5% fuel tax: Senate directs PPPRA to pay N634bn to FERMA

The Senate has directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to immediately pay the Federal Roads Maintenance Agency (FERMA) N634 billion.

The money, according to the Senate Committee on Works, represents the total amount PPPRA ought to have paid as 5 percent fuel users charge between 2007 and 2015.

This, it said, was in violation of the 2007 FERMA Amendment Act, which stipulates 5 percent fuel Users Charge.

Chairman of the Committee, Kabiru Gaya, said: “From the rough calculation, FERMA is requesting PPPRA to refund N634.8billion. This amount is twice Ministry of Works budget for this year. So, it should be mandatory for PPPRA to refund the money or we will get a consultant to give us the exact figure because I know the figure will be more than this.”

The revelation came to the fore at the panel’s investigative meeting with stakeholders to find solutions to funding of Nigerian roads.

This is even as the minister of state for petroleum; MD, PPPRA; minister of state for works; Accountant General of the Federation have been invited at the committee’s next adjourned date of April 12 to explain their involvement on the matter.

But the head of operations, PPPRA, V.Z. Shidoh explained that implementation of the FERMA Act would lead to increase in fuel pump price.

While urging lawmakers not to see the pump price as revenue, Shidoh pointed out that efforts to implement the five percent charge was aborted after public protests in 2007.

“The implementation of this 5percent will lead to increase in pump price, because the pump price is not a revenue. It is a cost element meant for specific activities in a template. We are looking at the pump price as if it is revenue; it’s not revenue.

“The template is a proposal of PPPRA. The implication of implementing all those elements listed is that there will be more financial exposure to government as long as we are under regulation. Because any element that you add a value, it will automatically increase the pump price which Nigerians must pay,” he stated.

But this explanation did not go down well with the committee, as members wondered why PPPRA would implement 15kobo as Administrative Charge for every litre of fuel in line with the PPPRA Act, yet ignore enforcement of the FERMA Act.

Other members of the committee including Senators Mao Ohuabunwa, Biodun Olujimi, Barnabas Gemade faulted Shidoh’s submission, insisting that the charge is already captured in the current fuel price of N86.50 per litre.

Gaya said: “You don’t understand the Act. That is why you add that 5percent again on the price. And that is why you have the problem of people protesting against it. What you should have done is from the figure you put, the consumers should not be involved. Already, you have taxed the consumers. As you are deducting the 15kobo from consumers for the personal use of your staff, then you could have taken the money for the maintenance of the roads from the same money you are making. You are not going to add it to the consumers. That is what the law says”.

Refunding the money, he explained, would fix major Nigerian roads and fulfil one of the electioneering promises of President Muhammadu Buhari.

He listed some of the bad roads that need urgent attention to include: Kano-Abuja, Oyo-Ogbomoso, and Enugu-Onitsha Roads.

Meanwhile, the Pricing Template of PMS, seen by BusinessDay on PPPRA website on Thursday, March 24, 2016 indicates that the following amount is charged for every litre of fuel: Lightering Expenses N2.02; Financing 33kobo; Storage Charge N2; Landing Cost N71.49; Retailers N5; Transporters N3.05; Dealers 1.95; Bridging Fund N4; Marine Transport Average (MTA) 15kobo; Administrative Charge 15kobo, while Government Tax, Import Tax and Fuel Tax all attracted 0kobo respectively.

But while Ohuabunwa flayed the agency for violating FERMA Act since 2007 with impunity, Gemade accused it of being deeply involved in corruption. “Why should PPPRA pay billions in subsidy but fail to pay a legal fee to FERMA?” he asked rhetorically.

Earlier, Peter Odey Ibu, FERMA MD and Secretary/Legal Adviser, Richard Clark, pointed out that the agency was yet to collect a dime from PPPRA for the charge, adding that all attempts to inform it to comply with the Act were not heeded to.

They also presented a letter written by the former President Goodluck Jonathan, dated December 2015, urging directing appropriate agencies to commence implementation of the Act in order to provide additional funds for FERMA to improve the existing road conditions in the country.

OWEDE AGBAJILEKE