The Federal Government has transmitted the 2023-2025 Medium-term Expenditure Framework and Fiscal Strategy papers (MTEF/FSP) to the National Assembly ahead of the 2023 budget presentation next month.
Zainab Ahmed, minister of finance, budget and national planning, said this when she appeared before the House of Representatives ad-hoc committee investigating the petroleum subsidy regime in Nigeria from 2013 to 2022.
Ahmed said if subsidy on petroleum products runs from January to December of 2023, it would amount to N6.715 trillion but what has been sent to the parliament for consideration in the MTEF is half a year, which put it at N3.357 trillion.
She said: “For 2023, the projection is that, the average daily truck out will be N64.96 million litres per day, that is about 65 million perday, using an average rate at open market rate of N448.20k and then a regulator pump price of N165 per litre. This gives us an average under-recovery, that is the difference between N165 and 448 of 283.2.
“So just multiply the amount of litres per day, the open market exchange rate of naira to the dollar and then, the gap between the pump price and open market price, the total amount of subsidy per day is N18.397 billion per day.
“So, the PMS subsidy we are carrying today in the nation is around N283 per litre, that is what we are carrying. So, it is the difference between the pump price and the landing cost of petroleum products in the country.”
The finance minister lamented that the N3.35 trillion in the approved MTEF presently before the National Assembly for consideration, could have been funds that would have been applied to other vital sectors of the economy such as health, education.
“We are carrying a burden, that as citizens we have to access whether it’s beneficial for us to continue to do so.
I want to move on to the document that has been circulated to the committee. In response to your letters to give information to the committee, for detailed information on petroleum subsidy in Nigeria for the period 2013, to 2022.
“I’m going to address issues as highlighted by the lawmakers in the letters sent to us. Deduction of PMS under recovery shortfall by NNPC for the period 2013 to 2022 we are reporting that there’s a total sum of N4.436 trillion, which was deducted as PMS under-recovery by NNPC for the period January 2013 to December 2021. In the report, it shows the amount that was deducted during the period under review.
“Also in the report is the summary of subsidy that has been paid to independent oil marketers from 2013 to 2016 and in this report, we are reporting the sum of N1.774 trillion has been paid to independent oil marketers as petrol subsidy from 2013 to 2016. The total sum of N6.210 trillion was expended from PMS under-recovery by NNPC and payment to independent oil marketers from 2013 to 2021.
“On the funding of subsidy payments to independent oil marketers for 2013 to 2016, payments that have been made to them were directly from domestic excess crude account through the deduction of Sovereign Debts Instruments (SDI). They are negotiable short-term instruments that were issued by the government at the time to enable marketers access financial support from their banks for the importation of PMS.
“The instrument was approved by the then president in 2010. It is also important to note that we have instances where funds are transferred from the consolidated revenue fund to the domestic excess crude account for subsidy payments. For 2015, N31 billion, again same year N106.1 billion was transferred from the CRF in another instance to the domestic excess crude account.
“In 2016 there was another transfer of N40 billion from the CRF to same account for the purpose of settling PMS subsidy to oil marketers. There was also the sum of N413.363 billion which was provided through short-term funding by the central bank of Nigeria.
Ahmed told the lawmakers that “with respect to transfer of funds by NNPC and its affiliates to the treasury single account the ministry has obtained evidence as enclosed in annex 9 of the report. The ministry is also not in the position to provide a statement of account of NNPC and its affiliates. The parliament should ask for this directly from them.”
The lawmakers, however, raised issues with the minister’s submissions with a member of the committee.
Isiaka Ibrahim questioned the rationale behind NNPC’s deduction from the source the sum of N1.66 trillion against the sum of N1.15 trillion paid to oil marketers in 2021, leaving an excess of N500 billion by fiat.
Consequently, the committee requested for documentary evidence of the beneficiaries of the N500 billion paid by the NNPC.
In his reaction, Ibrahim Aliyu, chairman of the committee, who contested the formula for the computation of the fuel subsidy, said: “Why I am disturbed for “the N6.7 trillion required for 2023, is because the 2023 financial year is approaching, by September, we will be expecting Mr. President’s budget submission, and the MTEF is already before the National Assembly.