UNBELIEVABLE: Fuel Subsidy Swallow Over N1 Trillion Again?

The fuel subsidy bill for 2012 hit N1.05 trillion as President Goodluck Jonathan yesterday admitted that he had underestimated the cost of subsidising fuel.

The President said this while submitting a request to the National Assembly to approve N161 billion as supplementary budget to meet the cost of fuel subsidy  for the festive season of 2012 (Christmas and New Year).

The new N161 billion fuel subsidy bill is in addition to N888 billion approved for subsidy payments earlier this year.  The new proposal takes the federal government’s total fuel subsidy bill in 2012 to N1.05 trillion.

Jonathan’s letter read:” You recall that as part of the 2012 budget framework, a provision of N888.1 billion was made for payment of fuel subsidy for the nation. I wish to intimate the distinguished Senate of the fact that following the forensic audit carried out, the provision for fuel subsidy in the 2012 budget was underestimated.”

Jonathan explained that of the N888 billion approved for fuel subsidy in 2012; N880 has been paid out, leaving a balance of N7.74billion.

“ In order to accommodate the outstanding arrears resulting from the forensic audit exercise and the remaining period of  2012 an additional sum of N162bn over and above what was programmed in the 2012 framework is required” Jonathan’s letter read.

The President explained that the new expenditure was needed “to maintain a steady flow of petroleum products, especially in the run up to the festive season.”

There has recently been persistent fuel scarcity, as marketers are said to be reluctant to sustain the importation of refined products over doubts that the debts owed by the Federal Government for products already supplied would be paid, and in good time.

It would be recalled that the Federal Government’s subsidy bill had hit N1.7 trillion in 2011, which had forced it to remove the subsidy, a move that did not go down well with many Nigerians and resulted in civil protests and strikes.

Following a national protest by labour unions and civil society in January 2012 over the removal of fuel subsidy, the Federal Government set up the Aig-Imokhude Presidential Committee on verification of fuel subsidy claims. The committee indicted 21 different marketers for making fraudulent claims to the tune of N382bn. The committee had gone ahead to say that the owners of the 21 firms indicted should be prosecuted.

Already the Economic and Financial Crimes Commission (EFCC) has charged some of the indicted persons and firms to court.

The Federal Government has also tightened the payment systems for fuel subsidy which may have resulted in the significant reduction seen in this year’s budget. The government has however announced that it would still go ahead to subsidise fuel in the 2013 budget, to the tune of N971 billion, an amount equivalent to 65% of the nation’s 2013 capital budget proposal of N1.5 trillion.

Though the amount is not captured in the 2013 N4.9 trillion budget appropriation before the National Assembly, those familiar with the process say the subsidy deduction will be a first line charge on petroleum revenues from the Nigerian National Petroleum Corporation (NNPC).

The 2012 supplementary bill was sent to both chambers of the National Assembly.

The request of President Jonathan will be formally referred to the senate committee on Appropriation today for consideration, while the amount would be approved next week, along with the 2013 budget, according to insiders at the National Assembly.

Source: BusinessDay