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HomeTop NewsNigeria spends 13.7 trln on fuel subsidy in 6-year, says NEITI

Nigeria spends 13.7 trln on fuel subsidy in 6-year, says NEITI

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The Nigeria Extractive Industries Transparency Initiative (NEITI) has said that the nation spent about N13.7 trillion on fuel subsidy in six years from 2005 to 2020.

In a report submitted to the House of Representatives ad-hoc committee investigating the fuel subsidy regime from 2013 to 2022, the agency said the subsidy payments in 2005 was N351 billion ($2.66 billion); N219.72 billion ($1.70 billion) in 2006; N236.64 billion ($1.89 billion) in 2007; N360.18 billion ($3.03 billion) in 2008; N198.11 billion ($1.60 billion) in 2009, and N416.45 billion ($2.76 billion)

In the document, which was presented to the committee by NEITI Executive Secretary, Ogbonaya Orji to the House Committee, the subsidy payments in 2005 was N351 billion ($2.66 billion); N219.72 billion ($1.70 billion) in 2006; N236.64 billion ($1.89 billion) in 2007; N360.18 billion ($3.03 billion) in 2008; N198.11 billion ($1.60 billion) in 2009, and N416.45 billion ($2.76 billion) in 2010.

Furthermore, in 2011, the payment was N1.9 trillion ($12.18 billion); N690 billion ($4.34 billion) in 2012; N495 billion ($3.11 billion) in 2013; N482 billion ($2.92 billion) in 2014; N316.70 billion ($1.62 billion) in 2015; N99 billion ($0.39 billion) in 2016; N141.63 billion ($0.44 million) in 2017; N722.30 billion (2.36 billion) in 2018, N578.07 billion (1.88 billion) in 2019, and 134 billion (0.37 billion) in 2020.

In May 2016, the Nigerian National Petroleum Company (NNPC) Linited has continue to deduct money spent on fuel subsidy from earnings from crude exports.

Orji noted that subsidy payment expected from NNPC in 2018, was N2.294 trillion including subsidy of N722.257 billion, N138.945 billion for pipeline repairs and management cost, N28.329 billion for crude and product losses and N998.285 billion being balance that NNPC should have remitted, actual remittance stood at N897.922 billion leaving outstanding (unremitted fund) of N100.363 billion for 2018.

He added that in 2019, the sum of N2.145 trillion comprising of subsidy of N518.074 billion, N126.664 billion for pipeline repairs and management cost, N31.844 billion for crude and product losses and N1.498 trillion being balance that NNPC should have been remitted, but actual remittance stood at N821.563 billion leaving outstanding (unremitted fund) of N170.675 billion for 2019.

Also, in 2020, payment of subsidy worth N133.74 billion, N54.49 billion for pipeline repairs and management costs, N133.06 billion for crude and product losses.

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The report stated that Domestic Crude Allocation for 2018, was 107.63 million barrels, out of which 13.581 million barrels (13%) was delivered to the refineries, 94.045 million barrels (87%) was exported under the DSDP arrangement and that NNPC was expected to make remittances within 90 days.

Orji in his presentation also revealed that within the transaction rules, the NNPC was expected to comply with the 90 days payment terms in remitting the proceeds of federation crude.

“NEITI’s report examined the pattern and consistency of remittance of sales proceeds into the designated bank account (CBN/NNPC crude oil and gas revenue naira account) by the NNPC.

“It was evident that the NNPC consistently defaulted on the sales terms of ninety (90) days. The delays ranged from 21 to 55 days. The opportunity cost of this monthly delayed remittance by NNPC was N17.5 billion.

“NNPC deducts from the sales proceeds of domestic crude oil for under-recovery (subsidy on PMS), payments for pipeline repairs and maintenance and payments for crude and product losses.
“Although amounts were appropriated for these expenditures in the approved budget for the year, however, the amounts deducted by the end of the year were over and above-appropriated sums.

“A periodic audit by the federal government to verify the utilisation of amount deducted for pipeline maintenance and repairs should be undertaken. The government should consider the following options: Allocating specific crude volume to NNPC to cater for their operational costs,” he said.

“The first question was if we think that subsidy should stay and why? All our reports are widely distributed and they are on our website, NEITI’s position, not my position over the years has been that subsidy should go. It was a recommendation.

“It’s advisory to the government. We are not in the position to decide when and how it should go because you are also aware each time we make submissions that there are other contending issues that are beyond NEITI’S consideration,” he added.

Orji stressed that there are issues of security, the welfare of the staff, citizens and all but NEITI’S position has been that the government should do away with subsidy. We made this first recommendation in 2006 and every other year, it has been on our report.

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