…transmitts 2023-2025 MTEF to NASS

By Gabriel Jonah, Abuja 

The All Progressives Congress (APC) led federal government on thursday transmitted the 2023-2025 Medium-term Expenditure Framework and Fiscal Strategy papers (MTEF/FSP) to the National Assembly ahead of budget presentation next month with a provision for N3.357 trillion for payment of fuel subsidy in 6 months

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 liters per day, that is about 65 million per day, 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 lamentated 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, amongst others.

“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 were deducted on 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 pms 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 government at 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 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. The details by the President for the approval of this funding is also attached to the document submitted to the committee,” she stated.

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 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 questioning the rationale behind NNPC’s deduction from 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 formular for the computation of the fuel subsidy, said: “the N6.7 trillion required for 2023, why I’m disturbed 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.

“You see, if you look at the average daily truck-out quantity latest, 64,964,400, in 2012 there was a report and the total consumption was put at 31,500, so it’s very difficult to imagine how you can have a near 100% increment in consumption within a period of 10 years.

“And then going by the permutations or calculations, Honourable Minister, if you are using a 42,000 litres capacity truck, if you divide it by the 64,964,400 litres you arrive at 1,547 trucks daily. And if you take an average, simple division by 37 (States) including Abuja, you have 41 trucks of 42,000 litres capacity giving to those states, maybe my own state being a smaller state in terms of consumption may be requiring less maybe 10 trucks.

“So, what I’m saying in essence honourable Minister, we are talking of daily consumption, Monday through Sunday and Monday again, no public holidays, in fact during COVID-19 when there was lockdown, limited movement the consumption rate remained the same. So, I wondered how the Ministry can accept this kind of figure. You see it’s difficult.

“You see, Nigerians are seeing all of us here, not only you on the other side, we in the Parliament as if maybe we are coming into agreement to short-change the country and Nigerians. if you look at the subsidy itself, who is it for, is it for the common man?

“This subsidy is for me, you and some of us that own cars or motorcycle, but subsidy is not for the common man that only needs few litres to go back to the farm. But to be honest, this figure is overblown and I think the Ministry should have done the due diligence to be able to arrive at a relative acceptable consumption rate.”