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NEITI: Nigeria spent over N13trn on petrol subsidy in 15 years

NEITI: Nigeria spent over N13trn on petrol subsidy in 15 years
September 09
07:24 2022

The Nigeria Extractive Industries Transparency Initiative (NEITI) says the country spent N13.7 trillion ($74.386 billion) on petrol subsidy payments from 2005 to 2020.

Ogbonnaya Orji, executive secretary, NEITI, disclosed this on Thursday when he appeared before the house of representatives ad hoc committee investigating the petrol subsidy regime from 2017 to 2022.

According to Orji, the agency started collecting data on subsidy payments in 2005, and the last report published in 2020 showed that the sum had been spent.

He said there was an urgent need for a national consensus on the management of the subsidy regime as it gulps more each year.  

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“Subsidy would continue to suffocate this economy and would not allow this economy to breathe because it is a payment that must be made, and then we do not also think that those expected to benefit are the beneficiaries,” he said.

Orji presented documents representing each year’s subsidy payments to the committee.

According to him, 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.

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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.

Speaking further, Orji revealed that within the transaction rules, the NNPC consistently defaulted on the sales terms of 90 days. 

He said the development had cost the country N17.5 billion in the same period.

“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,” he added.

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“It was evident that the NNPC consistently defaulted on the sales terms of 90 days. The delays ranged from 21 days to 55 days. The opportunity cost of these monthly delayed remittances 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.

“A periodic audit by the federal government to verify the utilisation of the amount deducted for pipeline maintenance and repairs should be undertaken. The government should consider the following options: Allocating specific crude volume to NNPC to cater for their operational costs.

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“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 other contending issues are beyond NEITI’S consideration.”

The NEITI boss, however, said issues of security, the welfare of the staff, citizens and all need to be considered, adding that the agency’s position has been that the government should do away with subsidies. 

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On his part, Sergius Ogun, a member of the committee, while giving his contribution, alleged that subsidy was a conduit pipe to siphoning money to fund elections.

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