Why Prudent management of subsidy savings amid growing concerns is vital
With the government saving about N400 billion monthly from the removal of subsidy on Premium Motor Spirit (PMS) according to the Nigerian National Petroleum Company Limited (NNPCL), the legislature, especially at the state and local council levels, where proper checks and balances seem to be absent, must be alive to their responsibilities if Nigerians will indeed reap the mouthed benefits accruing from the policy, ONYEDIKA AGBEDO writes.
As Nigerians cry over the hardship occasioned by the removal of petrol subsidy exactly two months ago, government at all levels in the country are rejoicing for having more money in their coffers as a direct outcome of the policy. This is evident in the amount of money recently shared by the Federation Account Allocation Committee (FAAC) to the federal, state and local councils as June 2023 Federation Account Revenue.
However, as many wreathing in pains as a result of the policy struggle to adjust appropriately and move on with their life, they are also seriously concerned about how the money saved from subsidy removal would be expended to the benefit of all Nigerians. Mainly, they are bothered about the management of the fund across the states, where there seems to be no proper checks and balances, thereby giving room for monumental financial profligacy.
In January this year, the amount of money shared to the three tiers of government by the FAAC as Federation Account Revenue was N750.174 billion. In February, the revenue shrank to N722.677 billion. It went further down to N714.629 billion in March and N655.932 billion in April; but it sharply rose to N786.161 billion in May. Following the removal of petrol subsidy and interplay of other variables, it jumped to N907.054 billion in June 2023 and there are expectations of further rise in the months ahead as the government fine tunes the policy.
The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, had during a meeting with oil marketers in the country in February this year revealed that the Federal Government would save over N400 billion monthly from the removal of subsidy on petrol.
“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/litre.
“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400 billion of subsidy every month,” Kyari said.
Barely a month after the subsidy was eventually removed, the National President of the Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, told the Nigerians that based on his knowledge of the industry, the government was making huge savings as a result of the policy.
“Right now they (the government) are making money. At least with this removal of subsidy, the government has raked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before,” Okonkwo said.
Speaking during the recently concluded 22nd edition of the NOG Energy week in Abuja, Kyari confirmed that the policy would free up funds for developmental projects, assuring that Nigerians would reap its dividends in due course. He said: “Subsidy was like smoking our currency. Like you light a cigarette and smoke off billions daily. That’s how I describe it. But all that is gone now. We at the NNPCL welcome the bold move of Mr. President to end subsidy payouts.
“Rather than using all our money to pay subsidies, we now have more funds to carry out other critical investments needed to unlock the economic fortunes of the petroleum industry. A lot of options are on the table and we are working with the Presidency to give Nigerians the best dividends.”
Governor Hope Uzodinma of Imo State, who is also the Chairman of the Progressives Governors’ Forum, made a similar claim recently while addressing journalists after a meeting of the All Progressives Congress (APC) Governors in Abuja.
“We are aware that the result of the removal of fuel subsidy will increase the volume of money that would be received by us during the Federation Account meeting and we are working with Federal government to ensure that the proceeds of that FAAC will be utilised in a manner that the citizens of the country are happy, the Labour happy, we also the practitioners happy.
“The current hardship occasioned by the price increase on food, petroleum products and cost of living is being addressed. The sub-National government is working with the Federal Government and tomorrow there would be National Economic Council to discuss further on that,” Uzodinma said.
A South West socio-political body, Yoruba Ronu Leadership Forum, however, sees the promise of judicious utilisation of the revenue as mere talks designed to hoodwink Nigerians into thinking that a prosperous future for all was imminent against the current situation where the political class lives large at the expense of the poor masses.
The forum, in a recent statement by its President, Akin Malaolu, faulted the removal of petrol subsidy. The group noted that the policy was tantamount to putting more money in the hands of state agents, describing the development as very risky.
“The risks involved are as follows: That over the years, governors, local council chairmen have not shown their desire to utilise resources for developmental purposes. Insecurity is still pervasive; low understanding of what democracy is all about is evident. Abuses are common, unfinished projects litter every state of the federation.
“A case in point is Kano State where in out of its 18 million population, the number of industries are 58, number of mosques are 350,000, while roaming children between the ages of five years and 15 years are in the population of three million plus. These scenarios can be representative of almost all the northern states.
“The scenarios we have shown were collected from various statistics showing negative economic development and growth in almost all the states of the federation. We therefore do not believe that growth and development will come through the present approach of putting more money in the hands of state agents and the expected delivery would not show up. Leakages are therefore going to erode any government desires to encourage growth nationwide,” Malaolu said.
