The Federal Government on Tuesday explained why it suspended the payment of fuel subsidy to oil marketers.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, said the huge amount so far paid as subsidy arrears within the first five months of the year was responsible for the suspension.
Her explanation followed a publication in a national newspaper (not THE PUNCH) on Monday that the suspension of fuel subsidy payments to oil marketers would cause scarcity of petroleum products in the country.
In a statement issued by the Senior Special Assistant on Communication to the minister, Mr. Paul Nwabuiku, Okonjo-Iweala said no marketer would stampede the government into making payments that were not verified.
She said based on the Petroleum Products Pricing Regulatory Agency and the Nigerian National Petroleum Corporation’s claims, N451bn out of the N888bn budgeted for subsidy in 2012 had been spent on arrears of 2011.
The minister said, “Since the NNPC/PPPRA estimate for the 2011 arrears was N232bn, this means that more than double the projected amount has already been spent and those agencies are still bringing in more claims. This is clearly not sustainable and the ministry has a responsibility to ensure that the lapses that may have led to this unhealthy situation are not repeated. That is the least that the ministry owes the Nigerian people.
“In line with the directive of the President, the ministry will continue to work towards the improvement of the fuel subsidy regime based on the lessons learnt from our recent experiences.”
Okonjo-Iweala said the ministry was determined to put in place a strong framework for the fuel subsidy regime that is both transparent and sustainable.
She said, “Speculation that prudence in subsidy payments will cause fuel scarcity is wrong. The Federal Ministry of Finance has a responsibility to ensure that subsidy payments are made in a prudent and transparent manner.
“In line with this focus, the ministry will continue to pay all marketers whose claims of fuel importation have been verified as genuine. While it is ready to work with relevant agencies for the common good of Nigerians, the ministry will not be stampeded into making hasty payments on deliveries that have not been substantiated or verified.”
She added, “Against this background, the ministry categorically rejects the idea that a prudent approach to verifying and making payments will lead to fuel scarcity.
“Indeed, to say that the ministry’s efforts to learn lessons from the past and reform the way payments are made will lead to fuel scarcity is simply not the case.”
The minister said the next meeting of the Federation Accounts Allocation Committee in June would provide the occasion for the resumption of payments.
Okonjo-Iweala said, henceforth, the approach to improving the subsidy regime would be predicated on “ensuring that the country’s finances are managed in a manner that clearly protects the interests of the Nigerian people.”