Fuel Subsidy Removal: ‘N400bn Savings’ Raises Questions

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After more than 30 days of fuel subsidy removal, the controversy surrounding the projected ‘N400 billion savings’ has unsettled Nigerians.

In February this year, the Group Executive Officer of the Nigerian National Petroleum Corporation Limited (NNPCL) Mr Mele Kyari, stated that the country spends over N400 billion monthly on fuel subsidies.

He stated that the Nation would save the amount expended on subsidy after its removal.

In the first half of 2023, the country spent N3.35 trillion on fuel subsidies as contained in the 2023-2035 medium-term expenditure framework and fiscal strategy paper, MTEF & FSP.

It was reported that NNPCL attributed zero remittance to Federation Account Allocation Committee (FAAC) to fuel subsidy payment.

But with the removal of fuel subsidies in June this year, President Bola Ahmed Tinubu’s administration is yet to unveil the details of the savings from subsidy removal.

READ ALSO: NNPCL, Marketers Fuel Vessels Arrive Next Week – IPMAN

Nigerians are also yet to see the light with the $800 million world bank loan collected by former president Muhammadu Buhari’s administration for fuel subsidy removal palliative.

Hence, the citizens are grappling with the effect of subsidy removal, increasing the prices of transportation, goods and services.

Consequently, the Socio-Economic Rights and Accountability Project, SERAP, in a statement at the weekend, asked the government to release the details of the savings from fuel subsidy removal.

SERAP, like some Nigerians, are apprehensive about the projected savings from fuel subsidy removal.

“SERAP is concerned that the savings from subsidy removal may be embezzled, misappropriated or diverted into private pockets”, the group stated.

No wonder Daniel Bwala, the spokesperson for the Atiku-Okowa Presidential Council, said that Nigerians are suffering because of the poor implementation of the subsidy removal.

He noted that Tinubu’s administration should put measures in place to cushion the subsidy removal effects.

“I think that the problem of the hardship Nigerians are experiencing from fuel subsidy removal stems either from premature removal or a removal without a broad-based plan for the cushion effect”, he wrote on his Twitter handle.

In an interview with DAILY POST on Monday, Dr Ayo Tariba, the Chief Executive of the Economic Associates, disclosed that there are no savings from the fuel subsidy removal because Buhari’s administration never found the funds to back the provisions.

He said the action of the past government led to a pile of unpaid debts for NNPCL.

“There are actually no ‘savings’ from subsidy removal because the Buhari regime never found the funds to back the provisions it made for subsidy in the budget, leading to a pile of unpaid debts to NNPCL”, he stated.

Also, an oil and gas expert, Dr Diran Fawibe said the President needs ministers in place for the fuel subsidy palliative to be effectively distributed.

Fawibe, the Chairman of International Energy Services Limited (IESL), noted that Tinubu had been warned not to allow anybody to squander the World Bank’s $800 million loan for fuel subsidy palliative.

“Government cannot shy away from providing a palliative for Nigerians.

READ ALSO: NNPC And Other Entities Involved In Fuel Subsidy Scam – Ex-Bauchi Governor, Yuguda

“It should be like a magic wand that the government will wave on the face of Nigerians. First, It is not the President that would distribute palliatives to Nigerians but the Ministers.

“The appropriate Ministries would work on the disbursement of the palliative, so we should allow the President to set up a system for effective distribution of the palliative”, he stated.

On his part, Idakolo Gbolade, Chief Executive Officer of SD & D Capital Management, said that Tinubu’s government should be given time to plan a comprehensive palliative package to cushion the effects of fuel subsidy removal.

He, however, stressed that the government must be transparent in its earlier life in order not to lose public trust.

He added that the government should kickstart the revitalization of the country’s refineries and seek ways of providing alternatives to fuel.

“The Federal government is presently in dialogue with the Labour Congress as regards the removal of fuel subsidy and the expected palliative that will be far-reaching.

“The government has to also project itself as accountable to the people and must be transparent in the early life of their administration.

“The government should use this period to provide a holistic approach to palliative issues and also ensure they set Nigeria on the path of prosperity again.

“The government should also ensure that government refineries are working optimally and seek ways of providing alternatives for fuel as well”, he said.

For Mr Kunle Olubiyo, the President of Network of Energy Reforms Nigeria, Nigeria Consumer Protection Network, the government needs to probe NNPCL and all involved in fuel subsidies in the past if the country wants to make headway.

He stated that the amount spent on subsidies in the past should be investigated, and the same thing should be done to the fuel consumption figure.

He claimed that the amount the government would unravel in the fuel subsidy probe would be overwhelming.

“We have looked at the entire fuel subsidy thing. We need to do a forensic overview of the fuel subsidy saga”, he said.

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