters that we are putting in place to ensure that what we are saying would actually be done.

“I think as painful as it is to us as a government, it is quite clear that the issue of subsidies has not worked in the manner in which they were intended for the Nigerian masses. The intention, of course, was to relieve the suffering of the masses across the board by ensuring that our petroleum products are subsidised to give them a comfortable level of procuring the products.
"Unfortunately, since we came into government as a continuum over a year ago, it has become quite clear that the majority of the subsidies were actually going to the middle line operators.

“Take kerosene for example, government subsidises at the tune of about N105 per litre, the landing cost is about N145 per litre, we sell to the middle line operators at N40 per litre, which means that we are subsidising at N105 per litre and we expect that it will reach the consumer or the masses at roughly N50 per litre that is our recommended price.

"But, as we all know, it reaches them at a more higher cost. On the average right now, it costs N85 per litre. There have been times, when it has been over N100 per litre. And this is very painful to us.

“We have flooded the market with the product, yet there is still some part of the country where the product remains fairly high cost wise, which means that the middle line operators are gaining both ways.

"They receive the subsidy from the government and at the same time, they are charging the consumers double and sometimes more than double the price. In other words, the masses are not gaining the benefit of this heavy subsidy."

The minister lamented that all measures put in place to arrest the situation in the past, including closing down businesses and filling stations, failed.

She said: “A lot has been done already, operators, businesses and stations have been closed down; some suspended from service as punitive measures by our regulators, the DPR (Department of Petroleum Resources).

“But, the truth of the matter is, we are not in a military regime, the market forces of supply and demand have to be allowed to a certain extent. Yes, we are tightening up operations, even as we speak, we are reforming our regulatory agencies as well.”
On the January take-off date for deregulation, the minister doubted the possibility, insisting that the government must finalise consultations with all the stakeholders before effecting subsidy removal.

Her words: “We are still in discussions with labour and other stakeholders, including the National Assembly. Until that is finished, I don’t think it is right to give any definite date for the roll out of the implementation of subsidy removal.”

Meanwhile, the House of Representatives yesterday frowned at the refusal of the Minister of Finance, Dr Ngozi Okonjo-Iweala, Mrs. Alison-Madueke and the Central Bank Governor, Sanusi Lamido Sanusi, among others, to attend the investigative hearing of the Nigerian National Petroleum Corporation (NNPC) over the alleged debt of N450 billion owed by the corporation to the Federation Account.

The investigative hearing, which commenced yesterday, was suspended by the ad-hoc committee set up to carry out investigation on the activities of the NNPC and the failure of the corporation to remit N450 billion to the coffer of the government.

The investigations had to be postponed for another one week due to the absence of key witnesses that would be of help to the investigation.

The Chairman of the Committee on Petroleum Upstream, Muraina Ajibola, one of the members of the ad-hoc committee, while citing Section 88 and 89 of the 1999 Constitution, maintained that the National Assembly and particularly the House of Representatives has the power to summon any government agencies and also has the power of arrest, therefore, those invited should not force the committee to invoke the relevant section of the Constitution against them.

In his ruling after most of the members of the committee had expressed their displeasure, the Chairman of the ad-hoc committee, Jubril Abdulmumuni, ruled that the hearing should be suspended “so that those key people who are directly connected will appear before the committee”.

Jibril had earlier gave reasons for the public hearing.

He said: “The embarrassing issue of non-remittance of N450 billion Domestic Crude revenue by the NNPC could have been avoided with transparent accounting for our revenues. More worrisome is the fact that the unremitted funds are known to be in excess of N700 billion. Our journey towards Vision 20:2020 cannot be realised with a whopping sum of N1.5 trillion being paid as subsidy on petroleum products just in one year, without empirical basis.

“Despite the enormous revenue accruing from crude oil sales everyday, we have continued to operate deficit budget simply because of our inability to track our revenues," he added.

He explained that the over $50 billion dollars of crude oil revenue is still trapped in the hands of the major lifters of Nigeria crude oil with the knowledge of NNPC officials.

“Our Excess Crude Account, which has been re-named "Sovereign Wealth Funds," has been so bastardised that over $5 billion was appropriated through the back door without parliamentary approval.

"NNPC religiously takes 445,000 barrels domestic crude per day at below commercial rate, exports petroleum products below import price, claims NPA charges as part of its cost but remains a major debtor to NPA, charges regular demurrage on petroleum products, imports as if our ports are always congested, underdeclares revenue from federation crude and still turns around to claim huge subsidy from the federation.

“As a manager of the nation's oil industry and overseer of Joint Venture arrangements, NNPC has created other arrangements such as "Carry Agreements" with IOCs which have turned out to be another drainpipe on the federation revenue as over $12 billion have been lost,” he added.

Speaker Aminu Tambuwal said that the House would take matters of financial management very seriously, particularly when it concerned the country’s resources.

He stated: “Let me state that public allegations bordering on lack of transparency against persons, agencies or corporations are grave enough and deserving of prompt action by the Representatives of the people who, by oath, are under a duty to uphold and defend this Constitution.” (Compass News)

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