A Review of the Nigerian Energy Industry

Senate to probe N931bn fuel subsidy expenditure

15 September 2011, Sweetcrude, Abuja- The Nigerian Senate is expected to commence investigations into allegations of reckless extrabudgetary funding of subsidies for petroleum products for the year 2011, if a motion listed on its Notice Paper on the matter comes before it today (Thursday).

Information available to the Senate shows that N240 billion was earmarked as subsidy for petroleum products in the 2011 Appropriation Act, but, a total of N931 billion has so far been expended as at August 2011.

The motion on the Senate notice paper is sponsored by Senator Abubakar Saraki. It asserts that the N240 billion budgeted was meant to be N20 billion per month, noting that of the N20 bilion, N11.2 billion was for domestic fuel subsidy and N8.8 billion for domestic fuel subsidy as stated in the Appropriation Act.

It urged the Senate to set up a special committee to investigate the operation of the fuel subsidy scheme with a view to ensuring that it was run according to laid down policy. It also sought investigations into the mode of operations and financing of the scheme with a view to establishing cases of misappropriation and other financial irregularities.

The motion reads: “Although N240bn was budgeted for the entire year, so far as at end of August 2011 N931 billion has been spent. This is a variance of N771 billion 700 per cent above budget.

“In the first three months of the year both the NNPC and the Independent Marketers did not exceed N62bn monthly, but within the last three months, figures have ranged between N10 billion and N186 billion.

“With this trend year-end we will have a fuel subsidy bill of over N1.2 trillion as against the N240 billion budgeted in the Appropriation Act.”

The motion noted that the expenditure on fuel subsidy was treated as a first line charge, undermining other necessary expenditures such as capital and distributions to states and local governments.

It predicted that the implementation of the 2011 Appropriation Act would surely meet with difficulty if there was a variation in N1.2 trillion as a result of the level of expenditure incurred on fuel subsidy so far.

The motion said there was an urgent need to review the subsidy scheme in order to strengthen the integrity, transparency and accountability of the scheme and that the nation might have to stay with the risk of a non-implementation of the 2011 budget if the review was not done.

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