A Review of the Nigerian Energy Industry

Fuel subsidy divides Nigerian Senate

13 October 2011, Sweetcrude, Abuja—The plan by the Nigerian government to remove subsidy on petroleum products has divided Nigerria’s Senate.

The sharp division occurred Wednesday on the floor of the Senate even as members of the upper legislature resolved to probe the Nigerian National Petroleum Corporation (NNPC) and the Ministry of Finance for allegedly overshooting oil subsidy funds from N240 billion appropriated in the 2011 budget by the National Assembly to N1.2 trillion.

While the Senators were unanimous on the probe, the proposed removal of fuel subsidy by the President Goodluck Jonathan government has pitched the senators against one another.

Senators from the South-East and South-South are backing the President’s decision on the removal of subsidy as they maintained that subsidy has not impacted on the people from the region.

But other senators argued that the removal will compound poverty in the country as they also pointed out that the problem lies with the management of the funds.

Senate President, David Mark blamed the controversies surrounding fuel subsidy on oil cartels in the petroleum industry and vowed that the Senate will uncover those that short-changed Nigerians in the process.

“My belief is that there is a cartel within the petroleum industry and whatever they do is just exclusive to them. Ninety per cent of people outside do not know. We must find out how much is spent on subsidy, who are the beneficiaries? Has subsidy benefitted us? These are salient points and we cannot run away from them,” he said.

Senator Abubakar Saraki (PDP-Kwara), while moving the motion for investigation into the management of subsidy, contended that the mismanagement of subsidy in 2011 budget will frustrate funding for 2012 appropriation.

“In furtherance of the implementation of the fuel subsidy in 2011 appropriation, the sum of N240 billion (N20 billion monthly) is budgeted. Of the N20 billion monthly allocated, N11.2billion was allocated for domestic fuel subsidy (NNPC) and N8.8 billion for domestic subsidy (market) as stated in the Appropriation Act 2011.

“Although, N20 billion was set aside for subsidy on a monthly basis in the Appropriation Act 2011, in August 2011, the total figure expended was N165bn of which the NNPC was N88 billion and Independent Marketers was N77.7 billion.

“In the first three months of the year, both the NNPC and the Independent Marketers did not exceed N62 billion monthly but within the last three months, figures have ranged between N150 billion and N186 billion.

“With this trend, by the 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 implementation of 2011 Appropriation Act will surely be in troubled waters if a variation of N1.2 trillion arises as a result of the level of expenditure incurred on fuel subsidy so far.”

Senator Heineken Lokpobiri, in supporting the motion, questioned the rationale for retaining subsidy when it is to the detriment of the people.

“In my opinion, subsidy should go. The question we need to ask is whether subsidy is alleviating the price of petroleum products, the issue is that subsidy is not achieving the purpose of being there. The administration has realized that we cannot continue because this subsidy does not benefit anybody.”
Senate Leader, Victor Ndoma-Egba was also in support of the probe and the need for government to remove fuel subsidy,” he argued.

“It is my belief that this argument about subsidy will be endless because subsidy is a mirage that benefits few Nigerians. We must identify the beneficiaries of this subsidy. I have not benefitted from subsidy, my people have not benefitted,” Ndoma-Egba said.

Senator Kabiru Gaya (ANPP, Kano), while supporting the motion for the probe said it was unconstitutional for monies to be spent without approval from the National Assembly.

He however maintained that government should not remove subsidy, noting that diesel was deregulated but it has made diesel to be scarce in the market.

In this article

Join the Conversation

  • Ewetan Mike

    Nigerians are in support of probing those who are directly benefiting from the oil subsidy to the detriment of the citizenry of the nation. The senate should do everything to get to the roots and the cartels. Would President Goodluck as a matter of policy/s put a percentage limit to sales increment on oil products should the removal of subsidy? Has he taken into cognisant the abusiveness of the oil operators in their quest for abnormal profits? Ask President GOODLUCK.