A Review of the Nigerian Energy Industry

States seek to take over payment of petroleum subsidy – Governors’ Forum

Fuel pump

Oscarline Onwuemenyi

19 May 2018, Sweetcrude, Abuja – The Nigerian Governors’ Forum (NGF) has called on the Federal Government to allow state governments take over the payment of petroleum subsidy based on the needs of their people.

The Chairman of the forum and Zamfara State Governor, Alhaji. Abubakar Yari, made this call in an interview with newsmen in Abuja, at the end of a meeting of the governors, the fourth in 2018.

He said that governors have decided to place this demand before the Federal Government as way of putting a halt to the unprecedented increase in the petroleum subsidy bill.

Yari said that the governors have agreed to receive millions of litres of petroleum per day for which they were prepared to pay the appropriate subsidy based on the need of their people.

According to him, “They, therefore, called on the Federal Government to stop paying subsidy at the federal level because the increasing cost had now become unsustainable.

“The governors also called on the Federal Government to revoke the operation licences of all petrol stations located within ten kilometre radius of the nation’s borders.”

The chairman said the governors believed this had become necessary to stop the increasing wave of cross-border fuel smuggling, which the NNPC had blamed for the bloated cost of being sustained through the subsidy.

Yari said during their interface with the Nigerian National Petroleum Corporation (NNPC), the corporation had stated that fuel consumption had risen to 60 million litres per day from the previous figure of 35 million litres.

He said that the governors expressed amazement at this figure on which the payment of the subsidy was anchored.

The chairman, however, said the governors believed that if fuel stations close to the borders were closed down, the nation could be saved the agony of paying outrageous cost as subsidy on petroleum.

Yari said the National Executive Council (NEC) discussed the question of if states are to henceforth determine how much is paid as subsidy and not NNPC, but the final decision will be taken in the June meeting.

Yari said, “Yes, the item was brought up for discussion but it was referred back to the sub-committee on remittances in which I’m chair. We are doing the nitty gritty with NNPC in terms of remittances.

“Don’t forget that the reason we got it right in 2016 on the NNPC side was because the oil prices were too low. It was easy for everyone to get fuel into the country and then make their profit.

“So, when the price started jacking up then the marketers started adjusting back because they needed to have a template of cost recovery and how they are going to make up the difference from the pump price to the landing cost of what they are importing.”

He added that, “Our problem is the volume, the quantity of consumption which is not acceptable. Working with the governors, so many decisions were taken but by next month, we are going to adopt that position either for the governors to take responsibility for the subsidy in their states based on the consumption or we look at other ways.

“For instance, if you say we paid N800 billion subsidy, you will ask who are we paying the subsidy to? And if you look at infrastructure development and capital programme of the Federal Government, it is about N1.1 trillion, almost 70 percent of what you are spending developing the economy.

“If there is no infrastructure development then you cannot talk about development of the economy. N800 billion is a huge amount that we must look at it, who is benefiting from it?

“So we are coming up with a strategy, we are going to meet in the month of May and June. By next meeting, we will definitely come up with a position of the government at both level of volume of what is being brought into the country and what the state and Federal Government collaborate to check.”

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