In a recent letter to President Bola Ahmed Tinubu made available to the media, the Socio-Economic Rights and Accountability Project (SERAP) also expressed fears concerning the management of the revenue accruing from subsidy removal.
It urged the president to publish expenditure of about N400 billion so far saved from removal of petrol subsidy, imploring him to provide details of how subsequent savings would be spent, including specific projects and mechanisms in place to ensure that the funds are not embezzled, misappropriated or diverted into private pockets.
The letter signed by its deputy director, Kolawole Oluwadare, said: “Your government has a legal responsibility to ensure that the savings from the removal of subsidy on petrol are spent solely for the benefit of the 137 million poor Nigerians, who are bearing the brunt of the removal.
“Prevention of corruption in the spending of savings from the removal of subsidy on petrol and preventing and addressing the challenges caused by the removal are serious and legitimate public interests.”
According to the organisation, Nigerians have the right to know how the savings are spent. The group stated that publishing details of the spending of the savings would promote transparency, accountability and reduce risks of corruption in the spending of the funds.
“Opacity in the spending of the savings from subsidy removal would have negative impact on the fundamental interests of the citizens and the public interest.
“Unless the government is transparent and accountable to Nigerians in how it spends the savings from the removal of subsidy on petrol, the removal will continue to undermine the rights of Nigerians and increase their vulnerability to poverty and social deprivation.
“Transparency would ensure that the funds saved from the removal of subsidy are not diverted into private pockets, and increase public trust and confidence that these savings would be used to benefit Nigerians.
“The implementation of the National Social Safety Net Programme (NASSP) and spending on the programme has been mostly shrouded in secrecy,” the group added.
Former presidential candidate and founding National Chairman of the All Progressives Grand Alliance (APGA), Chief Chekwas Okorie, also harped on the need for transparency in managing subsidy savings.
Speaking with The Guardian, he said: “Subsidy removal, as you pointed out, has put more money in the hands of the government. We have seen that in the monthly allocation of revenue since the subsidy was removed. There are so much money going to the states and local councils.
“Now, the Federal Government has looked into the issue of cash transfer to vulnerable Nigerians and seems to agree that it is better managed by the states; that is in terms of the states looking into the existing register to determine whether it actually reflects those who are sufficiently vulnerable to benefit from it. If that is done, what is important is that such transfers must be transparent and beneficiaries should know that they are receiving something and if they don’t get it there must be an avenue to complain that what was promised them didn’t come.
“Aside from that, most of the local councils in this country are not functioning at all. What those of them that receive allocation at all do is to get it, share it and go about their private businesses. Just like states make budgets, local council should make budgets and publish their budgets. The people in each local council should know what to expect from the increased revenue accruing to the local council and the same applies to the state.
“In the case of the states, making sure that those who are owed are paid their arrears and paying retirees their gratuities and pension should be vigorously pursued alongside the provision of infrastructure. These are their entitlement that had been withheld for years because of the excuse of paucity of funds. Now funds are being made available and there is no variation in the arrears. So, let them clear the arrears. When they clear those arrears, there will be more money in the hands of the citizens and they will be able to attend to their immediate needs. That is my idea of getting this subsidy thing functional.”
Okorie also advocated for the publication of details of monthly allocations to states and local councils as was done in the past. He added: “The need for transparency cannot be over emphasised. From the time of Ngozi Okonjo-Iweala as Minister of Finance, it had been the style to publish allocations to both states and local councils. It looks like that practice has slowed down. They have to reintroduce that publication so that people will know what their states and local councils are receiving, which when added to the Internally Generated Revenue (IGR) should give them the type of service delivery they deserve.
“I’m yet to see a local council that gets its full allocation once it’s paid. The state governments have always resisted the issue of autonomy of the local councils. The state governments have also resisted the issue of the autonomy of the state assemblies. If the state assemblies are autonomous, they will provide their checks; it is their oversight function. They are the ones that can call the executive arm to order. Even if the governor has immunity, commissioners don’t have immunity; ministers don’t have immunity. Other government appointees don’t have immunity. So, the legislative arm of government has been provided by the constitution as an instrument to check the executive arm from certain excesses and they do that on behalf of the people.”
He also urged Nigerians, as watchdogs, to speak out on issues that concern them. “For instance, if the government claims that it has reconstructed a road and that road is not there, they should speak out. That will allow the relevant committee of the state assembly to call the ministry concerned to order. This way, even though 100 per cent accountability level cannot be achieved, the pilfering that is going will reduce to a great extent.
“Every new government that comes will tell you that they have discovered a certain number of ghost workers. And they have never published the names they discovered as ghosts and the accounts they were using to siphon money. Government’s money is not paid cash. So, when you say you have discovered 1000 ghost workers, publish their identities so that the public will know,” he added.
