The Minister of Finance, Mrs. Kemi Adeosun says no more payment of fuel subsidy to marketers as the Nigeria National Petroleum Corporation (NNPC) bears the loss of fuel importation “on behalf of all Nigerians’’.
Adeosun said this while fielding questions from State House correspondents after the Federal Executive Council (FEC) meeting, which was presided over by President Muhammadu Buhari at the Presidential Villa, Abuja on Wednesday.
She said that the NNPC was presently doing all the importation of Premium Motor Spirit (PMS) and hence “there is no subsidy but rather under recovery’’.
“So for every time we get excited that the oil price is going up, there is also a knock-on effect on the price of imported PMS and that is a function of us not having refining capacity, it is one of the unfortunate impacts of that."
“Now, when there is the talk of payment of subsidy, technically today, there is no subsidy but there is under recovery. Why that is because NNPC is presently doing all the importing."
“They are importing at a higher price than they are selling which means they are losing money, which means effectively that loss is being borne by everybody and effectively it reflected in the federation account."
“So, there is no subsidy payment in the way the old subsidy scheme use to work where they were paying the oil marketers but there is an under-recovery."
“A loss on the importation of PMS being borne by NNPC and, therefore, indirectly being borne by every one of us.”
The minister further explained that the revenue being generated by all federal government revenue generating agencies was being shared to fund the budgets of the three tiers of government in the country.
“But if you also follow those who cover the FAAC accounts, you will know that that money is shared every month among the three tiers of government. That is what makes up the FAAC."
“The FAAC is made up of Customs revenue, FIRS revenue, and NNPC revenue. So that money is not just for the federal budget, it is all for the three tiers of government that’s all they all live on."
“So customs has improved its revenue significantly and will continue to do so but you do need to remember that there are three tiers of government sharing that money.’’
The minister said that Nigeria was able to pull out of the economic recession due to massive budget spending on infrastructure by the government.
According to her, the massive spending which also resulted in debt deficit helped to create jobs and drive growth.
“When you are in a recession, the way you get out of it is to spend money."
“So, we increased the size of our budget deliberately, so we will need to borrow the difference and that is why you have the debt deficit which is what really translate to the massive spending on infrastructure."
“This helped us out of recession in five quarters when many oil-producing countries stayed in recession for two, three years."
“That was a deliberate strategy of this government because we needed to spend our way out of recession. We spent specifically on infrastructure which we felt will create jobs and drive growth.’’