Nigeria has spent over N11 trillion as payment for outstanding subsidy claims over the last six years. This was disclosed on Thursday by the Senate Committee on the downstream Petroleum sector.
The committee which is headed by Senator Kabir Marafa also approved the payment of N129 billion as outstanding subsidy claims to 67 petroleum marketers. The approval followed the adoption of the report of its Committee on Petroleum Downstream on the Promissory Note Programme and a Bond Issuance for Oil Marketers Outstanding Claims.
Calls for subsidy removal: Nairametrics had earlier reported that Nigeria pays the sum of N39.9 billion monthly on Petroleum subsidy payment. In April, the issue of subsidy removal surfaced again after the International Monetary Fund (IMF) urged the Federal Government to remove fuel subsidy, stressing that the removal could positively improve the country’s slow economic growth.
While the IMF argued that removing subsidy is important due to the low contribution of tax revenue to Gross Domestic Product (GDP), the Finance Minister, Zainab Ahmed responded that there’s no alternative to prompt such action from the Federal Government.
An alternative to fuel subsidy: Subsidy payment on Petroleum products still remains a big challenge for the nation’s oil sector. As the 8th national Assembly comes to an end, parliamentarians, lawmakers also expressed their dismay on the recurring subsidy issue in Thursday’s plenary session led by the Deputy Senate President, Ike Ekweremadu. Ekweremadu advised that Nigeria needs to proffer a lasting solution to the problem through the provision of functional local refineries.
…the issue of subsidy. We need to do something about provisions of refineries in our country – it is not rocket science. Even if it does not resolve the issue of subsidy, we would have gone a long way in addressing it.”-Deputy Senate President, Ike Ekweremadu.
— The Nigerian Senate (@NGRSenate) May 30, 2019
… told us; the issue of subsidy is now a first line charge on oil drilling which is extremely dangerous.”- Deputy Senate President, Ike Ekweremadu.
— The Nigerian Senate (@NGRSenate) May 30, 2019
Upshots – Due to the importation of petroleum product, the Federal Government pays the Depot and Petroleum Products Marketers Association of Nigeria (DAPMAN) huge amount of money that should have been channeled into other sectors to encourage growth. As expressed by Senator Victor Ameh during the session on Thursday;
“People in government have refused to face the problem. Everyone is depending on oil revenue and yet no functional refineries have been set in place.”
The Chairman, House of Representatives Committee on Petroleum (Downstream), Joseph Akinlaja, recently disclosed
“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 distribution of petroleum products in Nigeria.
“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.”
Nice update. Please you can do more