Removing Fuel Subsidies Is The Right Way To Go, IMF Tells Nigeria

The Managing Director, IMF, Christine Lagarde at a press conference on Thursday, during the on-going joint annual spring meetings with the World Bank in Washington DC.

 

The International Monetary Funds (IMF) has asked the Nigerian Government to consider the complete removal of fuel subsidy.

IMF Managing Director, Christine Lagarde, who said this at a press conference on Thursday, noted that it was the right way to go.

Addressing a joint annual spring meeting of the World Bank in Washington DC, United State, she explained that the move would save a lot fiscally and in terms of human lives.

“We believe that removing fossil fuel subsidies is the right way to go,” Lagarde affirmed.

She added, “If that was to happen, then there would be more public spending available to build hospitals, to build roads, to build schools, and to support education and health for the people.”

READ ALSO: IMF, World Bank Urge Caution With China Loans

The IMF boss revealed that the figures spent on subsidy from 2015 were staggering.

She, however, urged the government to put in place a social protection safety net while the subsidy was being removed, to reduce its effect on the people.

“If you look at our numbers from 2015, it is no less than about $5.2 trillion that is spent on fuel subsidies and the consequences thereof,” she said.

Lagarde added, “And the Fiscal Affairs Department has actually identified; you know how much would have been saved fiscally but also in terms of human life if there had been the right price on carbon emission as of 2015. The numbers are quite staggering.

“Now, how this is done is more complicated because there has to be a social protection safety net that is in place so that the most exposed in the population do not take the brunt of the removal of subsidies principle. So that is the position we take.”

According to the IMF boss, with the low revenue mobilisation that exists in Nigeria in terms of tax-to-GDP, the nation is amongst the lowest.

She said there was a need for “a real effort” to maintain a good public finance situation for the country and in order to direct investment towards health, education, and infrastructure.

The IMF had in a recent ‘Staff Article IV consultation report on Nigeria’ made recommendations that the fuel subsidy should be removed.

PDP Accuses FG Of ‘Massive Corruption’ In Fuel Subsidy Regime [Full Text]

PDP Accuses FG Of ‘Massive Corruption’ In Fuel Subsidy Regime [Full Text]
A file photo of Nigerians queuing to buy fuel

The Peoples Democratic Party (PDP) has accused the Federal Government of ‘massive corruption’ amid the controversy over the alleged payment of fuel subsidy.

The party made the allegation in a communique issued shortly after the meeting of members of its National Working Committee (NWC) on Sunday in Asaba, the Delta State capital.

As fuel scarcity persists, the PDP questioned why billions of naira are allegedly deducted monthly from the Federation Accounts.

They also condemned the killings across the country and asked President Muhammadu Buhari to ensure that the lives and property of Nigerians are well protected.

The communique was jointly signed by the National Chairman Uche Secondus and Chairman of PDP Governors’ Forum Ayo Fayose.

Read the full statement below:

We strongly condemn the unabated killings across the country. We call on Mr President to come out clean on the herdsmen killings and address the nation on how to end the carnage. The President must take responsibility for the protection of lives and property of Nigerians which is the most important of his responsibilities.

We believe that the Federal Government’s decision to set up a Committee to address the issues of herdsmen killings is a pretentious approach to a matter that requires firm action and leadership by the President in line with his oath of office to protect all Nigerians irrespective of creed, tribe and political affiliation.

The People’s Democratic Party (PDP) has been the author of restructuring and this was further expressed in the Report of the 2014 National Conference. The All Progressive Congress (APC) as a later day convert of restructuring is merely paying lip service to a matter of national importance.

However, we have mandated our members in the National Assembly to immediately commence the process of initiating a Bill to address issues bothering on restructuring.

We urge Mr President to henceforth direct the Economic and Financial Crimes Commission (EFCC) to adhere to the Rule of Law by obeying Court judgements and orders such as the one involving the Ekiti State Government against EFCC and restrain itself from further political intimidation and harassment of known or perceived political opponents.

We commend the judiciary for their commitment to the enthronement of constitutional democracy in the face of intimidation and harassment. We condemn in strong terms the massive corruption going on in the management of fuel subsidy regime which the Federal Government had declared nonexistent while billions of naira are deducted monthly at Federation Accounts Allocation Committee (FAAC) meetings.

