A Review of the Nigerian Energy Industry

NEITI calls for end of subsidy regime in oil industry

Fuel dispenser
Fuel dispenser

*Says only oil marketers benefit from system

Oscarline Onwuemenyi

19 June 2015, Sweetcrude, Abuja – The Executive Secretary of the Nigeria Extractive Industry Transparency Initiative (NEITI), Mrs Zainab Ahmed on Thursday called for the removal of subsidy in the nation’s oil industry.

Ahmed, who made the call in an interview with the press in Abuja is adamant that the subsidy regime had only been beneficial to the oil marketers and not to ordinary Nigerians.

She said, “I do think subsidy should be removed because the incidence we had in the near past and even that of January 2012 had shown that it is not actually the Nigerian citizen that is benefiting from the subsidy.

“It is the marketers of oil that had been benefiting from the subsidy.”
She added that, “In October last year, the (then) President, Goodluck Jonathan reduced the pump price of petrol by ten naira (from N97) to N87.

“That singular act increased the fuel subsidy obligation of the government by a very significant amount.

“But look at what happened in the last couple of weeks. Did anybody buy fuel at 87 naira? No! Instead people bought fuel at 200 naira per litre; some even bought at 250 naira per litre and more in different places.

“It (subsidy) should be removed because it has not worked in this country.”
Ahmed also advised the Federal Government to device other means of mitigating the challenges of fuel availability and affordability faced by Nigerians outside of the subsidy method.

She advocated a gradual removal of the subsidy, saying that it would reduce the temporary pains that Nigerians might face as a result of the removal.

“In order not to hurt the population and to implement it (subsidy removal) seamlessly, the government should look at making an immediate announcement of its intention to remove it and plans for the removal.

“May be graduated over a year so that every month you are removing a small fraction so that the impact that labour claims is borne by the people is not immediately felt.

“It should be a graduated removal spanning over may be six months or one year.”
The NEITI boss said that the removal of the subsidy would not end the mandate of the Petroleum Products Pricing Regulatory Agency (PPPRA) since “the PPPR also monitors supply to the country and the quality of the product.

“What is taken to the depots, the distribution and the effectiveness of the distribution.

“So they can still have a purpose; but the management of the payment of subsidy will just not be there anymore.”
Ahmed also urged the Federal Government to recover the 11.6 billion dollar paid as dividends to the Nigeria National Petroleum Corporation (NNPC) by the Nigeria Liquefied Natural Gas (NLNG), saying that the sum should have been remitted to the Federation Account.

“There is 11.6 billion dollars that government can recover from the NNPC – payment of dividends that was made by the NLNG to NNPC, which the audit report clearly says should have been remitted to the Federation Account.”

She said that NEITI’s annual audit reports published over the years had identified the amount to be paid into the Federation Account by companies and agencies of government operating in the extractive sector.

In this article

Join the Conversation