Current Petrol Subsidy Regime Illegal, Says Senate

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 • NNPC should be prepared to explain to Nigerians who approved the subsidy for them and who appropriated it

Damilola Oyedele in Abuja   

The Senate yesterday said the current payment of N26 per litre to subsidise Premium Motor Spirits (PMS) by the federal government was illegal as the monies were not appropriated for by the National Assembly as constitutionally required.

The matter of subsidy returned to the forefront of national discourse recently in the wake of the lingering fuel scarcity, following reports that the landing cost of the product per litre, had increased to N171, while the official price remains N145.

The Group Managing Director of the Nigeria National Petroleum Corporation, Maikanti Baru, said six days ago that PMS was currently being subsidised with N26 per litre, due to government’s determination to retain the pump price at N145, despite the landing cost of N171. 

He outlined the cost, insurance and freight of the product to $620 per metric tonne, and that at the exchange rate of N305 to US$1, the landing cost was N171.

Baru put consumption at about 50 million liters daily but attributed the increase to hoarding of the product. 

The Vice President Yemi Osinbajo briefing journalists in Lagos recently, said the subsidy payments were being borne by the NNPC and not the federal government. 

The statement drew the ire of several stakeholders who said Osinbajo’s statement implies that the NNPC can spend monies without appropriation, despite being an agency of  the federal government, or that the corporation is independent of the government. 

The Senate joined the controversy yesterday when it declared that the said subsidy payments were not appropriated for, and therefore illegal. 

The Chairman of the Senate Committee on Petroleum Resources ( Downstream), Senator Kabiru Marafa, speaking at a news briefing yesterday said the Senate was determined to stop the payments which are illegal.

” At our slated investigative public hearing on the sector next week Thursday, NNPC and other stakeholders should be prepared to explain to Nigerians who approved the subsidy for them and who appropriated it? 

“There is complacency in the sector and sharp practices that must be stopped. They want to take us back to subsidy regime that has never been beneficial to ordinary Nigerians across the country. We cannot go back to such scam called subsidy which robbed the country of N10 trillion between 2006 and 2016. 

” Before we went on recess , I remember submitting on the floor of the senate that I am no body’s man or rubber stamp ,the same way I strongly believe that the Senate is not a rubber stamping platform for anybody or arm of government,” he said .

Marafa maintained that there must be transparency in the sales and importation of fuel, which he claimed began in 2015 under the current administration. 

“The current administration opted for the more transparent model of directing selling crude oil and purchasing refined products, instead of the model of swapping crude for refined products adopted by the previous administration,” he noted.

  • udofiapeter

    The Federal government is not truthful on this oil issue. Simple truth everybody knows. Is like corruption is rising to unprecedented level beyond what can be anticipated and is glaring in all sectors of our economy that is controlled by government.

  • FrNinja

    Baru is lying. The wholesale cost of refined petrol on world markets is 44 American cents per litre. That is 134 naira per litre. Lets assume cost of transportation and insurance is 10% that is 147 per litre landing cost. How did he get to 171.40 landing cost unless NNPC are adding their typical fraudulent margins ?? If truly they are bringing petrol into Lagos at 147 and pricing it at 171 then someone somewhere is making a bundle from dodgy NNPC accounting.

    They need to investigate Baru and NNPC.

    • You assumed the cost of transport and insurance then concluded that your assumption is final. Chai

      • FrNinja

        All the trading exchanges on AGO/PMS are indicating a landing price of 137-145 per litre in Lagos and Lome. How did Baru get to 171.40.

  • TDaniels2

    Time to disband the senate and entire NASS. They are unfit for purpose. How naive and incompetent the NASS members have been. They collected their share of the cake and went to sleep! They took their eyes off the ball! How did they think the price of petrol will remain the same when crude oil prices have been going up in the last 18 months while at the same time the Naira exchange rate continues to devalue! What coo coo land have they been living in? Not think of the corruption in the system, the foreign suppliers of refined products are not Father Christmas , so something has to give way!

  • Kelechi Chioma Onunka

    foouel subsideeeee…………..again.

  • ricky ifo

    The senate should please spare us all the drama and comedy.When have Buhari the self acclaimed alpha and omega and his hausa/fulani landlords and owner of the modern hell and slavery called Nigeria started listening to the opinion and voice of the senate in the abracadabra and confusion presently in the affairs of government in Nigeria.

  • Judith

    Forgive my ignorance, I thought subsidy had been removed when APC increased the price of fuel??? How many more lies are to be uncovered before the year ends. Has anybody noticed that Maina-gate has fizzled into thin air? Just like Babachir-gate. Ikoyi-gate, NNPC-gate, and all the other gates that that are waiting to be exposed. This administration is a disgrace to the simple virtue of TRUTH.

    • Your ignorance can be excused. Cost of crude hasn’t remained the same since May 2015, all countries have access to the same price of petrol and the price of petrol also fluctuates. If the price of petrol was fixed at 145/lt at at a time when landing cost was 131/133, it is only natural that adjustments will be made when the price of petrol goes up internationally

      • Judith

        Bottom line of my ignorance is that APC has no solution for ANY of the problems we suffer in Nigeria that they boasted they have solved or could solve…..

        • Bottom line is no government has control over price increase of petrol internationally. The govt can either apply subsidy when prices go up to sell at announced price or increase the price of fuel locally and transfer the burden to you and I. Which do you prefer? Analyse things critically and stop jumping to join the band wagon of APC has no solution for global events that no country controls

          • Judith

            Mr Sabi Sabi, I suggest you analysis this government critically and stop deceiving yourself that they have answers to the problems they cause. They came into power saying they would STABILIZE fuel prices obviously not knowing the dynamics of fuel pricing. They made several other grandiose promises, including the waging of a fake war against corruption. This is my grouse with this administration. To be clear, regarding fuel prices, a government should never make promises they cannot keep ESPECIALLY when the price of their main fx earner cannot be determined in isolation. I suggest you get off the bandwagon of attempting to defend the indefensible lies of this administration. Most sensible Nigerians now think for themselves and demand solutions and accountabilty. So please spare me the condescending attitude, I refuse to be deceived any further with the stupid lies of this administration. But if you wish to, it’s your prerogative. Next thing you will tell me is that I hate Buhari, abi???

  • tobias

    It would be interesting to see if the Senate is only during street dancing or are really serious to fight the subsidy battle to the end? I doubt it though.

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