Okonjo-Iweala delays subsidy payments
Nigeria’s finance minister said on Thursday she had ordered a slow-down of fuel subsidy payments to allow verification that they are for genuine deliveries, an effort to combat fraud costing it billions of dollars.
“I decided that we should slow down the payments until we verify … that what we are paying is really being paid for genuine product delivered, to avoid the mistakes we made in the past,” Ngozi Okonjo-Iweala told a news conference.
Fuel shippers say they are facing delays at import terminals while their subsidy payments are scrutinised, and some private firms have halted deliveries, while others are relying on swaps for crude oil to receive payments.
Accountant-General of the Federation, Jonah Otunla, also at the conference, said the government had spent 1.44 trillion Nigerian naira ($8.83 billion) in the first half of 2012, of which 1.036 trillion was on recurrent expenditure, the largest component of that being the fuel subsidy.
A parliamentary probe into the subsidy scheme released last month found it was riddled with fraud that had cost Nigeria $6.8 billion in just three years — equal to a quarter of the national budget. It was one of the biggest corruption scandals in the history of Africa’s top energy producer.
Okonjo-Iweala said she had come to the realisation that the subsidy must be slowed after paying out 451 billion naira — more than half of the 888 billion naira the country budgeted for this year — just on arrears for last year.
“It was at that point in time I decided,” she said. “We will not be stampeded to make payment until we verify that what we are paying is correct … We are taking it very cautiously.”
She added that only 17 billion naira had been released against 2012 fuel deliveries as a result.