FG Spends N784bn On Fuel Subsidy In 2017 – Senate

THE Federal Government spent a total of N784 billion on fuel subsidy in 2017, a report submitted by the Senate Committee on Petroleum Resources (Downstream), has said.

The Senator Kabiru Marafa-led committee who submitted it findings yesterday describe the payment as fraudulent practices.

It placed the total surplus in the volume of petroleum imported in 2017 by both the Nigerian National Petroleum Corporation (NNPC) and the marketers at 5.9 billion litres, which, when multiplied by the N133 landingcost gives the sum of N784 billion.

“Since the NNPC said it is importing 30 cargoes of 30,000mt (minimum) of PMS monthly through the DSDP Scheme, it means NNPC is importing 30 x 30,000 x 1,341 = 1,206,900,000 litres of PMS monthly.

“Therefore, at an average consumption of 35 million litres/day, NNPC said the country consumes between 27-30 million litres/day from January to September and 30-40 million litres/day from September to December 2017.

-From the above figures, NNPC- monthly supply is supposed to last the country for about 35 days at 35 million litres/day,” the report said.

Continuing it said, -The marketers, on the other hand, received from government about $1,669,180,182 at Central Bank of Nigeria (CBN) rate of N305 to a dollar to import petrol from January to August 2017. This means that marketers were supposed to bring into the country about 3.8 billion litres of PMS at a landing cost of N133. In other words, marketers” supplies were supposed to serve the country for about 109 days at 35 million litres daily in 2017.

-The implication of this is that NNPC has five days surplus every three months, 60 days surplus in a year, added to the marketers” 109 days supply gives a total of 169 days supply surplus of 35 million litres/day or 5.9 billion litres. The question is, who consumes this surplus before we ask of subsidy?”

It also noted that shortages in the volume of fuel claimed to have been supplied by the NNPC and the independent marketers, were major factors that led to the scarcity of fuel nationwide.

According to the report, other factors that caused the scarcity, include;

  1. Withdrawal of marketers from importation because of the rise in the internatioml price of PMS occasioned by the rise in the price of crude oil and the effect of winter;
  2. The claims by oil marketers of non-payment of subsidy arrears by the government to the tune of N800 billion incapacitated their operations through the dearth of operational capital;
  3. Rumours of impending pump price increase by government in December or 1st week of January, that went viral on social media.

The report further noted that massive smuggling across the nation- borders was a major cause and added that NNPC claimed that about 4,600 trucks were smuggled out of the country during the crisis period.