Confab: Removal of Fuel Subsidy Generates Heat
The on-going National Conference in Abuja
witnessed a heated session on Monday as delegates spoke
either in support of or against the complete removal of fuel
subsidy as recommended by the Committee on Public Finance
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Each party in the debate spoke with passion on reasons the
Federal Government should either keep subsiding petroleum
products for the public or why subsidy was meant to serve
the economic interest of just a handful at the expense of
The Committee, headed by Senator Adamu Aliero, had stated in
its report that subsidy on petroleum products was an
avoidable major financial burden the nation has been made to
It said between 2006 and 2007, subsidy accounted for 30% of
government expenditure which translated to 118% of capital
budget and 4.18% of the Gross Domestic Product.
It was also revealed that subsidy payment of N2.527 trillion
in 2012 and 2013 averaged N1.263 trillion per annum and
described it as “a burden too heavy for the nation and its
The Committee stated that the situation was anomalous and
encouraged smuggling; and that government resources which
should have been used to undertake more developmental
projects were being spent on subsidy.
It argued that subsidy removal “will most certainly ensure
product availability at all times and significantly mitigate
illicit cross-border activities.”
It was the Committee’s position that the poor and the rural
dwellers to whom the subsidy scheme was initially targeted
were not reaping the benefits; and that removal of subsidy
would encourage investments in refineries and the downstream
Those who argued against the removal said since constant
power supply in the country was still a mirage; government
should first fix all the sick refineries for local
production of petroleum products before removing the
They observed that criminal activities would increase
nationwide if the removal was carried out since majority of
artisans who rely on small power generating sets to do their
business would be out of work.
However, those in support of the removal of subsidy also
presented appalling situations of wastages and high level
corruption among both the fuel importers and certain
They argued that continuous subsidization of fuel would
amount to deliberate effort to enrich a few Nigerians at the
expense of others; and that what was advisable would be to
ensure judicious use of funds accruing from the subsidy
Professor Anya O. Anya in his contribution said it was
unfortunate that the argument has been reduced to “I support
subsidy or I oppose subsidy,” describing such argument as
“over-simplification of a more complex issue.”
He said delegates needed to come up with a road-map in the
area of having the crude oil refined in Nigeria.
Professor Anya demanded of the delegates to come up with “a
comprehensive national plan for the withdrawal of subsidy,”
such that people will not suffer at the end.
He suggested a phased withdrawal that should follow a
comprehensive overhaul of the system with the requisite
infrastructure in place such that would make the subsidy
issue completely irrelevant and unnecessary.
Final decision on the debate would be taken on Tuesday when
the Conference in the Committee of the Whole would consider
each of the recommendations clause by clause.
The Committee also recommended that in order to enhance
accountability, transparency and avoid mistrust between the
three tiers of government, it has become absolutely
necessary to have Accountant Generals of the Federation and
that of the Federal Government.
Consequently, the Accountant General of the Federation would
manage the accounts of the federation while Accountant
General of the Federal Government would handle the finances
of the Federal Government.
It was observed by the Committee that in the 1970s,
budgetary allocations, up to 70%, were always in favour of
capital expenditure; a situation it said enhanced economic
development; but that the situation has since changed.
In the last 10 years, it said approximately 73% of the
annual budgets have been devoted to recurrent expenditure
leaving a mere 27% for capital.
The committee remarked: “The present budget mix is
unacceptable as no economy can grow with such a paltry
allocation for capital and still be expected to provide
vital infrastructure and social amenities for the populace.”
It also frowned at situations where budgets are submitted to
the National Assembly and thereafter, the crude oil
benchmark is subjected to upward reviews, thereby increasing
the size of the budget.
It was the position of the committee that “it is the
prerogative of the Executive branch to propose the annual
budget and to determine crude oil benchmark.”
The Committee therefore recommended that the country
maintains a budget mix of at least 60% capital expenditure
and 40% recurrent expenditure to leave substantial fund to
address infrastructural gap, provide jobs and promote
general economic growth and development.
It urged that the time frame for the presentation of the
annual budget to the National Assembly should be on or
before September 30th preceding the budget year; while the
passage and presidential assent must be completed on or
before December 31.
It was also the opinion of the Committee that the Fiscal
Responsibility Act of 2007 which deals on budget issues be
enshrined in the 1999 Constitution and all the controls and
sanctions therein adhered to.
On solid minerals, the Committee provided a comprehensive
list of essential solid minerals found in states of the
federation explaining that these can be a veritable source
for diversification of the country’s non-oil revenue base
and that when fully tapped, the revenue profile would change
from oil dominance.
Under the Sovereign Wealth Fund (SWF), the Committee
recommended that a minimum of 50% of all funds in excess
crude account be transferred to the SWF while the balance
should be used to augment where necessary, certain
shortfalls in the FAAC in the short term.
To make it more effective with a higher legal backing, it
was the recommendation of the committee that the SWF be
enshrined in the 1999 Constitution.
In order to stop the on-going revenue losses due to oil and
gas pipeline leakages and theft, the Committee urged that
commensurate security be deployed to these areas to deter,
detect, apprehend and prosecute perpetrators of the crime.
Besides deployment of security personnel, Committee members
said there was need for acquisition and deployment of
appropriate technology to check fuel and pipeline vandalism.
Principally, it demanded of government to provide
opportunities for young people to be involved in the oil and
gas activities as this would engender gainful employment for
While calling for the passage of the Petroleum Industry
Bill, it emphasized the need for intelligence gathering and
processing in tracking movement of ocean bound vessels
coming in and going out of Nigeria.
The Committee said government should consider involvement of
private companies in the management and replacement of oil
pipelines, some of which it said are over 50 years old.
It was the position of the Committee that as things stand
now, Nigeria’s external debt ration is below the
international benchmark of 40%; and that this has created
room for further external borrowings.
It said back home, instead of the stated position helping in
the growth of the economy, domestic debt profile, especially
debt owed local contractors, unpaid salaries of public
servants, pensions and gratuities have contributed to hamper
It recommended that while there is room for borrowing, such
external borrowing must be tied to designated projects which
must be efficiently and prudently implemented to reduce
pressure on lendable funds.
Meanwhile, Conference Chairman and former Chief Justice of
Nigeria, Justice Idris Legbo Kutigi, has thanked Nigerians
and particularly, delegates to the National Conference and
the media for the support and cooperation extended following
the death of his wife, Maryamu, last week.
He observed that both Christians and Muslims were with him
throughout the period; from his home to the mosque, to the
cemetery and back to the house, adding, “I was overwhelmed.
This is why Nigerians should not fight over religion.”
Also on Monday, two moves to resolve the controversial
issues of Land Tenure Act and the establishment of Religious
Equity Commission (REC) failed. In addition, the issue of
states establishing Pilgrims Welfare Board was left
A motion by Chief Mike Ozhekome on the need to establish REC,
stating the usefulness of such a body to the religious
harmony in Nigeria and the resuscitation of Pilgrims Welfare
Baord only at state levels, was defeated by voice vote.
Conference Deputy Chairman, Professor Bolaji Akinyemi had
equally announced a decision by some delegates who discussed
with him on the need to keep Land Use Act in the Concurrent
List. The move also did not receive approval.
These issues were carried forward last week when reports of
Committees on Religion, and Land Tenure and National
Boundaries were presented and no consensus was arrived at on
Professor Akinyemi said that based on the development on
Monday, the issues would still be discussed at another level
until an acceptable resolution is found for each of them.
ASSISTANT SECRETARY, MEDIA AND COMMUNICATIONS
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