President Muhammadu Buhari plans to totally remove fuel
subsidy and use the proceeds for the provision of free and compulsory
primary/secondary education across the country.
The administration is also said to be working on unbundling
the Nigerian National Petroleum Corporation, NNPC, to make it more efficient in
the production and delivery of products to Nigerians.
These proposals form part of the strong recommendations made
by the transition committee raised by Buhari to work out a blueprint for his
administration.
When asked if the proposal for total subsidy removal had
been discussed with labour, a source disclosed that members of organized labour
in the country were consulted by the committee and they made presentations on
what should be done over the matter. And that Labour is part of the decision
and have accepted the proposal of fuel subsidy removal.
“A committee is likely to be set up by the federal
government to work out the modalities of what is to be done in that respect.
“But the truth is that total removal of fuel subsidy has
been recommended with adequate provisions for palliatives on free education and
social welfare for the unemployed”, a member of the transition committee said.
The source also pointed out that unlike in the past, the
Buhari administration is considering the provision of free meals for students
to serve as incentives for them to enroll in school.
The source explained that the committee also recommended the
unbundling of NNPC to reposition the agency to serve the needs of Nigerians
better.
According to him, all refineries in Nigeria are to be made
to work at maximum capacity by the federal government to be able to deliver
adequate products to the consumers.
Corruption
He said that the era of allocating more crude than any
refinery in Nigeria can process was over, as it was discovered that the policy
encouraged corruption and diversion of funds.
In a tone that suggested that the Buhari administration
might probe the operations of the NNPC, the committee member further disclosed
that the federal government was set to block all channels of fund leakages in
the corporation.
He said: “The federal government is keen on plugging all
areas of leakages in the corporation and whoever must have caused them must be
made to account for such unpatriotic wastages. We don’t know whether that is
what you call probe or not”, he said.
It could not be established as at last night whether such
decisions of the officials were influenced by the planned beaming of search
light on the operations of the government agency.
FG to pay the controversial N160 billion subsidy claims
Meanwhile, hopes for resolution of outstanding subsidy
issues hampering normal supply of petroleum products across the country appear
kindled as the special investigation team on subsidy claims verification
recommends payment of the controversial N160 billion claimed by oil marketers.
As a result, bankers have resumed credit lines to the sector
while importation by marketers have resumed though it is still on cautious
notes.
The supply shortages witnessed across the country since last
month was as a result of a disagreement between the federal government and oil
marketers over the subsidy claims resulting in the marketers’ refusal to import
more products under the subsidy programme.
In the last week of ex-president Goodluck Jonathan’s
administration, the finance ministry had paid a part of the subsidy claims
totalling about N131 billion in the wake of the supply crises arising from this
disagreement.
The former Minister of Finance, Dr Ngozi Okonjo-Iweala, had
doubted the additional N160 billion claims ascribed to exchange rate
differential and interest rate charges on banks’ funding for the petroleum
products imports.
She had subsequently set up a special investigative team
made of representatives of Petroleum Products Pricing Regulatory Committee
(PPPRC), Central Bank of Nigeria (CBN), the Debt Management Office (DMO) and
the finance ministry to investigate the claims before she can approve the
payment.
The team couldn’t conclude their assignments before the
expiration of ex-president Jonathan’s government and exit of the minister,
hence validating the allegation of some of the marketers that the investigative
team was designed to provide escape for the ministry from the agreement they
had reached on subsidy payment. The marketers had also wondered why the setting
up of the team whereas this assignment has always been done by PPPRC without
any issues.
Return of confidence
Bankers who spoke to VanguardNews last week
said that their confidence was gradually returning to the oil marketing sector
which they had classified as ‘high-risk’ in the wake of the subsidy claims
disagreement, indicating that some of them have resumed granting loans to the
sector.
The disagreement had put about N300 billion banks’ risk
assets (loans) in danger of default, escalating the industry non-performing
loan ratio to almost 4.0 per cent with the worst performing banks hitting above
8.5 per cent aggregate and over 40 per cent on the oil sector. The industry red
line is 5.0 per cent at which any bank’s exposure would be dangerous and
unacceptable.
Top executives of the oil marketers’ associations told VanguardNews
that they have information that the investigative team has validated the
marketers’ claims in their report to the finance ministry two weeks ago.
However, they said that actual payment is waiting for the
settling down of President Mohammadu Buhari’s government, a situation which
they also said cannot last for too long otherwise the renewed confidence of
their funding banks may wane.
One of the marketers informed that following a meeting with
the permanent secretary, Ministry of Petroleum Resources two weeks ago, some of
them have begun importation of products on a low scale while helping the
Nigerian National Petroleum Corporation (NNPC) to distribute its stock to
lessen the supply crises. The focused cities are Abuja and Lagos which according
to him has been very successful.
He added that the agreement reached with the ministry was
just a palliative to welcome the new government of Mohammadu Buhari, adding
that eventually they will have to address the issue in a more lasting policy.
The marketers associations, according to him, are unanimous
in pushing for removal of subsidy, but probably they will recommend a phased
programme lasting not more than six months.
