Following the disclosure yesterday that the federal government paid N18.397 billion in subsidy per day by the minister of finance, budget and national planning, Zainab Ahmed, chairman of the House of Reps Committee probing the subsidy regime, Hon Ibrahim Aliyu, has said the figures may have been overblown.
The minister had also said that a total sum of N6.210 trillion had been paid as fuel subsidy to independent oil marketers from 2013 to 2021.
She made the disclosures before the House of Representatives ad-hoc Committee investigating the subsidy payments regime from 2013 to 2022 led by Hon. Ibrahim Aliyu.
But Hon Aliyu questioned the figures behind subsidy payment, saying there was no due diligence on the part of government to arrive at true consumption figures.
The minister had said: “First of all, starting from the parameter that is used for the assessment of subsidy, especially for 2023, we used information as provided by NNPC and regulator. And for 2023, the projection is that the average daily truck-out will be N64.96 million litres per day; that is about 65 million per day, using an average rate at open market rate of N448.20k and then a regulator pump price of N165 per litre.
This gives us an average under recovery, that is, the difference between N165 and 448 of 283.2. So just multiply the amount of litres per day, the open market exchange rate of naira to the dollar and then the gap between the pump price and open market price; the total amount of subsidy per day is N18.397 billion per day. So, if you are projecting for the full year from January to December, it will be N6.715 trillion. If you are projecting for half a year, it will be 50 percent of that – N3.375trillion, and I said earlier, on the recommendations that we sent to Parliament for consideration on MTEF in half year, that will be N3.375 trillion.
“Fuel subsidy is the difference between the pump price which is now fixed at N165 and the landing cost which we are projecting at an average of N448 per litre in 2023; even now the cost is around that.
“So, the PMS subsidy we are carrying today in the nation is around N283 per litre.”
The minister, however, said that the ministry paid the sum of N1.774 trillion from 2013 to 2016 while the rest came under PMS under-recovery by the NNPC Limited.
She explained that the federal government is paying the total sum of N18.397 billion as subsidy per day.
The chairman of the ad-hoc committee, Hon Ibrahim Aliyu, picked holes in NNPC’s deduction from source the sum of N1.66 trillion against the sum of N1.15 trillion paid to oil marketers in 2021.
He also contested the formula for the computation of subsidy payments by the minister, saying they may have been overblown.
The committee therefore demanded documentary evidence of the payments.
He said: “The N6.7 trillion required for 2022, why I’m disturbed is because the 2023 financial year is approaching by September, we will be expecting Mr. President’s budget submission, and the MTEF is already before the National Assembly.
“You see, if you look at the latest average daily truck-out quantity, N64,964,400 in 2012, there was a report and the total consumption was put at 31,500, so it’s very difficult to imagine how you can have a near 100% increment in consumption within a period of 10 years.
“And then going by the permutations or calculations, Honourable Minister, if you are using a 42,000 litre-capacity truck, if you divide it by the 64,964,400 litres, you arrive at 1,547 trucks daily. And if you take an average, simple division by 37 states including Abuja, you have 41 trucks of 42,000 litre-capacity given to those states, maybe my own state being a smaller state in terms of consumption may be requiring less, maybe 10 trucks.
“So, what I’m saying in essence, minister, we are talking of daily consumption, Monday through Sunday and Monday again, no public holidays, in fact, during COVID-19 when there was lockdown and limited movement, the consumption rate remained the same. So, I wondered how the Ministry could accept this kind of figure. You see, it’s difficult to believe.
“If you look at the subsidy itself, who is it for, is it for the common man? This subsidy is for me, you and some of us that own cars or motorcycles, but subsidy is not for the common man that only needs a few litres to go back to the farm.
“But to be honest, this figure is overblown and I think the Ministry should have done due diligence to be able to arrive at a relatively acceptable consumption rate,” he said.