N’Assembly Increases Fuel Subsidy to N521bn

01 December 2015, Abuja – The Senate monday compelled the federal government to increase the N413 billion fuel subsidy bill it submitted under the supplementary budget to the National Assembly last week to N521 billion.

Bukola Saraki, Senate President of the Federal Republic of Nigeria.

Bukola Saraki, Senate President

The new figure includes N108 billion meant for fuel subsidy in the last quarter of 2015, which was not captured in the N465.5 billion supplementary budget submitted to the Senate by President Muhammadu Buhari. The N413 billion allocated to fuel subsidy claims covered the period from January to September.

With the extra N108 billion, the supplementary budget before the National Assembly now stands at N573 billion.
The decision leading to the increased budget followed the discovery by the Senate Committee on Appropriation that the subsidy captured in the budget was only for the period January to September 2015.

The discovery was made during the defence of the budget by government agencies in the National Assembly yesterday.
The same revelation was made yesterday at a meeting of the House of Representatives Committees on Appropriation, Finance, Aids, Loans and Debt Management with the ministries which came to make their budget defence.

In the Senate, the Appropriation Committee frowned on the development, saying leaving the subsidy claims for October to December out of the budget would be counter-productive, noting that it could result in another round of fuel shortages in the no distant future.
Speaking on the development, the committee chairman, Senator Danjuma Goje, said the committee was disappointed to discover that the government was laying the foundation for another precarious situation by failing to budget for the subsidy claims for the last quarter of the year.

“We are concerned because we don’t want to see this kind of situation in the next four years again. We want to see that fuel scarcity is totally eliminated 24 hours a day and fuel is available to all.

“But we are disappointed to hear that this subsidy is only from January to September. With Christmas around the corner, it will be unfortunate that after paying this money, we will come back and face this problem again,” Goje said.

Also speaking, Senator Adamu Aliero (Kebbi Central) said approving only N413 billion would amount to postponing the evil day, insisting that the October to December subsidy claims must be approved in the supplementary budget.

“We don’t want a situation where long queues will surface again. We don’t want a temporary solution. We want the subsidies to cover up to December. This is unacceptable, it must be corrected. We must find a way to approve it as we enter into the Christmas to New Year period,” Aliero said.

The same position was espoused by Senator Jibrin Barau (Kano), who said it was unacceptable fuel shortages should be a recurring decimal in this era of “change.”
In her response, Permanent Secretary, Ministry of Petroleum Resources, Jamilla Shuara, said the budget had been prepared before Dr. Ibe Kachikwu and herself assumed office as the Minister of State for Petroleum and permanent secretary respectively.
Shuara said the attention of the budget office had been drawn to the N108 billion for the last quarter of the year, which was not captured in the budget.

In order to save the situation, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, intervened and assured the senators that a review of the budget would be done and the new addition captured and re-submitted to the Senate by 3pm yesterday.
Shuara had told the committee that the N413 billion budget for subsidy claims in the supplementary budget consisted of the outstanding N120.5 billion subsidy claims from 2014, plus N294.4 billion for January to September 2015.

However, the committee uncovered unappropriated subsidy payments to the Nigerian National Petroleum Corporation (NNPC).
Providing details, Senator Akpan Bassey (Akwa Ibom) said intelligence reports before the National Assembly showed that the total subsidy claims including that of NNPC stood at N950 billion, and the corporation had been pretending that the entire subsidy from January to September was N413 billion.

This revelation implied that the corporation has been withdrawing its subsidy claims from source without appropriation.
Bassey said: “What I was trying to clarify at the committee meeting is that we know from our own intelligence that the total subsidy today is about N950 billion.

“But what the NNPC and Petroleum Products Pricing and Regulatory Agency (PPPRA) are reporting is the subsidy due to major oil marketers alone.

“Major oil marketers import 52 per cent while NNPC imports 48 per cent. So the subsidy that the NNPC is presenting, in our opinion, is subsidy due to oil majors only and we asked what is the subsidy due to the NNPC on the basis of their own importation of 48 per cent of the total fuel consumption in the country.

“We have also entered into agreement that they will take care of the exchange rate differential with the oil majors.”
However, NNPC was not represented at the budget defence, while Shuara explained that the notice of the budget defence only got to her and Kachikwu yesterday morning.

She also informed the committee that Kachikwu was in Lagos meeting with major oil marketers to resume importation of fuel.
After her explanation, Senator Bassey sought for a further breakdown of the outstanding N120.5 billion subsidy for 2014 and N294.4 billion covering January to September 2015 with a view to exposing NNPC’s unappropriated expenditure.

But Goje intervened, promising that he would request the information from the Central Bank of Nigeria (CBN).
Earlier, the Director General, Budget Office, Aliyu Gusau, explained that the supplementary budget became compelling in view of discoveries that the amount earlier budgeted for subsidy claims by the outgone administration of former President Goodluck Jobathan was insufficient to pay outstanding subsidy claims.

According to him, additional expenditure became compelling in view of outstanding deficit, adding that falling oil prices had widened the revenue deficit, which he said compelled the government to raise borrowing in the 2015 budget from 882.1 billion to 2.103 trillion.
In his budget defence, the Minister of Defence, Colonel Musa Dan-Ali (rtd.), said N29.958 billion was captured in the supplementary budget for military operations against the insurgency in the North-east.

According to him, N17.465 billion of the sum is required for the wellbeing of armed forces personnel on the field; N8.141 billion for the logistics of the air force; N4.348 billion as the balance of defence budget in the 2015 Appropriation Act; and N1.987 billion required for short service recruitment by the military.

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