The PDP states and local governments are vehemently opposed to the unilateral withdrawal of USD1Billion from the Excess Crude Account by the Federal Government under any guise.

We want to state unequivocally that neither the Governors’ Forum nor the Federal Executive Council has the power of appropriation of Federation Accounts, as such powers reside with the National and State Assemblies.

We commend members of our party for their unalloyed support. We reiterate that our repositioned party is prepared for the 2019 elections and will ensure that all Nigerians aspiring to elective offices are free to contest on the platform of the PDP.

We want to assure that no established organ of the party is allowed to align with any presidential aspirant. We thank the people and government of Delta State for playing host to this all-important meeting.

Subsidy: We’ve Received N4.9trn So Far, NNPC Tells Senate

Subsidy: We’ve Received N4.9trn, NNPC Tells Senate
L-R: Maikanti Baru and Isiaka Abdulrazak

 

The Nigerian National Petroleum Corporation (NNPC) says it has received more than N4.9trillion as payments for subsidy on Premium Motor Spirit, popularly known as petrol between 2006 and 2015.

NNPC Chief Finance Officer, Mr Isiaka Abdulrazak, disclosed this on Monday during a public hearing conducted by the Senate Committee on Petroleum (Downstream) in Abuja.

READ ALSO: Fuel Scarcity: NNPC Says Porous Borders Affecting Distribution

Top officials of the corporation who appeared at the investigative hearing were led by the NNPC Group Managing Director, Dr Maikanti Baru.

The NNPC officials were summoned by the lawmakers amid the persisting fuel scarcity in the country and the controversy over the payment of fuel subsidy.

Briefing the senators on the issue, Abdulrazak said subsidy payments were duly approved by the Petroleum Products Pricing Regulatory Agency (PPPRA).

He said: “All NNPC’s subsidy claims and entitlements are duly verified and approved by PPPRA with relevant certificates issued,” he was quoted as saying by the corporation.

“The subsidy approved for NNPC is backed out of Domestic Crude Cost payable to Federation Account Allocation Committee (FAAC).”

On the essence of the payment, the NNPC official explained that subsidy is a duly authorised reimbursable amount from Petroleum Support Fund (PSF) to compensate for products supplied at the government regulated price.

He, however, informed the panel that while a total of N5.1tr was duly approved by PPPRA as subsidy claims for the corporation, NNPC is still being owed N170.6bn.

Abdulrazak further sought the understanding of members of the committee on the peculiarity of NNPC operations, and its role as “a supplier of last resort in the downstream sector of the economy.”

Despite the purported payment of fuel subsidy, Nigerians have continued to experience difficulty in getting the product with long queues at filling stations.

On Wednesday last week, Baru had decried the sustained nefarious activities of cross-border fuel smuggling syndicates and hoarders in the country.

The NNPC boss, who addressed a Joint National Assembly Committee on Petroleum (Downstream), noted that fuel supply and distribution matrix across the country have been hindered by such activities.

Concerned with the lingering fuel crisis, the Senate issued a directive to the NNPC to end fuel queues in seven days from January 25.

Reps Summon Kachikwu, Baru Over Alleged Fuel Subsidy Payment

Reps Summon Kachikwu, Baru Over Alleged Fuel Subsidy Payment
File photo

 

The House of Representatives has summoned the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru.

The summon followed a motion sponsored on Wednesday by a lawmaker from Kogi State, Honourable Sunday Karimi, who drew attention to the need to investigate the allegation of fuel subsidy payment by the corporation.

Mr Karimi was concerned that “the Federal Government claimed that it has stopped fuel subsidy payment and it is the NNPC that is paying subsidy through its routine trading activities.”

He was also worried about claims that such payment does not “require budgetary approval”, while motion gained the support of a majority of the lawmakers.

Kachikwu and Baru were consequently directed to appear before a Joint Committee of the House to explain the current subsidy payment.

Both men were also asked to account for the funds spent on subsidy payment since January 2017 to date.

The House, however, asked President Muhammadu Buhari to formally request for approval of budgetary provision for fuel subsidy in the 2018 Appropriation Bill, if there is a need for such.

Subsidy Fraud: Two Convicted For Stealing 754m Naira From Govt.

artificial fuel scarcity, imo state, imo state governmentA Lagos State High Court in Ikeja on Friday convicted two oil marketers, Walter Wagbatsoma, Adaoha Ugo – Ndagi and their company, Ontario Oil and Gas Limited for defrauding the Federal Government of the sum of 754 million Naira.

