Article summary
- RMAFC Chairman said the NNPC had stopped contributing to the Federation account due to the fuel subsidy regime since January 1, 2022.
- He agreed that Nigeria can no longer sustain fuel subsidies whose demerits far outweigh its benefits to the citizenry.
- He equally emphasized that the cessation of under-recovery payments would eliminate the uncertainty surrounding the subsidy regime, adding that it would free up funds for the execution of critical projects.
The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) has expressed its support for President Bola Tinubu’s decision to stop the payment of subsidy on petrol.
This is as the commission said that the Nigeria National Petroleum Company (NNPC) Limited has withheld about N8.48 trillion as claimed subsidies for petrol since January 1, 2022.
This disclosure is contained in a statement issued by the RMAFC Chairman, Mohammed Shehu, on Thursday, June 8, 2023, where he pointed out that the payments of “humongous” amounts to a privileged few in the name of subsidy were a major drain on the nation’s scarce resources.
NNPC not contributing to the Federation account
Shehu noted that the NNPC which is one of the major sources of revenue to the Federation Account, had since stopped contributing to the national purse due to the fuel subsidy regime.
He disclosed that the President’s pronouncement of the removal of fuel subsidy due to the non-budgetary provision for subsidy is a masterstroke that broke the jinx and the appropriate step in the right direction.
The statement partly reads,
- “It is saddening to note that since 1st January 2022 to date, the Nigeria National Petroleum Company Limited (NNPCL) has not been contributing to the Federation Account due to the claimed subsidy payments,” the statement read.
- “The country can no longer sustain fuel subsidies whose demerits far outweigh its benefits to the citizenry.
- “The total amount withheld by the NNPCL as claimed subsidies for this period amounted to N8,480,204,553,608.13 as reported by the Office of the Accountant General of the Federation (OAGF) which is yet to be reconciled by the RMAFC, OAGF, and NNPCL.”
The RMAFC boss maintained that it would be unwise to sustain the phantom subsidy payments at the detriment of other critical sectors of the economy, especially in a situation where the records of petrol subsidy transactions are not transparent and crude oil prices are determined globally.
He equally emphasized that the cessation of under-recovery payments would eliminate the uncertainty surrounding the subsidy regime, adding that it would free up funds for the execution of critical national development and human capital enhancement projects.
He enumerated such projects to include the provision of an affordable transport system, investment in the education sector, improvement in healthcare, and infrastructural development.
What you should know
- Recall that President Bola Tinubu during his inaugural speech on May 29, 2023, announced that fuel subsidy is gone as there was no provision for that in the 2023 budget from July 1.
- The President pledged his administration’s support to channel the money to provide basic infrastructural needs to Nigerians.
- The action of the president has been backed by some stakeholders and interest groups including state governors, legislators, oil marketers, economic and financial experts, among several others.
- However, this did not go that well with organized labour due to the spike in the pump price of petrol, leading to a declaration of a planned strike action and protest by the NLC and TUC.
- The strike was however suspended on the backdrop of the judgment of the Industrial Court which restrained them from going ahead with the strike as well as the outcome of the meeting between the leadership of the organized labour and representatives of the Federal Government.
