Nothing to applaud in subsidy savings October 6, 2013 by~ #PunchEditorialBoard IT appears that the chickens have come home to roost with the Federal Government’s recent disclosure that it saved more than half of what it paid as fuel subsidy to importers of petroleum products in 2011. This development came more than a year after the fuel subsidy scam was exposed by the House of Representatives in an investigation. The Minister of Finance and Coordinating Minister for the Economy, Ngozi Okonjo-Iweala, said last month that subsidy payment had been brought down to N950 billion from about N2.2 trillion. The sharp drop cannot just be explained away by the increase in the price of fuel. Okonjo-Iweala believes what we are witnessing is a huge achievement for which the Jonathan administration deserves some credit, something that should make Nigerians proud of their government. “In 2012, there was a huge public outcry. As a result, this administration has worked hard to clean up the process of subsidy payments. In response, the ministry set up the Aig-Imoukhuede committee, which investigated the subsidy payments. The committee was later elevated to a presidential committee by the President. We also hired new auditors and we put in place different checks and balances. As a result, last year, we brought the subsidy payment down to about N950bn, and we expect that this year, we will pay about N971bn,” she explained. Interestingly, the country is not consuming less fuel now than it did in 2011, when, either N1.7 trillion or N2.2 trillion was purportedly spent as fuel subsidy. But the drastic reduction must be seen for what it is: government’s admission of zero transparency, fraud and incompetence in the subsidy funds management during the period in question. But this is hardly surprising to those who had followed the 2011 fuel subsidy bazaar, the government’s initial denial of any wrongdoing and the nationwide mass protest that came in its wake in January 2012. Now, learning from this immediate awful past, Okonjo-Iweala says the 2013 subsidy budget will not be significantly different as N971 billion will be paid this year, meaning that it will be N21 billion higher than the previous year’s outlay. According to the minister, grim realities such as dwindling oil production, arising from oil theft and pipeline vandalism, its concomitant revenue loss and discovery of oil in so many parts of the world have made expansionary budgeting irrational and unaffordable. But Nigerians, deeply concerned about the proclivity for wastefulness and corruption in government, had warned much earlier of the inescapable backlash if the authorities did not retrace their steps. The country loses an estimated 400,000 barrels of crude oil daily to illegal bunkering and vandalism, just as revenue fell to N497.9 billion in July, a 42 per cent drop. The exploitation of shale oil in the United States, the admission of Ghana, Chad, Benin Republic and a host of others in Africa into the oil producers’ club, will no doubt alter the economic landscape. Yet, in real terms, Nigeria has no enduring response to these new challenges. Lamentably, the subsidy racketeers have not been jailed according to the laws of the land. Almost two years after public protests corralled the government to arraign a handful of suspects in court, the grains have yet to be separated from the chaff. For a regime that wants to permanently arrest the drift in the downstream sector of the petroleum industry, it ought to have ensured speedy trial of the suspects. Any worthwhile transformation of that sector must be an irreversible one, irrespective of any government in power. A mere reduction in subsidy payments is just scratching the surface of a fundamental malaise. Nigerians are eager to know those who fleeced them and to see them punished. A total of 140 companies were discovered to have imported fuel in 2011, for which N1.7 trillion was initially paid as subsidy. The House explained that the figure rose to N2.58 trillion with the addition of N844.94 billion the Central Bank of Nigeria paid to the Nigerian National Petroleum Corporation. The conflicting figures given by government agencies to the House of Representatives panel unfurl the void in transparency associated with the spending. For instance, the NNPC had put the figure at N1.3 trillion; the Finance Minister N1.4 trillion, Petroleum Products Pricing Regulatory Agency N1.4 trillion; Accountant-General of the Federation, N1.6 trillion; while the CBN said it was N1.7 trillion. The Deputy Governor of the CBN, Kingsley Moghalu, in charge of Systems Stability, had told the committee, “I am aware there have been some testimonies here giving different figures. But, as the banker to the Federal Government, the CBN should have the current figure. And, although we need to get through the documents for the exact figure, yet the amount approximately is N1.7 trillion.” While it was still doing its own investigation, embarrassed at the turn of events, the government pruned the number of petroleum marketers import list. A total of 98 of them were yanked off. From 49 firms that imported petroleum products in the first quarter of 2011, the “number dramatically increased to 140 firms at the end of the year,” the House report stated. Nigeria unabashedly has remained at this crossroads for more than two decades because of poverty of leadership, and failure to cage the monster called corruption. Yet, the country is the sixth largest producer of crude oil in the world. No country has this anomalous record. Regrettably, the National Assembly, with all the powers vested in it by the constitution to make things work in the country, has been dilatory in passing the Petroleum Industry Bill for more than six years. Expected to inject a regime of transparency and accountability into the sector, with a new legal, fiscal and regulatory framework, vested interests of some public officials, corporate bodies and political treachery, however, have been at work against the PIB. Consequently, the minister and the government should not rhapsodise about the subsidy cuts. Putting those that illegally siphoned public funds behind bars is a more durable benefit. It is time the country began to punish such felons.
Posted on: Sat, 05 Oct 2013 23:53:51 +0000
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