Reps shelve oil subsidy debate, okay fiscal plan

[TGD]

 Probe licences of 26 non-functional private refineries

Senate asks Okonjo-Iweala for fuel import audit report

Labour, groups mobilise for protest

A SETBACK mounted by the nation's lawmakers and workers' groups yesterday further dimmed the prospect of the removal of oil subsidy as being contemplated by the Federal Government.

Sending a subtle notice of disapproval of the government's move yesterday, the House of Representatives approved the 2012-2014 Medium Term Fiscal Frame-work (MTFF), but refused to identify expected savings from the removal of oil subsidy as one of the funding items of the 2012 budget.

It was to serve as the template on which the 2012, 2013 and 2014 budgets would be developed.

But the Minister of Information, Mr. Labaran Maku, has urged Nigerian youths to support the plan to remove fuel subsidy.

He explained that fuel subsidy when removed would enable government to grow the economy and generate more revenue to service critical sectors of the national economy.

Speaking at the launch of African Poetry Realty Show in Abuja, the minister while soliciting the understanding of Nigerians on the proposed policy, said that, "if Nigerians really want government to work for them, they must understand that things cannot be done the same way."

Besides, the Senate ad hoc committee investigating fuel subsidy management in the country yesterday ordered the Minister of Finance, Dr. Ngozi Okonjo-Iweala to furnish it with details of audit of fuel import in the last 11 months.

The chairman of the panel, Magnus Abbe, who gave the order during a public hearing at the National Assembly yesterday, also said that should the minister fail to produce the required document within seven days, the panel might be compelled to subpoena her to that effect.

The minister had told the panel that the quantum of fuel import was being captured by auditors engaged by the Federal Government and the committee insisted on access to the document to enable it to carry out an investigation.

The minister asked for time to enable her to tidy up the records. At this juncture, the panel said:  "We are giving you seven days to do that if not we will issue a subpoena.''

The panel also raised some issues on the differential between the amount set aside for fuel subsidy for 2011, which was about N245.9 billion and the N1.34 trillion   spent so far. She told the panel that the Ministry of Petroleum would be in a position to explain that.

Mrs. Okonjo-Iweala insisted that removal of the fuel subsidy still remained the best option in the circumstance, stressing that the poor masses that should be the beneficiaries were yet to do so.

The Chairman, House Committee on Media, Zakari Mohammed, had during a media briefing on Wednesday, stated that the parliament was yet to be convinced on the desirability of the proposed subsidy removal, and with this development, President Goodluck Jonathan is therefore expected to explore other sources of financing expected deficits in the 2012 budget.

Section 11(2) of the Fiscal Responsibility Act, 2007 required the President to present a MTFF for the next three years to the National Assembly for approval, pursuant to which the document was sent to the House in September 2011, with a proposal that expected savings from the planned removal of oil subsidy would be one of the funding elements of the 2012 budget.

The House also mandated its standing Committee on Petroleum Resources (Downstream) to investigate the issuance of licences to private refineries and the cause of the non-takeoff of the 18 private refineries nine years after the licences were granted.

Some of the refineries include Akwa Ibom Refining and Petrochemicals, Badagry Petroleum Refinery, Clean Water Refinery, Ilaje Refinery and Petrochemicals, Niger Delta Refinery and Petrochemical, NSP Refinery and Oil Services and Ode Ade Refinery. Others are the Orient Petroleum Resources, Owena Oil and Gas and Rivgas Petroleum and Energy.

The others are Sapele Petroleum Refinery, the Chasewood Consortium, Tonwei Refinery, Total Support Refineries and Union Atlantic Petroleum.

The Deputy Chairman, House Committee on Education, Rose Okoh who sponsored a motion with 23 others, expressed concerns that the four public refineries with a combined capacity of 445,000 barrels per day with the output of 18.72 per cent, could only meet about 17 per cent domestic demand, hence the need for more refineries.

She lamented that the amount spent on oil subsidy yearly to the tune of N1.256 trillion would have been enough to build new refineries or channelled into other ventures.

Campaign has been on for the removal of oil subsidy by the Presidency, which said over N1.3 trillion was spent on subsidy yearly, but without commensurate benefits to Nigerians.

But the House's joint Committee on Finance, Appropriations, Legislative Budget and Research, and National Planning and Economic Development whose report on the fiscal document was considered, and recommendations approved on the floor yesterday, said savings from the expected subsidy removal as a financing item to the 2012 budget was rather "premature," and urged the executive to explore other sources.

Other recommendations by the committee adopted by the chamber were the oil benchmark price of $70 per barrel, as against the $75 proposed in the MTFF, and crude oil production targets of 2.48 million barrel per day for 2012, 2.55 million barrel per day (2013) and 2.58 million barrel per day (2014).

Though the committee had initially recommended an exchange rate of N153 to a dollar, Chairman of the Committee on Appropriations, John Enoh, called for an upward review to N155, considering the recent announcement of the Central Bank of Nigeria (CBN), which pegged the exchange rate at N155 to the dollar. At last, N155 was approved.

The committee also cautioned that Public, Private Partnership (PPP) should be done in a manner that still makes the government to deliver on its social responsibilities.

On the deficit to Gross Domestic Product (GDP) ratio, 2.7 per cent, two per cent and 1.5 per cent were approved for 2012, 2013 and 2014 in that order, while the proposed N794 billion for domestic borrowing in the 2012 fiscal year was approved, as according to the committee, they were within the sustainable level.

The committee's recommendation also directed the Debt Management Office to provide an analysis of the impact of the private sector, and measures to reduce domestic debt.

It also reiterated the need for the President to attach the income and expenditure plan of statutory bodies as listed in the schedule to the Fiscal Responsibility Act, 2007 to the 2012 Appropriation Bill.

Several voices from the Civil Society Organisations and Labour rose yesterday against the   planned fuel subsidy removal.

Among those, which vehemently opposed the move, were non-government organisations like ActionAid Nigeria, Oxfam GB Nigeria, the United Action for Democracy (UAD) and the Nigeria Labour Congress, Federal Capital Territory Council.

At a joint press conference in Abuja, all the parties were in agreement that the fuel subsidy issue was a wrong decision by government and called on government to immediately conduct a referendum on the appropriate economic direction for the country where issues such as subsidy removal, privatisation, and deregulation would be determined by the masses.

However, the Nigeria Extractive Industries Transparency Initiative (NEITI) said yesterday that the Federal Government spent N816.55 billion on fuel subsidy between 2006 and 2008.

The Executive Secretary of NEITI, Mrs. Zainab Ahmed, who made this disclosure yesterday in a presentation to the Senate Joint Committee on Petroleum Resources on oil subsidy, faulted the paying process through which the Nigerian National Petroleum Corporation (NNPC) gets paid for imported product directly without a recourse to the Petroleum Support Fund (PEF), which is set up for that purpose.



The Guardian