Nigeria fostering corruption through petrol subsidy, says Policy Alert

A civic society organisation, Policy Alert, has condemned continuous payment of subsidy on premium motor spirit (PMS), insisting that the country is fostering corruption through the scheme.

While the Minister of Finance, Zainab Ahmed, had said only N443 billion is presently available in the 2022 budget for subsidy from January to June, the Nigerian National Petroleum Company (NNPC) presented to the ministry, a request for N3 trillion as fuel subsidy for 2022. “What this means is that we have to make an incremental provision of N2.557 trillion to be able to meet the subsidy requirement, which is averaging about N270 billion per month,” she said.

Decrying the development, Executive Director of Policy Alert, Tijah Bolton-Akpan, said while the government has sent a supplementary budget to the National Assembly in which provision is made for subsidy payments, statistics on actual consumption remained elusive.

The Minister of State for Petroleum Resources, Timipre Sylva and the NNPC had embarked on a campaign against smuggling in an attempt to reduce daily consumption of PMS. The development had at some point, reportedly reduced the consumption level below 50 million litres daily.

With renewed subsidy payment, NNPC stated that the country’s consumption was over 100 million litres. Bolton-Akpan, however, noted that the consumption disparities were indications of lack of transparency and accountability.

He said: “We are discussing the removal of a subsidy that no one knows for sure how much it amounts to. How much exactly will you be removing when you eventually come around to deregulate?

“The problem really is that because corruption has dogged all efforts at fixing our refineries over the years. It defies every logic that we could be a super-producer and still be here talking about the economics of spending nearly a trillion naira in just over two years for just freighting refined products back home for domestic consumption. How can you be a yam titleholder and be depending on other people to eat pounded yam?”

The Guardian had reported that at least, N861 billion was spent by the country in 26 months as freight cost for the importation of petroleum products, especially Premium Motor Spirit (PMS) totalling about 41 billion litres, as the nation’s four refineries remain comatose.

By importing, instead of refining petroleum products in the country, the Chief Executive Officer (CEO) of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, had earlier informed that the country spends at least N17 as freight cost on every litre of petroleum product imported.

Policy Alert noted further that Nigeria’s energy problem isn’t about subsidy but about the corruption that has rendered refineries obsolete.

“It is about the cabal that has been feeding fat on subsidy payments for dud or inexistent refined products and a government that has refused to bring these known criminals and economic saboteurs to book. It is about an NNPC that has over the years been playing abracadabra with domestic crude allocation.

“It is about regulators and security agencies turning a blind eye to diversion and smuggling of products and poor Nigerians taking the rap for it at the pumps. It is about our bad road network and poor electricity supply situation that is increasing the number of litres of fuel spent on public transportation and running generators by businesses,” Bolton-Akpan said.

He insisted that the country is “subsidising a fat lie,” stressing that the three trillion naira would be cutting a huge hole in the federal budget.

Bolton-Akpan said: “While I agree that this is not sustainable, we must deal with the issue at the level of first principles. Address these fundamentals and we might just realise that there is really little or nothing left to subsidise.”

Beyond these, he stated that Nigeria’s energy crisis has been more about the denial of the energy transition, adding that the country is still banking on resource-backed loans to fix the refineries; crude oil that has not yet been drilled, money still in the ground, while oblivious of the energy transition and the possibility that the country could wake up one morning and find no use for oil resources.

Bolton-Akpan stated that the budget funding challenge must also be tied to the refusal to diversify and wake up from oil-induced economic stupor.