President releases N407.076 billion for fuel subsidy

PRESIDENT Muhammadu Buhari has released the sum of N407.076 billion for the settlement of claims by petroleum products importers aimed at arresting the lingering fuel shortage in the country.

This sum exceeds the amount released by the Federal Government for the execution of projects under the capital votes for the 2015 fiscal year as only the sum of N197 billion has been released for the implementation of capital projects.

The World Bank on Tuesday said at the moment 18 percent of Nigeria’s total revenue generation goes into subsidy payments and projected that it will grow to 30 percent if the trend continues.

Meanwhile, the National Chairman of the ruling All Progressives Congress (APC), Chief John Odigie-Oyegun, has said the government will finally remove the subsidy on petroleum products after palliative measures have been introduced.

Odigie-Oyegun, while speaking with journalists said, “I do not know what is contained in the budget. What is covered or what it does not cover, we do not know because it is still in various stages of construction. Whether subsidy goes or stays is an intricate and major issue. If it has to go, the government must have to provide the palliatives to cushion the effect of the hardship that may come on the ordinary Nigerian.”

Anyway, eventually subsidy will have to go, but we have not reached that stage yet because you cannot just wake up and announce that subsidy has been removed without putting the adequate programmes in place to cushion the negative aspects that may be involved.”

Development Economist, Mr. Odilim Enweagabra, has however advised the World Bank to stop meddling in Nigeria’s fiscal policies, particularly issues concerning subsidy administration.

The Minister of Finance, Mrs. Kemi Adeosun, who confirmed the release said that the President has directed that payments be made immediately in order to bring to a quick end the lingering fuel crisis.

The minister’s confirmation is contained in a statement by the Director of Press in the Federal Ministry of Finance, Mr. Marshall Gundu.

The statement said: “The minister also said that despite dwindling revenues, the government is committed to ensuring continuous availability of fuel to Nigerians. The payments include arrears from the 2014 financial year as well as payments for the current year. It is expected that the recipients would ensure adequate supply of fuel to end the persistent fuel shortage in the nation.
“Details of the approved payments under the subsidy scheme will be published in the national dailies as has been the practice,” the statement added.

Enwegbara argued that his position and advice to World Bank was hinged on his understanding that even in Europe and the most advanced nations in the West, including the United States which houses the World Bank, there exist one form of subsidy or the other.

According to Enweagbara, “I’ve always said it that the problem with fuel subsidy is not that the subsidy is bad in itself. After all, not only do governments in EU, U.S. and most other OECD countries spend hundreds of billions of dollars annually subsidising agriculture so as to make food always readily and cheaply available.”

They also go as far as subsidising many social amenities, including electricity, winter heaters, and telephone subscriptions both for the poor and for businesses in an effort to make local businesses more competitive.
“That is why I strongly believe that there will always be one form of subsidy or another since to move petroleum products from either the refineries or depots to remote and distant parts of the country so as to maintain uniform pump price across the country, government should subsidise the cost of transporting fuel to distant fuel stations.”