The convicts, were arraigned before the court for allegedly obtaining the sum from the government through the Petroleum Product Subsidy Support Fund.

They were arraigned by the Economic and Financial Crimes Commission on an eight count charge of conspiracy, obtaining property by false pretence, forgery and altering of documents.

While delivering judgment in the five year old case, Justice Lateefat Okunnu held that the prosecution had proved its case against the convicts beyond all reasonable doubt.

Collapsed In The Dock

The judge stressed that the convicts knew that the documents they presented to the government to claim subsidy was forged but they presented it anyway to derive “undeserved benefits”.

The first convict, Walter Watgbasoma, who is the Chairman of Ontario Oil and Gas Limited, was convicted in absentia, as he had fled the country despite the fact that the court was with his passport and other travel documents.

He is currently under house arrest in the UK where he is also accused of fraud.

The second convict, Mrs Ugo-Nnadi, who was present in court, collapsed in the dock before the judge could pronounce the sentence.

The ensuing confusion forced the court to adjourn the proceedings to Monday, January 16 when the sentence will be delivered.

Family members later claimed that Mrs Ugo-Nnadi, who is the Managing director of Ontario Oil and Gas Limited, was subsequently rushed to a hospital in the company of some prison officials.

The Court has, however, acquitted and discharged the third defendant, one Babafemi Fakuade, an official of the Petroleum Products Pricing Regulatory Agency (PPPRA) for lack of evidence linking him to the crime.

The offense committed by the two convicts attracts a minimum sentence of seven years imprisonment while the maximum sentence is 20 years.

Oil And Gas Suppliers Support Fuel Subsidy Removal

DPR - IlorinThe Natural Oil and Gas Suppliers Association of Nigeria has directed its members to sustain the full supply of oil and gas throughout the country especially within the industrial sector, to aid manufacturers and the construction companies.

The directive by the association is against the backdrop of the call for industrial action by the Nigeria Labour Congress which is protesting the recent hike in the price of petrol by the Federal Government from 86.50 Naira to 145 Naira per litre.

In a statement, the Secretary of the Association’s Board of Trustees, Mr Eddy Nwosu, urged members of the association to shun any attempt to disrupt their production.

Mr Nwosu explained that the decision to remove subsidy was in the best interest of Nigerians.

He further called for Nigerians understanding as regards the hike in the price of petrol, stressing that the hard impact of the decision on the people was only going to be momentary.

He therefore urged them to support the decision and other policy directives of the government as its long term effect would be in the interest of Nigerians.

Mr Nwosu also said the removal should be full to promote effective competition in the oil and gas sector.

New Petrol Pump Price Enjoys High Compliance Nationwide

petrolThere seems be high compliance level for the new pump price of petrol across the country.

This is according to Channels TV correspondents, who visited petrol stations across the country.

While petrol is selling at between 86 naira and 86.50 in Abuja, the product is selling for N87 per litre in Kano.

Many petrol stations in the Federal Capital Territory have been nearly empty with just two to three cars at the fuel pumps at a time.

At the NNPC filling station visited, the pump price was 86 naira per litre and the station manager who spoke off camera said that the new pump price was put in place as soon as government announced the reduction.

Other filling stations visited; Conoil, Oando, Forte Oil, were selling at N86.50k per litre.

Vehicle owners buying at the new rate said that they were happy that the product was available whether or not there is a reduction in pump price.

They also said that the 50 kobo reduction would be taken as a sign of better things to come.

However, one customer asked that federal government pay attention also to the pump price and availability of kerosene which he said is used by a greater number of Nigerians, especially the poor.

For the oil majors in Lagos, they have reverted to the approved rate of N86.50k, while the same may not be said of independent marketers who are still selling above the recommended retail price.

The situation seems to be bad in Ogun State where the product is still selling for between N110 and N120 per litre except for the capital city, Abeokuta where the NNPC mega station is selling at the new pump price.

PDP Leaders Kick Against Removal Of Petroleum Subsidy

pdpLeaders of the Peoples Democratic Party (PDP) in Kaduna State have kicked against the proposed removal of petrol subsidy by the Federal Government.

