Over N451billion of 2012 fuel subsidy budget already spent


With more than half of appropriation for fuel subsidy in this year’s budget already spent on settlement of arrears for last year, the Federal Government moved swift to douse fears that it might not be able to continue the payment of claims for petroleum products imports.

From initial appropriation of about N1.314trillion in the 2012 Budget for subsidy claims, the amount was scaled down to about N888billion following the decision to embrace partial deregulation of the downstream sector of the petroleum industry in the wake of the nationwide protest early this year over the withdrawal of fuel subsidy. 

Out of the amount, about N451billion has already been disbursed for settlement of the arrears of subsidy claims for 2011, raising fears that another round of fuel scarcity may be in the offing if government is unable to sustain the payment of subsidy claims to importers and marketers of petroleum products. 

The fears received fillip last week with recent reports that government had decided to suspend further payments related to reimbursement of subsidy claims to marketers on petroleum products imports till further notice.

But, Minister of Finance, Ngozi Okonjo-Iweala, moved swiftly on Tuesday to douse speculations on the issue, saying government resolved to tread cautiously in its handling of the issue, pointing out that contrary to speculations henceforth only genuine, verified and substantiated claims would be settled. 

The Senior Special Assistant to the Coordinating Minister for the Economy, Paul Nwabuikwu, said it was wrong to speculate that prudence in the management of subsidy payments would trigger another round of fuel scarcity in the country.

Mr. Nwabuike said that the ministry’s approach to the subsidy regime would be based on the prudent use of the balance of what was provided in the 2012 budget for subsidy claims for the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Nigerian National Petroleum Corporation (NNPC). 

“Since the NNPC/PPPRA’s estimate for the 2011 arrears was N232 billion, this means that more than double the projected amount (N451billion) has already been spent and those agencies are still bringing in more claims,” he said.

Mr. Nwabuikwu said in Abuja that the government has a responsibility to ensure that subsidy payments are made in a prudent and transparent manner in line with the determination of the Federal Ministry of Finance to continue to pay all marketers whose claims of fuel importation have been verified and established as genuine.

He said that during the next meeting of the Federal Accounts Allocation Committee (FAAC) in June, there would be discussions on when the government intends to resume payments of the fuel subsidy claims. 

Mr. Nwabuike pointed out that while the ministry is ready to work with relevant agencies for the common good of Nigerians, it would reject attempts to be stampeded into making hasty payments on deliveries that have not been substantiated or verified.

According to him, the Ministry is willing to learn from the lessons in the management of the reimbursement process in the recent past. He also said that the ministry is committed to reforming the way payments are made to all beneficiaries.

“This is clearly not sustainable and the Ministry has a responsibility to ensure that the lapses that may have led to this unhealthy situation are not repeated. That is the least that the Ministry owes the Nigerian people.

“In line with the directive of the President, the Ministry will continue to work towards the improvement of the fuel subsidy regime based on the lessons learnt from our recent experiences. The Ministry is determined to put in place a strong framework for the fuel subsidy regime that is both transparent and sustainable.”

He stressed that the government’s approach to improving the subsidy regime is dependent on ensuring that the country’s finances are managed in a manner that clearly protects the interests of the Nigerian people by putting in place a system that ensures that only genuine claims of genuine marketers are honoured.


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