As the debate rages whether or not the subsidy on supply of petroleum products should be removed next year, the Nigeria Extractive Industries Transparency Initiative (NEITI) on Thursday welcomed the possibility of a policy shift in favour of removal as a step in the right direction.
NEITI’s position contrasts sharply with that of the Nigeria Labour Congress (NLC) which has already warned the Federal Government against the proposal.
The Minister of Budget and National Planning, Udo Udoma, said at the presentation of the Medium Term Expenditure Framework (MTEF) a fortnight ago that continued payment of subsidy was unsustainable.
Equally, a week ago, the World Bank advised President Muhammadu Buhari that the best time to act on the issue was now, if he was seriously considering the removal of fuel subsidy.
NEITI’s acting Executive Secretary, Ogbonnaya Orji, said the fuel subsidy removal proposal was consistent with the recommendations in its independent audit reports in the last six years, pointing out that the policy “served as a tool by the rich to exploit the poor”.
Mr. Orji told participants at a “Policy Roundtable on Subsidy Removal Debate” in Abuja that current challenges associated with the crash in global oil price makes subsidy arrangements appear to be funding the lifestyle of the rich, while majority of the Nigerians wallow in poverty.
“From NEITI’s independent audit report, over N4 trillion has been paid as subsidy to marketers from 2006-2012,” Mr. Orji said. “The breakdown of the subsidy shows that N2.197Billion was paid as subsidy in 2006. This rose to N236.64Billion in 2007 and N360.1Billion in 2008.
“In 2009, the country paid N198.1Billion as subsidy for petroleum products, and in 2010 the subsidy payment rose to N416.45Billion. The payments skyrocketed to N1.9 trillion in 2011. Payments of oil subsidy declined to N690Billion in 2012 following the subsidy protests across the country in January of that year”.
Removal of subsidy, the NEITI scribe explained, would free over N700 billion annually, which could be channelled to the provision of key infrastructure, like roads, education, health service, power, security, creation of jobs and basic benefits for the poor in the society.
Oil subsidy, he pointed out, was conceived as a temporary measure to provide relief and ensure refined products availability to Nigerians at a much lower level than the prevailing market price.
In removing fuel subsidy, NEITI urged government to consider progressive welfare measures to ordinary Nigerians, by introducing palliative programmes to reduce the temporary pains that may be experienced by the poor and vulnerable.
In addition, he said NEITI wanted government to either reactivate the existing refineries, privatize them or create the enabling environment for private refineries to thrive.