Speaking during a one-day conference organised by the Kaduna State PDP Youth Patriotic Front held in Kafanchan, the party leaders including the minority leader of the House of Representatives, Yakaubu Barde, and the Senator representing Southern Kaduna District, Danjuma Laah, wondered why the same All Progressive Congress-led government that opposed the move by former President Goodluck Jonathan’s administration to remove petrol subsidy 2011, is planning to do same.

Barde specifically faulted the former Governor of Lagos State and National Leader of the All Progressive Congress (APC), Bola Tinubu, for his recent call for the removal of petrol subsidy.

He noted that Tinubu’s insistence on President Buhari removing fuel subsidy come January 2016 was quite unfortunate in many respects, and another misadventure of the National Leader of the APC and his party.

According to the PDP leaders, the only reason the issue of fuel subsidy had continued to recur was because Nigeria imports petroleum products for domestic consumption.

They warned that so long as importation continues, the problem that the government sets out to confront would continue like a recurring decimal.

The event was attended by prominent members of the PDP from the Southern Kaduna Senatorial Zone, including former Minister of Aviation, Mr Hassan Hyet, Senator Danjuma Laah, the State PDP Chairman, Mr Abubakar Haruna, former Deputy Speaker of Kaduna State House of Assembly, Dogara Mato, former Attorney General and Commissioner for Justice, Mr Mark Jacob, and many former Commissioners.

NNPC To Announce 85 Naira Fuel Pump Price In January

NNPCThe Minister of State for Petroleum, Dr. Ibe Kachikwu says the NNPC will announce a pump price of 85 naira per litre of petrol in January 2016.

Dr. Kachikwu said that the new pump price is according to a PPPRA template which he signed off on Wednesday which will be the first reflection of the price modulation that will kick off fully in the petroleum sector by January 2016.

Dr. Kachikwu, who took a tour of the refineries in Port Harcourt on Christmas Day, said that the price modulation is to help ensure the fluctuation of prices to reflect the realities of the crude oil market.

He, however, said that all efforts were being made to get the refineries to start up to 60% production also in January that will supply about 11 million litres of petrol daily.

“If you look at the new PPPRA template that we developed and which I just signed off two days ago, when it is announced you will find out that for now (and I use the emphatic word of the President ‘for now’), the price of the refined product will actually be lower than 87 naira, It will be 85. We will probably announce that in January if the prices hold.

“What that does for you is that its modulating. If it goes up you move up, if it comes down you come down. So we take away the fact of having to go find funds to pay for these subsidies that we cannot afford.

“More importantly we try to be as close to the pump price that we have now as possible,” he said.

Kachikwu Deploys NNPC Staff To Monitor Product Sales

NNPCNNPC officials have been deployed across the country to monitor the supply and sale of petroleum products.

Minister of State for Petroleum, Ibe Kachikwu who gave the directive, said that any marketer found hoarding petrol or found to be selling above 87 naira per litre, would have his licence withdrawn.

Dr Kachikwu advised the NNPC officials to be firm and record daily supplies made to service stations, and sales made at the end of each day to his office.

He explained that the recent unpatriotic activities of marketers and petroleum product dealers, has made it imperative to deploy the NNPC staff to directly monitor them.

Lai Mohammed Blames Fuel Crisis On Past Administration  

Lai MohammedThe Minister of Information, Mr Lai Mohammed, has blamed the lingering fuel crisis on what he called the sins of the past administration.

The Minister, who was answering questions from State House correspondents after the Federal Executive Council meeting on Monday, said that the Muhammadu Buhari administration inherited 522 billion naira subsidy arrears which was incurred as far back as August 2014.

He said that the revelation came when the administration went to the National Assembly for a supplementary budget of 674 billion naira out of which 522 billion was for arrears of fuel subsidy.

According to him, the last administration failed to make adequate provision for fuel subsidy.

Mr Lai Mohammed, however, said that the NNPC is gradually importing fuel that will help cushion the effect of fuel shortage.

Meanwhile, at a media interaction in Abuja recently, the Nigerian National Petroleum Corporation (NNPC) expressed belief that there would be no fresh subsidy in the 2016 budget.

The Group General Manager, Corporate Planning, Mr Bello Rabiu, explained that a new framework was being worked on for the management of subsidy on petrol.

Mr Rabiu said that the new template would eliminate subsidy in the next few months, leaving the price of petrol at a capped price of 97 Naira.