House of Reps member canvasses for fuel subsidy removal

Weeks after the International Monetary Fund (IMF) advised the Nigerian Government to remove the subsidy on Premium Motor Spirit, the Chairman, House of Representatives Committee on Petroleum (Downstream), Joseph Akinlaja, has thrown his weight behind the agitation.

Akinlaja supported the recommendation of IMF, stating the issue of subsidy for petroleum products is outdated in Nigeria. He argued that the country is not disciplined enough to operate subsidy in whatever form.

He further argued that the subsidy on fuel should be diverted to the agricultural sector like the United States did for their country’s farmers so they won’t run out of business.

“IMF will talk to us in an advisory capacity; they don’t run our government for us. It is the government that is supposed to take the decision.

But as somebody who has been in the industry for more than 40 years, I believe that the issue of subsidy for petroleum products is outdated. Nigeria does not have the discipline to operate subsidy in whatever form.

“Subsidy is good for agriculture. I have been in the forefront, for more than 20 years, fighting against removal of subsidy, believing that the Nigerian government or the people responsible will act like America that we copy all the time, it subsidises agriculture.

“For farmers not to go out of business, if they produce in America, there are agencies to buy the produce from the farmers and preserve them, so that the farmers can produce next year. But here, it is the middlemen who are being subsidised in our Nigerian situation.”

National Assembly unaware of the amount spent on subsidy: Akinlaja said the amount spent on subsidy is not known to the National Assembly. According to him, the Federal Government had continued to make the payments without appropriation by the National Assembly.

He also said the amount being spent on subsidy was only known to the Nigerian National Petroleum Corporation and the Minister of Petroleum Resources. President Muhammadu Buhari is the Minister of Petroleum Resources, while Ibe Kachikwu is the Minister of State for Petroleum Resources and Chairman of the Board of the NNPC.

“I cannot tell you how much is being paid on subsidy. We will know that if the government has come to the parliament to ask for a specific amount, based on our specific consumption for the year, for appropriation.

“If they have not come here, we cannot answer the question. It means that it is only the NNPC and the Minister of Petroleum Resources that can answer the question.

“As for the issue of subsidy, I believe that there is a subsidy that is being paid in whatever name it is called. The executive is responsible for the supply and the distribution of petroleum products in Nigeria.

“The same executive said petrol especially – because that is the issue now- should as a matter of policy not sell more than N145 per litre. And the same government, specifically the NNPC, at a time last year during the scarcity, said the landing cost was N171.50.

“If oil marketers are instructed not to sell more than N145, and the same government talks about N171.50 as the landing cost, who is paying the difference of N26.50? Somebody must be paying. Definitely, it has to be the government.

“As the Chairman of the Committee on Downstream, when we took on the Ministry of Petroleum Resources, what we heard (from them) was ‘under-recovery.’ What is ‘under-recovery’? Somebody is paying for something. So, I concluded in my mind as a knowledgeable person that the N145 per litre is being subsidised.”

Why IMF want Nigeria to remove subsidy: The Managing Director of IMF, Christine Lagarde, had suggested that the removal of subsidy from fuel will positively improve Nigeria’s slow economic growth. Lagarde said fuel subsidy removal is important due to the low contribution of tax revenue to Gross Domestic Product (GDP).

She made the suggestion during a press conference at the joint annual spring meetings with the World Bank in Washington DC, United States, in the second week of April. According to her, if fuel subsidy is removed, the funds could be diverted to health, education, and infrastructure.

Federal Government shut down the advise: Speaking on behalf of the Federal Government, the Finance Minister, Zainab Ahmed, said there’s no alternative to prompt such action from the Nigerian government. She, however, acknowledged the advice as reasonable.

Ahmed said Nigeria will not be removing the subsidy due to lack of alternatives that could cushion the effect on Nigerians. She added that there will be discussion with various groups before such decision is made.