CBN says N1.76trn subsidy was paid in 2011

Emman Ovuakporie

25 January 2012, Sweetcrude, ABUJA –The Nigeria’s government spent N1.76trillion on fuel subsidy for the year 2011, the Central Bank of NIgeria (CBN) revealed Tuesday at the on-going adhoc committee probe on fuel subsidy regime monitoring.

Deputy Governor of the apex bank, Mr Kingsley Moghalu who represented the CBN Governor Sanusi Lamido Sanusi said “the total amount paid for fuel subsidy alone in 2011 was N1.76trn.
According to him, the apex bank plays limited role in fuel subsidy management. “What it does is to ensure monetary and price stability.”
He said the Petroleum Stability Fund (PSF) designed for the stability of petroleum prices has its account domiciled in the CBN and operated by the Petroleum, Products Pricing Regulatory Agency (PPPRA).
Moghalu explained further that the “account was opened on December 15, 2001 and credited with N673.85billion and withdrew N666billion leaving a balance of N6.257billion.
Also, the Deputy Governor revealed that the Excess Crude Account is domiciled in CBN and operated by the Accountant General of the Federation, AGF which had a credit balance of N2.562,780trn between September 25 2007 and January 2012 .
He said as at January 17 this year, the Excess crude balance was N19,261bn “and is pertinent to note that CBN is not involved in the payment of the subsidy. “
It was also noted that subsidy payment went up 8fold in 2009 totalling over 110percent and by October, 2011 it hit over 500percent.
He said this led to a high demand for foreign exchange which made the apex bank to set up a special foreign exchange audit to determine the veracity of the foreign exchange demand.
“The audit is on-going and this really put so much pressure on the forex market, in 2009 the total sales of foreign exchange was 38billion dollars and 9billion dollars was sold to the oil sector alone. “
Asked why there was a sudden increase in subsidy payment, Mr Moghalu said, “like some senior officials had previously observed here of likely manipulations of the subsidies as we do not have concrete evidence because we are not EFCC. “
“Multiplicity of subsidiaries (is) main factor that led to the high demand of foreign exchange and we felt that with so many companies involved in the subsidy we felt the effect at our foreign exchange window. “
“There will be problem if the dollar demand becomes so high without touching our threshold if we go below the threshold there will be problem.
Asked what was the threshold by the adhoc Committee Chairman, Rep Farouk Lawal, Moghalu said the threshold is 30billion dollars.
When further queried on who authorises subsidy payment, he explained that it was an issue meant solely for the fiscal authorities.
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