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High Tension As Delegates Discuss Removal Of Fuel Subsidy At Confab  

The on-going National Conference in Abuja witnessed a heated session on Monday, 2nd June, 2014 as delegates spoke either in support of or against the complete removal of fuel subsidy as recommended by the Committee on Public Finance and Revenue.

Each party in the debate spoke with passion on reasons the Federal Government should either keep subsiding petroleum products for the public or why subsidy was meant to serve the economic interest of just a handful at the expense of the majority.

The Committee, headed by Senator Adamu Aliero, had stated in its report that subsidy on petroleum products was an avoidable major financial burden the nation has been made to bear.

It said between 2006 and 2007, subsidy accounted for 30 percent of government expenditure which translated to 118 percent of capital budget and 4.18 percent of the Gross Domestic Product. 

It was also revealed that subsidy payment of N2.527 trillion in 2012 and 2013 averaged N1.263 trillion per annum and described it as “a burden too heavy for the nation and its populace.”

The Committee stated that the situation was anomalous and encouraged smuggling; and that government resources which should have been used to undertake more developmental projects were being spent on subsidy.

It argued that subsidy removal “will most certainly ensure product availability at all times and significantly mitigate illicit cross-border activities.”

It was the Committee’s position that the poor and the rural dwellers to whom the subsidy scheme was initially targeted were not reaping the benefits; and that removal of subsidy would encourage investments in refineries and the downstream sector generally.

Those who argued against the removal said since constant power supply in the country was still a mirage; government should first fix all the sick refineries for local production of petroleum products before removing the subsidy.

They observed that criminal activities would increase nationwide if the removal was carried out since majority of artisans who rely on small power generating sets to do their business would be out of work.

However, those in support of the removal of subsidy also presented appalling situations of wastages and high level corruption among both the fuel importers and certain government officials.

They argued that continuous subsidization of fuel would amount to deliberate effort to enrich a few Nigerians at the expense of others; and that what was advisable would be to ensure judicious use of funds accruing from the subsidy removal.

Professor Anya O. Anya in his contribution said it was unfortunate that the argument has been reduced to “I support subsidy or I oppose subsidy,” describing such argument as “over-simplification of a more complex issue.”

He said delegates needed to come up with a road-map in the area of having the crude oil refined in Nigeria.

Professor Anya demanded of the delegates to come up with “a comprehensive national plan for the withdrawal of subsidy,” such that people will not suffer at the end.

He suggested a phased withdrawal that should follow a comprehensive overhaul of the system with the requisite infrastructure in place such that would make the subsidy issue completely irrelevant and unnecessary.

Final decision on the debate would be taken on Tuesday, 3rd June, 2014, when the Conference in the Committee of the Whole would consider each of the recommendations clause by clause.

The Committee also recommended that in order to enhance accountability, transparency and avoid mistrust between the three tiers of government, it has become absolutely necessary to have Accountant Generals of the Federation and that of the Federal Government.

Consequently, the Accountant General of the Federation would manage the accounts of the federation while Accountant General of the Federal Government would handle the finances of the Federal Government.

It was observed by the Committee that in the 1970s, budgetary allocations, up to 70 percent, were always in favour of capital expenditure; a situation it said enhanced economic development; but that the situation has since changed. 

In the last 10 years, it said approximately 73 percent of the annual budgets have been devoted to recurrent expenditure leaving a mere 27 percent for capital.

The committee remarked: “The present budget mix is unacceptable as no economy can grow with such a paltry allocation for capital and still be expected to provide vital infrastructure and social amenities for the populace.” 

It also frowned at situations where budgets are submitted to the National Assembly and thereafter, the crude oil benchmark is subjected to upward reviews, thereby increasing the size of the budget.

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