Subsidy payment costs 864.07 billion naira in nine months – NNPC report
The Nigerian National Petroleum Corporation spent a total of 864.07 billion naira between January and September to subsidize Premium Motor Spirit, commonly known as gasoline.
This amount represents 31 percent of the total revenue of 2.7 billion naira generated by the company between January and September.
An analysis of a report submitted by the company to the Federation Accounts Allocation Committee at its last meeting showed that the NNPC did not incur oil subsidy costs in January, but spent $ 25.37 billion naira to subsidize the product in February.
The cost of the subsidies soared to 60.39 billion naira and 61.96 billion naira and 126.29 billion naira in March, April and May respectively.
The NNPC spent 164.33 billion naira, 103.28 billion naira, 173.13 billion naira and 149.28 billion naira on PMS grants in June, July, August and September.
In the 2021 budget, no provision has been made for the fuel subsidy.
Since November of last year, the price of PMS has remained unchanged despite rising crude oil prices on the international market.
When the fuel subsidy was removed in June of last year, the price of crude oil was around $ 45 a barrel.
But on Wednesday, the price of Brent crude, the international benchmark for oil, stood at $ 82.17 per barrel.
The Minister of Finance, Budget and the National Assembly, Ms. Zainab Ahmed, had in July during the public consultation of the Medium-Term Expenditure Framework / Budget Strategy Document for 2022-2024 qualified the amount spent for the subsidy of the oil as a drain on the economy.
She said 900 billion naira would be spent next year to subsidize the product, adding that it could have been spent on more productive sectors of the economy such as health, education and infrastructure.
An analysis of federal government spending in 2022 showed that the planned grant budget of 900 billion naira is higher than the 292.7 billion naira for the sinking fund, with 750.03 billion naira allocated to personnel costs for public enterprises and overheads of 335 billion naira.
It is also higher than the 261.2 billion naira budgeted for overhead costs of state-owned enterprises; N567.02bn for pensions, gratuities and retirees; and capital supplement budget of N366.13 billion.
Ahmed said, “This (grant) is costing us a lot of time. We spend over 150 billion naira on grants, which means that the NNPC has to use this amount to pay for the PMS and distribute it. It is money that the federation account can share.
“This is money that could have been made available for education, health and infrastructure, reduce our borrowing and increase the amounts that states and local governments collect.
“We are pessimistic and crazy to think that by giving this grant, the citizens benefit from it. But at the end of the day, the citizens are in fact the bearers of the rich. ”
The finance minister lamented that while the subsidies are supposed to benefit the poor, those who actually benefit are the rich in society.
She added: “Some (the rich) have two, three, four cars and they are the ones we subsidize. He does not help the farmer who needs a bus from his farm to the market. But we have to get rid of the subsidies completely, even though this is not a popular opinion among the working people.
“Right now we are subsidizing consumption in Nigeria; we sell at N165 per liter while our neighbors sell at N500 per liter. Only traders profit by taking this product from Nigeria and selling it across borders. The ordinary man does not take advantage of it.
“The transition is not easy, if the subsidy has to be removed. What are the alternatives ? What can we bring to citizens? We therefore expect that we will pay at least 900 billion naira for next year. ”
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