A few weeks ago, the governors of the 36 states of the federation came up with a highly contentious issue of fuel subsidy withdrawal at the height of the crisis generated by the issue of payment of the new minimum wage. The problem with the governorsâ€™ proposal was not in the message but in the messengers and its delivery as they spoke more like politicians than business-minded administrators who have a genuine and patriotic case against the entire concept of subsidy and the huge resources channeled through the racket.
Whether the governors under the aegis of the Nigerian Governorsâ€™ Forum (NGF), as alleged, actually pressured the President, Goodluck Jonathan to remove fuel subsidy so they could free more money to pay the agreed minimum wage, is by all patriotic intent, immaterial in this case. The real issue that needs to be addressed is whether in actual sense, fuel products are being subsidized in this country for direct benefit of the ordinary people. Chairman of the Governors Forum, the Rivers State Governor, Chibuike Amaechi was very right when he alleged that â€śthese people, these fuel contractors, are just carting away our money and doing nothing.â€ť
The National Assembly and the Presidency allocated only N240 billion for fuel subsidy in 2011 budget but by August end, the NNPC has spent N931 billion on fuel subsidy, a whopping N771 billion or 700 percent above the budgetary allocation. And nobody is talking about the serious challenges the current fuel subsidy management poses to the implementation of the 2011 budget. As rightly said by Senator Saraki, who is moving for the probe of the illegal spending on fuel subsidy, the NNPC and the Petroleum Ministry breached the 2011 Appropriation Act by spending N931 billion on fuel subsidy between January and August 2011.
First, this extra-budgetary spending is an outright contravention of Section 80 of the 1999 Constitution and beyond that, at the rate they are going over N1.2 trillion would have been spent outside the budgetary allocation before December 31, 2011. Is this how to run a country? A copy of Sarakiâ€™s motion as published in the Senate on Wednesday September 14th Order Paper reads: â€śIn furtherance of the implementation of the fuel subsidy, an amount is budgeted in the Appropriation Act. In 2011, the sum of N240 billion (N20 billion monthly) was allocated.
â€śThe N20 billion monthly allocated, N11.2 billion was allocated for Domestic Fuel Subsidy (NNPC) and N8.8 billion for Domestic Fuel Subsidy (Market) as stated in the 2011 Appropriation Act. Although the N20 billion was set aside for subsidy on a monthly basis in the Appropriation Act, 2011. In August 2011, the total figure expended was N165 billion of which NNPC was N88 billion and independent marketers was N77.7 billion.
â€śAlthough the N240 billion was budgeted for the entire year, so far, as at the end of August 2011, N931 billion has been spent. This is a variance of N771 billion or 700 per cent above budget. â€śThe Senate is worried that in the first three months of the year, both NNPC and independent marketers did not exceed N62 billion monthly but within the last three months, figures have ranged between N150 billion and N186 billion.
â€śWith this trend, year-end, we will have a fuel subsidy bill of over N1.2 trillion as against N240 billion budgeted in the Appropriation Act.â€ť
Amaechi and his Governors Forum should actually re-caption their protest from withdrawal of subsidy on petroleum products to opposition of the continued criminal diversion of our highly-needed resources into the pockets of the faceless cartel that is active in and around the Presidency, NNPC and Ministry of Petroleum Resources. When we re-christen the racket, the true purpose will be clearly understood by all concerned Nigerians. Agreed that all governments around the world subsidize the existence of their citizens, but is it proper for NNPC, PPPRA and PEF officials to take the opportunity of governmentâ€™s good intention to continue to shortchange all of us? Government and its agencies especially the NNPC have continued to confuse Nigerians with this fuel subsidy business. The question is: are we subsidizing to make fuel cheap and readily available to the citizenry or to make importation more lucrative?
Despite what the NNPC and their masters in and around government since the days of Obsanjo want us to believe, the nationâ€™s existing three and half refineries, if optimally functional, can meet our daily domestic fuel needs. It is also an established fact that the cost of production of a litre of PMS (petrol) by our refineries is far below N65 per litre. This is the truth. But how can the refineries function optimally when government and its NNPC people seem to be deliberately making the plants sick so the nation can continue to import petroleum products? Many of the figures being dished out by the PPPRA could best be described as phantom. What pricing are you regulating when artificial scarcities are deliberately created and petrol sells for between N300 and N65 per litre depending on where you are in the country?
Why is the PPPRA chairman not canvassing for a taskforce approach in the management of the nationâ€™s existing refineries or even harmonizing per litre price across the country since his job is to ensure equitable pricing? What is actually the use of PPPRA to the â€śrealâ€ť people of this country? The agency is just another conduit for the misuse of public funds and that is why we keep seeing funny people scramble to administer it. Letâ€™s look at another subsidy drain pipe- The Petroleum Equalisation Fund (PEF). They allegedly administer a price equalization scheme to ensure the sustenance of Government policy of uniform pump prices for petroleum products nation- wide. What do they do? Has the equalization fund ever done anything to harmonise prices of fuel across the country or they merely sit down and work out how much money to share?
Different states have different pump prices so what are they harmonizing? The man in Brass and Nembe areas of Bayelsa and the man in Yenagoa pay different rates for petrol, diesel and kerosene. For Abia state, every filling station sells at different prices and it takes only the NNPC and some majorsâ€™ outlets to sell petrol at the so called government- allowed N65 kobo per litre. Fuel price in Port Harcourt metropolis is very different from prices in Oyigbo, parts of Ogoni and Etche areas of the same Rivers state. In the northern parts of the country, fuel sells for N65 kobo per litre only in major cities. Elsewhere, they sell in the range of N120-N300 per litre depending on where you are in the far north. And the story is just the same across all the six geo-political zones, so what is the Petroleum, Equalisation Fund equalizing?
Is it not funny that PEF exist to â€śadminister bridging payment scheme to complement the NNPC pipeline distribution network of petroleum products to all the depot areas nation-wide, during breakdown/maintenance of local refineries and or pipeline breaks.â€ť Bridging is the movement of petroleum products by long distance road haulage (above 450 kilometres) from a depot/refinery to another depot experiencing scarcity. And we know that none of the existing PPMC pipeline system has 100 percent integrity to transport products to the depots. So do we still need to look for the people bursting products pipelines across the country to ensure they continue to siphon our collective wealth in the name of bridging?
Meanwhile, PEF relies on Department of Petroleum Resources (DPR) to make available all relevant data and operational information on marketers; to confirm products lifted and received at the depots by stamping and signing freight documents; to submit the list of licensed filling stations and their locations; to ensure that products are not diverted but are sold at properly designated stations; Ensure that products are sold at approved rates amongst other functions.
So what does PEF exist for when they rely entirely on DPR to do almost everything? They just collect huge trillions of naira for doing nothing and are using the resources avalaible to them to manipulate the PIB so that they can be accommodated in the ongoing or rather grossly compromised re-structuring of the nationâ€™s oil industry. Yeye country, where yeye people hold sway at the expense of good and serious â€“minded ones.
Ifeanyi Izeze is an Abuja-Based Consultant On Strategy And Communication
(iizeze at yahoo dot com; 08033043009)
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