FG spent N13.7trn on fuel subsidy in 15 years – NEITI

The Federal Government has spent N13.7 trillion ($74.386 billion) expended on fuel subsidy in 15 years (2005 -2020), the Nigeria Extractive Industries Transparency Initiative (NEITI) disclosed.

The disclosure is contained in a report the agency submitted to the House of Representatives ad-hoc committee investigating the fuel subsidy regime between 2013 and 2022.

The documents presented by

Ogbonaya Orji, NEITI’s executive secretary to the committee showed that the subsidy payments in 2005 were N351 billion ($2.66 billion), N219.72 billion ($1.70 billion) in 2006, N236.64 billion (1.89 billion) in 2007, N360.18 billion (3.03 billion) in 2008, N198.11 billion ($1.60 billion) in 2009 and N416.45 billion ($2.76 billion) in 2010.

In 2011 the payment was N1.9 trillion ($12.18 billion), N690 billion ($4.34 billion) in 2012, N495 billion (3.11 billion) in 2013, N482 billion (2.92 billion) in 2014, N316.70 billion (1.62 billion) in 2015, N99 billion ($0.39 billion) in 2016, N141.63 billion ($0.44 million) in 2017, N722.30 billion (2.36 billion) in 2018, N578.07 billion (1.88 billion) in 2019 and 134 billion (0.37 billion) in 2020, respectively.

However, in May 2016, the Nigerian National Petroleum Corporation (NNPC) took over, making deductions from the sale of domestic crude.

Orji in the report stated that subsidy payment expected from NNPC in 2018 was N2.294 trillion, including subsidy of N722.257 billion, N138.945 billion for pipeline repairs and management cost, N28.329 billion for crude and product losses and N998.285 billion being balance that NNPC should have remitted; actual remittance stood at N897.922 billion leaving outstanding (unremitted fund) of N100.363 billion for 2018.

For 2019, the sum of N2.145 trillion comprising of subsidy of N518.074 billion, N126.664 billion for pipeline repairs and management cost, N31.844 billion for crude and product losses and N1.498 trillion being the balance that NNPC should have remitted; actual remittance stood at N821.563 billion leaving outstanding (unremitted fund) of N170.675 billion for 2019 were due for payment.

Read also: Nigeria’s N3trn fuel subsidy in 2022: Who will be more subsidised?

Also, in 2020 payment of subsidy worth N133.74 billion, N54.49 billion for pipeline repairs and management costs, N133.06 billion for crude and product losses.

The report further indicated that Domestic Crude Allocation for 2018 was 107.63 million barrels, out of which 13.581 million barrels (13%) was delivered to the refineries while 94.045 million barrels (87%) was exported under the direct sales and direct purchase (DSDP) arrangement.

Orji said: “Within the transaction rules, NNPC is expected to comply with the 90 days payment terms in remitting the proceeds of federation crude. NEITI’s report examined the pattern and consistency of remittance of sales proceeds into the designated bank account (CBN/NNPC crude oil and gas revenue Naira account) by the NNPC.

“It was evident that the NNPC consistently defaulted on the sales terms of ninety (90) days. The delays ranged from 21 to 55 days. The opportunity cost of this monthly delayed remittance by NNPC was N17.5 billion.

“NNPC deducts from the sales proceeds of domestic crude oil for under-recovery (subsidy on PMS), payments for pipeline repairs and maintenance and payments for crude and product losses. Although amounts were appropriated for these expenditures in the approved budget for the year, however, the amounts deducted by the end of the year were over and above-appropriated sums”.

He recommended that periodic audit be made to verify the utilisation of the deductions made, saying the government should consider the options such as allocating specific crude volume to NNPC to cater for their operational costs.

“The first question was if we think that subsidy should stay and why? All our reports are widely distributed and they are on our website, NEITI’s position, not my position over the years has been that subsidy should go. It was a recommendation. It’s advisory to the government.

“We are not in the position to decide when and how it should go because you are also aware each time we make submissions that there are other contending issues that are beyond NEITI’S consideration. There are issue of security, welfare of the staff, citizens and all not but NEITI’S position has been that the government should do away with subsidy.