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Nigerians Groan while FG Budgets Billions for Subsidy

-By Gideon Osaka

Amidst widespread complaint and backlash by Nigerians, the federal government again has said it will spend about N450 billion this year on fuel subsidy.

This is despite the commitment by the Nigerian National Petroleum Corporation (NNPC) to rehabilitate the country’s four refineries to stop importation of petroleum products.

At a stakeholders forum, an oil and gas expert, Uche Kelechi said “If Nigeria continues to pump such huge funds on fuel subsidy, all the revenues which it generates will be going into paying fuel subsidy.

According to Kelechi, infrastructure challenge which has taken a big toll on the country’s refineries has made them incapable of refining significant amount of crude till date.

Also a public affairs analyst, Kabiru Musa said the federal government under the leadership of President Muhammadu Buhari “Must do everything within the ambit of the law to curb or completely remove fuel subsidy payment.”

President Muhammadu Buhari

He said it is rather painful that huge sums of money are being sunk into fuel subsidy annually rather than being channelled to developmental projects.

Although fuel subsidy is now termed as “Under-recovery”, many have attributed it to the same things as fuel subsidy as long as huge amounts of money is being budgeted for it in the country’s annual budget.

A former NNPC chief and ex-petroleum minister, Ibe Kachikwu, had also pledged that Nigeria would end petrol importation by 2019. Mr Kachikwu was one of the ministers not reappointed by President Muhammadu Buhari when he named his new cabinet after his re-election last year.

The Minister for Finance, Budget and National Planning, Zainab Ahmed, announced the subsidy amount in Abuja at the public presentation of the 2020 budget details.

She said a provision of N450 billion has been made for ‘under-recovery’ of cost in respect of the importation of Premium Motor Spirit (PMS), popularly called petrol.

“A provision has been made in the budget for under-recovery for PMS (premium motor spirit) in the sum of N450 billion provided in the fiscal framework. It is under-recovery because it is a cost operation for the NNPC,” Ahmed said.

The minister answered a question by the President of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed, who wanted to know if the government has removed fuel subsidy from the budget.

Under-recovery is the term officials of the Nigerian National Petroleum Corporation use for fuel subsidy, partly because the state-oil firm, NNPC, is now the sole importer of petrol.

Late last year, the Group Managing Director of the NNPC, Mele Kyari, announced a programme to carry out the full rehabilitation of country’s four refineries in Port Harcourt, Warri and Kaduna.

Kyari, who unfolded the schedule for the refineries’ repairs during a tour of the Port-Harcourt Refining and Petrochemical Company (PHRC), said the exercise is scheduled to commence in January 2020.

He said the corporation was determined to ensure the refineries achieved optimum refining capacity by 2022.

This is not the first time the state owned corporation will be giving such assurances over the years.

“We will stick to the schedule. We will deliver this project by 2022. We will commence actual rehabilitation work in January next year.

“We will do everything possible between October and December this year to close out all necessary conditions for us to deliver on the project,” Kyari had stated.