The Senate yesterday asked its committees to investigate how the Federal Government overspent the budgeted funds on fuel subsidy by up to N1.1 trillion since the beginning of the year.
About N240 billion was provided for the subsidies in the 2011 budget, but so far government agencies responsible for running the scheme have spent up to N1.3 trillion this year, the Senate heard through a motion moved by Senator Bukola Saraki yesterday.
The Federal Government has planned to stop the subsidies starting January, but this is facing criticism from labour unions, opposition politicians, lawmakers and many prominent people.
Ending the scheme would inevitably send petrol prices shooting up to about N150 per litre from N65 per litre.
In the motion co-sponsored by 13 other senators yesterday, Saraki said instead of spending N20 billion each month on fuel subsidy as budgeted, government spent up to N165 billion in one month alone in breach of the budget law.
Saraki said government has so far spent about N1.3 trillion on fuel subsidy this year, translating to 700 per cent above the budgeted sum.
He said reports by some prominent foreign economic journals and the Department of Petroleum Resources (DPR) has revealed how volume of fuel imported into Nigeria is inflated fivefold and then smuggled out and sold at higher prices in neighbouring countries after collection of large sums of money as subsidies from the government.
“Fuel subsidy as it is being managed today has become a risk to the entire economy. The implementation of the 2011 Appropriation Act will surely be in trouble waters if a variation of N1.2 trillion arises as a result of the level of expenditure incurred on fuel subsidy so far.
“Although N20 billion was set aside for subsidy on a monthly basis in the Appropriation Act 2011, in August 2011 the total figure expended was N165 billion of which the Nigeria National Petroleum Corporation (NNPC) was N88 billion and the Independent Marketers was N77.7 billion.
“In the first three months of the year both NNPC and the Independent Marketers did not exceed N62 billion monthly but within the last three months figures have ranged between N150 billion and N186 billion,” Saraki said.
Speaking on the motion, Senate President David Mark said the scheme has been hijacked by a cartel operating like Mafia. “Whatever they do is completely exclusive to them. They are very few and 95 per cent of us don’t know what is happening. It is important to investigate the subsidy to know whether or not it has achieved the aim it is set out to achieve,” he said.
Saraki said illegal expenditure on fuel subsidy diminished the power of the National Assembly as the organ of government responsible for appropriation of all public funds.
Debate on the motion soon became a debate on whether to remove fuel subsidy or not.
In his contribution, Senator Ibrahim Gobir (PDP, Sokoto) opposed the proposal to remove fuel subsidy.
“The issue here is about misappropriation of funds in the management of the subsidy fund… I believe that if we look at the management of the fund, it may even be that we don’t need to remove the subsidy after all,” he said.
But Senator Heineken Lokpobiri (PDP, Bayelsa) said the time has come for fuel subsidy to be removed, as “subsidy has only benefitted a few people and it has to go. The people that it is meant to help have not benefitted from it. In my area fuel is sold far above the N65 approved rate.”
After the debate, the Senate asked it committees on Downstream Petroleum Resources, Appropriation and Finance to investigate the whole fuel subsidy scheme and report back.
Last week, President Goodluck Jonathan wrote to the National Assembly on government’s intention to stop subsidising cost of fuel in the country. State governors have already announced their support for the plan.
The outcome of the investigation launched by the Senate yesterday is expected to influence the position that it would take on fuel subsidy.
Fuel subsidies have been a long-standing policy for Nigerian governments to ease the cost pressures on the people.
Ending the subsidy has been met with widespread optimism by international investors, who believe it is inefficient, fuels corruption and holds back the country from reforming its downstream oil sector, Reuters news agency reported.
But many Nigerians view the subsidy as the only benefit they get from living in an oil-rich state and say they would like to see the government cut costs from wealthy politicians before asking more money from subsistence workers.
About N240 billion was provided for the subsidies in the 2011 budget, but so far government agencies responsible for running the scheme have spent up to N1.3 trillion this year, the Senate heard through a motion moved by Senator Bukola Saraki yesterday.
The Federal Government has planned to stop the subsidies starting January, but this is facing criticism from labour unions, opposition politicians, lawmakers and many prominent people.
Ending the scheme would inevitably send petrol prices shooting up to about N150 per litre from N65 per litre.
In the motion co-sponsored by 13 other senators yesterday, Saraki said instead of spending N20 billion each month on fuel subsidy as budgeted, government spent up to N165 billion in one month alone in breach of the budget law.
Saraki said government has so far spent about N1.3 trillion on fuel subsidy this year, translating to 700 per cent above the budgeted sum.
He said reports by some prominent foreign economic journals and the Department of Petroleum Resources (DPR) has revealed how volume of fuel imported into Nigeria is inflated fivefold and then smuggled out and sold at higher prices in neighbouring countries after collection of large sums of money as subsidies from the government.
“Fuel subsidy as it is being managed today has become a risk to the entire economy. The implementation of the 2011 Appropriation Act will surely be in trouble waters if a variation of N1.2 trillion arises as a result of the level of expenditure incurred on fuel subsidy so far.
“Although N20 billion was set aside for subsidy on a monthly basis in the Appropriation Act 2011, in August 2011 the total figure expended was N165 billion of which the Nigeria National Petroleum Corporation (NNPC) was N88 billion and the Independent Marketers was N77.7 billion.
“In the first three months of the year both NNPC and the Independent Marketers did not exceed N62 billion monthly but within the last three months figures have ranged between N150 billion and N186 billion,” Saraki said.
Speaking on the motion, Senate President David Mark said the scheme has been hijacked by a cartel operating like Mafia. “Whatever they do is completely exclusive to them. They are very few and 95 per cent of us don’t know what is happening. It is important to investigate the subsidy to know whether or not it has achieved the aim it is set out to achieve,” he said.
Saraki said illegal expenditure on fuel subsidy diminished the power of the National Assembly as the organ of government responsible for appropriation of all public funds.
Debate on the motion soon became a debate on whether to remove fuel subsidy or not.
In his contribution, Senator Ibrahim Gobir (PDP, Sokoto) opposed the proposal to remove fuel subsidy.
“The issue here is about misappropriation of funds in the management of the subsidy fund… I believe that if we look at the management of the fund, it may even be that we don’t need to remove the subsidy after all,” he said.
But Senator Heineken Lokpobiri (PDP, Bayelsa) said the time has come for fuel subsidy to be removed, as “subsidy has only benefitted a few people and it has to go. The people that it is meant to help have not benefitted from it. In my area fuel is sold far above the N65 approved rate.”
After the debate, the Senate asked it committees on Downstream Petroleum Resources, Appropriation and Finance to investigate the whole fuel subsidy scheme and report back.
Last week, President Goodluck Jonathan wrote to the National Assembly on government’s intention to stop subsidising cost of fuel in the country. State governors have already announced their support for the plan.
The outcome of the investigation launched by the Senate yesterday is expected to influence the position that it would take on fuel subsidy.
Fuel subsidies have been a long-standing policy for Nigerian governments to ease the cost pressures on the people.
Ending the subsidy has been met with widespread optimism by international investors, who believe it is inefficient, fuels corruption and holds back the country from reforming its downstream oil sector, Reuters news agency reported.
But many Nigerians view the subsidy as the only benefit they get from living in an oil-rich state and say they would like to see the government cut costs from wealthy politicians before asking more money from subsistence workers.
