How Much Does Subsidy Cost?

victor emejuiwe (Leadership Newspapers)
Sep 8, 2014 | Leave a comment

In 2014 budget, the sum of N971 billion was appropriated for fuel subsidy; this is close to the annual sum appropriated for capital projects. Can this be the real amount paid to oil marketers as subsidy, for importing refined crude across the country? If this be the case, it means there is more to the stealing of the petroleum subsidy funds than we already know.

There have been negative reactions from the public on the huge sums of money paid to the oil marketers in the name of subsidy. It is believed that the oil marketers are just but a few citizens of the country who have been exploiting the nation. This privilege few are known as a cartel that consistently smile to the bank, on account of the oil industry. Most of them are owners of refineries and oil blocks.

Nigerians have at one time or the other expressed their dissatisfaction at the rate at which the nation spends on these cartels. More so, the various reports on fuel subsidy probe, revealed various acts of conspiracy of the cartel against the nation. First; is that they chose to build their refineries outside the country so as to claim cost for importation. The marketers have also been accused of lifting Nigerian crude and taking it to countries like Benin Republic; where they are refined and sold at very high rate, before selling to Nigerians. The cartel also went further to collect petrol subsidies from the NNPC without supplying the products to Nigerians.

The federal government has done well to set up committees to unravel these frauds; but at the same time, Nigerians are confused on the position of the federal government concerning the fuel thieves.

It has been over two years since the reports which indicted the oil marketers were released, but we are yet to see any one of them successfully prosecuted. We are also confused as per how much the federal government is paying on petrol subsidy. This also raises question mark on the makeups of subsidy thieves.

From 2006 to 2013 the amount for petroleum subsidy had been as follows; 2006 (N151.9 billion), 2007 (N188 billion), 2008 (N256 billion), 2009 (421.5bn), 2010 (1.3trn) 2011 ( 2.19trn), 2012 (888bn) in 2013, (N971bn) and in 2014 (N971bn). What is evident from this allocations is that, every year subsidy figure kept going high, but what is also contentious is that the reason for the increment of the subsidy figure was as a result of the illegal claims made by subsidy thieves .

Having established the fact that there was fraud in the subsidy payments; it is expected that the government would have plugged the leakages so that there will be a reduced sum for subsidy. It is not expected for the federal government to continue appropriating up to N967bn as petroleum subsidy.

If we are to add up the amount paid for the partial removal of petroleum subsidy (SURE-P) into the overall subsidy sum, it means we would be paying up to 2trn as subsidy.

This means that nothing has changed in spite of the fraud uncovered from the subsidy regime.

This also brings us to the use of the partial removal of the fuel subsidy.

Having witnessed the huge propaganda made prior to the introduction of SURE-P; it is disappointing to note that the program is fraught with embedded corruption and mismanagement of the fund. The program was established with all sorts of promises; it was sold to Nigerians as the elbow room to relieve the masses from the pains which the petrol subsidy was not solving.

For the fact that the SURE-P is making little or no impact in relieving the poor from its suffering, it would have been preferable that the poor continued to enjoy the purchase of petroleum at former pump price of N67 per liter. This view is held on the premise that, buying petrol at a more reduced cost is a visible benefit which can be easily accessed by the poor. It is also preferable given the fact that, the reduction in the pump price of crude also leads to the reduction in the cost of transportation and other commodities in the market. Also since the SURE-P has failed to deliver on the promises, it means that technically we are still paying largely on fuel subsidy.

The arguments of the citizen against the removal of subsidy was based on corruption, the citizens never had trust on the federal government, because the government has failed in its responsibility to the citizen. If the government cannot fulfill its obligation of providing essential services to the citizens using the normal national budget, what difference would it make with a program like SURE -P? Whatever intervention the SURE-P is currently engaged in, is part of what the federal government is expected to do using the already existing mandate and structures.