Financial Energy Review
There is a strong indication Petrol Subsidy will remain till the year 2022 even with the the recent signing of the PIB into law and the Group Managing Director of Nigeria National Petroleum Corporation (NNPC), Mr Mele Kyari, had before now hinted that subsidy will stop immediately after the bill becomes law
Kyari has now said that the Federal Government will make provision for subsidy in 2022, Nigerian National Petroleum Corporation (NNPC) has said.
He disclosed this on Wednesday at a public hearing organised by the Senate Committee on Finance on the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
Although no provision was made for fuel subsidy in 2021, he informed the lawmakers that the government had begun a conversation with relevant stakeholders to exit the subsidy regime.
The NNPC chief, however, stated that the process may not be concluded anytime soon, hence the need to reintroduce subsidy in the 2022 budget.
On his part, the Chairman of the Senate Committee on Finance, Adeola Olamilekan, raised a concern about revenue generation to curb borrowing to fund the budget.
The lawmakers also want government agencies to equally focus on revenue generation as they do on spending the government’s money.
The Senate is holding a three-day public hearing on the 2022-2024 MTEF/FSP, as part of processes to prepare the 2022 budget.
MTEF sets parameters with which the budget is prepared, including the borrowing plan of the government as it proposes $57 per barrel as crude price and 1.88 million barrels daily oil production.
It could be recalled that on Wednesday last week, the NNPC boss had appeared before members of the House of Representatives Committee on Finance for a similar hearing on the 2022-2024 MTEF/FSP.
At the session, he disclosed that Nigeria would stop the importation of Premium Motor Spirit (PMS), popularly known as petrol, when the Petroleum Industry Act (PIA) comes into full effect, and when the Dangote Refinery kicks off operations.
Kyari, who also responded to questions on the Dangote Refinery, justified the Federal government’s equity share in the plant.
According to him, taking equity in Dangote Refinery was well thought out as the nation now has a venture that will ensure the production of millions of litres of petrol in the country.
The Senate yesterday accused Government Owned Enterprises of worsening the current dwindling revenues in the country by engaging in spending spree instead of remitting the appropriate funds into the federation account.
The Chairman of the Senate Committee on Finance, Senator Solomon Adeola, made the accusation on Wednesday at a public hearing on the 2022-2024 Medium Term Expenditure and Fiscal Strategy Paper organised by his panel.
Adeola noted with concern that big spenders like the Central Bank of Nigeria, and the Nigerian National Petroleum Corporation among others had yet to remit their operational surplus to the consolidated revenue fund account over the years.
He said, “In budgeting, some revenue generating agencies spend their revenue hiding under the disguise that what accrued to them is not enough for them to carry out their functions.
“From the preliminary investigation carried out by this committee, our findings are not palatable at all. A lot of heads of agencies have taken over the agencies as their personal property.
“They have decided to embark on a spending spree with nobody challenging them.
“Out of the 60 Government Owned Enterprises, I can conveniently say that agencies like the NNPC, I don’t know when last they contributed from their excess revenue into the Consolidated Revenue Fund, except recently when they declared profit.
“The Central Bank of Nigeria, out of an average budget of about N2.3tn a year, it is expected that at the end of every financial year, whatever accrues to you as excess revenue, a certain portion of it must be paid into the Consolidated Revenue Fund. As we speak, within the last five to six years, CBN has not contributed anything.”
CBN debunks claims as lawmakers demand proof
The Deputy Governor of the CBN, in charge of Economic Policy, Dr. Kingsley Obiora, who represented Godwin Emefiele at the session, disagreed with the assertion of the Senate Committee chairman.
Obiora said, “I just want to, with due respect and deep reverence, categorically say that the allegation that the CBN has not remitted surpluses in any year, let alone the last five years, is 100 per cent not correct.
“We have in the last five years remitted our surpluses in accordance with the law.
“As responsible government agency, we follow the Fiscal Responsibility Act and we do remit 80 per cent of our surpluses every year.”
The Chairman of the committee directed the CBN to produce documentary evidence of its remittances within the last five years unfailingly Friday.
He also told the apex bank to produce its audited account in the last five years as well as its position paper on monetary policy.
There was a mild drama when the Comptroller General of the Nigerian Customs Service, Colonial Hameed Ali (retd.), expressed frustrations over the inability of his agency to raise enough revenue from tariff on import.
He therefore solicited the support of the federal lawmakers to empower the NCS through appropriate legislation to impose excise duty on carbonated drinks.
“Today, Coca-Cola is producing in Nigeria and paying no excise. It is only in Nigeria that Coca-Cola is producing and not paying excise duty.
“All other carbonated drinks are also injurious to our health. So, if we tax tobacco and alcoholic beverages, I see no reason why we should not tax the carbonated drinks.
“We have said this for the past five years I have been on this seat, and up till today, we have not been able to get it. The reason, I don’t know.
But the senators disagreed with Ali’s proposal and maintained that such action could lead to the total collapse of the manufacturing companies which were currently struggling to survive the harsh economic situation in the country.
Meanwhile, the Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, lamented that the agency was spending most of its profit that should go into the federation account to subsidise the premium motor spirit which runs into billions of naira every day.
Kyari also lamented that a larger quantity of the 60 million litres of the subsidised product being evacuated from the various NNPC depot did not represent the actual consumption as a good percentage were being smuggled outside the country.
Reacting to why the NNPC imports at N256 per litre and sell at N162, Kyari said ‘not providing energy for Nigeria will be a breach of the law which establishes the NNPC’.
He said, “We will therefore continue to supply PMS to the Nigerian market at sub-market prices. What we have to do is to come back to the National Assembly to see how the narrative could be changed.”
Adeola, while welcoming his guests, had said the essence of the parley was to seek ways to increase revenue generation to reduce borrowing.