He tasked the legislators at the local council and state levels to be alive to their duties, saying the failure of the local council or state government amounts to their own failure. “It is when they fail in their duties that the government can be said to have failed. And it is by pandering to the whims and caprices of the executive arm of government as if they were appointed by the governors or local council chairmen that things go wrong. That is when governors decide who becomes speaker and who doesn’t, giving room to the instability and mobility of speakers we see in some states. It’s so embarrassing and scandalous. So, they have to take up their constitutional duties more seriously, knowing that the failure of a state government begins with the failure of the legislature,” Okorie noted.
Speaking in the same vein, a public affairs analyst, Jide Ojo, noted that the issue of transparency and accountability has to be taken beyond parroting it this time around.
His words: “It has to be institutionalised and by institutionalising it there has to be some matrix to guide and ensure proper reportage of how the expenditure is done. There are institutions that are supposed to hold the government or the governors as the case maybe to account. One of them is the legislative assembly, which has the oversight function of the executive. Unfortunately, we have a very docile and pliant assemblies that do not want to exercise their powers or rather would want to compromise and not do their work the way it should be done. The whole essence of oversight of the Ministries, Departments and Agencies (MDAs) is to ensure that there is proper usage of the resources.
“Aside from the legislative assembly, you also look at the Auditor General of the states. The reason the office of the Auditor General is statutory just like that of the Accountant General is because the two offices are meant to act as watchdogs on the expenditure and disbursement of resources of the state. The Commissioner for Finance gets the allocation on behalf of the state but the office of the Accountant General exists to ration out the resources. So, even if a budget is passed, it will take the office of the Accountant General to share the resources according to priorities. But the office of the Auditor General exists to now crosscheck what the office of the Accountant General has done with regard to the disbursements.
“These are statutory bodies. You could see that at the national level, every year the Auditor General submits report to the Public Accounts committee of the National Assembly, which is supposed to look at all the queries and expenditure. But the Public Accounts Committee of the National Assembly has become a burial ground for all those reports. So, unless we strengthen the office of the Auditor General both at the centre and the states to play their statutory roles in a way that they will be able to blow whistle on any financial infractions, it might be very difficult to achieve accountability and transparency in government.”
Ojo also charged the civil society and the media to heighten their demand for transparency and accountability in government.
“Many journalists shirk in their responsibility to do thorough investigative journalism; the primary focus has been more at the federal level. What about the states? Many of the stories we read in the papers these days are like press statements. The Chief Press Secretary to a governor will issue a statement and there will be no background checks before publishing the statement. An instance is the disputed issue of social register. The states want to build their own register but the Federal Government said the states made input in the building of the social register. It will take a serious minded media organisation to dig into the manner of the social register the country has and the beneficiaries. Can we see the list? “Now, these governors want to do their own conditional cash transfer to vulnerable Nigerians. It will be interesting to see what manner of registers the states will have and if the beneficiaries are going to be paid digitally through their bank accounts or cash, which is subjected to a lot of opacity and fraud. So the media has a role to play.
“The civil society organisations operating across the 36 states and even community-based organisations have the constitutional responsibility of holding government to account. Section 22 of the constitution is not there as a window dressing,” he added. Ojo expressed disaffection with the state Houses of Assembly for what he termed “the dereliction of duty”, describing many of them as rubber stamp.
He added: “They are worse than the federal legislature. The good news is the financial autonomy that the administration of former president Muhammadu Buhari gave to the states, which has undergone two alterations, during the fourth and fifth alterations of the constitution in 2018 and 2023. With financial autonomy, any serious state House of Assembly that wants to perform should be able to because the Assembly will not be beholden to the state governor. Their funding will come as a first line charge on the consolidated revenue fund of the state. So, that should enable them to exercise their independence and to discharge their oversight functions without let or hindrance. So, they can put their feet on and tell the governor that they want to be carried along in the disbursement of state fund.
“However, the legislators must not see the financial autonomy as a means to enriching themselves. Imagine the N110 billion that the National Assembly has purportedly amassed for itself comprising N70 billion to provide furniture and other office accessories and N40 billion for the procurement of official cars. This kind of allocation is not the intendment of the 2010 constitution alteration to give financial autonomy to the National Assembly. So, when the state assemblies start seeing financial autonomy as a means to enriching themselves at the expense of the suffering masses, then there is a problem. The whole intendment of giving financial autonomy to the state House of Assembly is to empower them to perform their role of legislation, oversight and representation in an independent and autonomous manner. So, if they are able to do that, even in a situation where the governor may want to punitively remove the Auditor General or the Accountant General, they can resist that, because these are institutions that have been put in place to ensure accountability and transparency in governance.”
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