By Sebastine Obasi
Depotand Petroleum Products Marketers Association of Nigeria, DAPPMAN has said that the N713 billion spent by the Federal Government as fuel subsidy in 2018, could have been better used to build hospitals, additional roads to link out farms for easier evacuation of products, as well as complete dam projects for improved power and water supply.
DAPPMANs reaction is coming on the heels of the World Bank report which stated that Nigeria spent N713 billion to subsidize fuel consumption in 2018, while the countrys oil sector declined in its productivity, ending on 1.9 million barrels a day (mbd) production mark as against the governments hope of 2.3mbd.
Speaking on the issue, Olufemi Adewale, Executive Secretary, DAPPMAN, said: Though I dont have data on empirical alternatives but surely, N731bn could have been used to build more hospitals to improve health care, build additional roads to link out farms to the cities for faster evacuation of farm produce, complete a few dam projects to both provide portable water and improve power supply for the countrys teeming populace. N731bn could have been put to better use than consumed as fuel subsidy. It is hoped that the FG will take the bull by its horn and do the needful to curtail these unnecessary and avoidable expenses.
Challenging the Nigerian National Petroleum Corporation, NNPC to provide data on fuel consumption, Adewale said: NNPC has been the sole importer of PMS for quite a while so the corporation should be able to provide data on our fuel consumption nationwide.
We in DAPPMAN have for quite a while been clamouring for deregulation of the nations downstream sector to eliminate subsidy costs and we shall continue to do so. For as long as landing cost of PMS into the country is higher than the pump price , for so long shall we be experiencing distortions in our economy. According to the World Bank report, most of the petrol volumes Nigeria spent money to subsidise in 2018 were inflated as daily consumption increased to 54 million litres per day (ml/d) from 40ml/d in 2017, ostensibly due partly to out-smuggling.
Oil and gas revenue collection increased in 2018 but remained below potential. Net oil and gas revenues retained in the federation account grew by 73 per cent in nominal terms: as oil production remained stable, the increase has been driven by the oil price. As cost is not linearly proportional to the oil price increments, more growth in the oil revenues were expected, and only about two-third of the budgeted net oil and gas revenues were actually collected. The oil revenues continue to underperform both relative to the budget targets and their realistic potential due to the unbudgeted fuel subsidy (Nigerian National Petroleum Corporation (NNPC) cost under-recovery), which amounted to N731 billion in 2018, among other discretionary deductions, and the dollar-naira conversion using an exchange rate lower than that prevailing in the convertible IEFX window, the report stated.
Author: Urowayino Warami