FG spent N10.416trn on subsidy from 2006 to 2019 – Lai Mohammed

The Minister of Information (middle), flanked by the Minister of State, Petroleum Resources, Chief Timipre Silver (left) and the Minister of State, Power, Goddy Jedi Agba (right), during a joint press conference on the pump price increases and increases in the unit cost of electricity in the country, at the Federal Secretariat, Abuja.

*Supplementing electricity tariff shortfalls by N1.7trn, he said

*Listed African countries to prove lower petrol price, electricity tariff

By Ralph Christopher

The Minister of Information and Culture, Alhaji Lai Mohammed, yesterday stated that the federal government spent a whooping N10.416 trillion on petrol subsidy between 2006 and 2019.

Addressing a joint press conference with the Ministers of State for Petroleum Resources and Power, Timipre Silver and Jeddy Agba, respectively, Mohammed said that with the downturn of the economy brought about by covid-19 pandemic and falling crude oil prices, government can no longer afford to spend such huge amount of money.

He also stated that the federal government has equally been supplementing electricity tariffs shortfalls to the tune of N1.7 trillion.
He said: “Truth of the matter is that subsidizing fuel is no longer feasible, especially under the prevailing economic conditions
in the country.

“The government can no longer afford fuel subsidy, as revenues and foreign exchange earnings have fallen by almost 60%, due to the downturn in the fortunes of the oil sector. Yet, the government
has had to sustain expenditures, especially on salaries and capital

“Even though we have acted to mitigate the effect of the economic slowdown by adopting an Economic Sustainability Plan, we have also had to take some difficult decisions to stop unsustainable practices that were weighing the economy down”.

Mohammed explained that due to Covid-19 pandemic which collapsed oil prices at the height of the global lockdown, and the deregulation of the prices of PMS, it then meant that “the effect of deregulation is that PMS prices will change with changes in global oil prices.

“This means quite regrettably that as oil prices recover, there will be some increases in PMS prices, as has happened now”.

He further explained that “government can no longer afford to subsidize petrol prices, because of its many negative consequences.

“These include a return to
the costly subsidy regime. With 60% less revenues today, we cannot afford the cost.

“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration.

“The days in which Nigerians queue for hours and days just to buy petrol, often at very high prices, are gone for good. Of course, there is also no provision for fuel subsidy in the revised 2020 budget, because we just cannot afford it”.

He added that “the cost of fuel subsidy is too high and

“From 2006 to 2019, fuel subsidy gulped N10.413 trillion Naira. That is an average of 743.8 billion Naira per annum.

“According to figures provided by the NNPC, the breakdown of the 14-year subsidy is as follows: In 2006 subsidy was N257bn; 2007, N272bn; 2008, N631bn; 2009, N469bn; 2010, N667bn; and in 2011, N2.105tn.

“Also in 2012, it was N1.355tn; in 2013, N1.316tn; 2014, N1.217tn; 2015, N654bn; 2016 (figure unavailable); 2017, N144.3bn; 2018, N730.86bn and in 2019 the subsidy was N595bn.

He however stated that in order to cushion the hardship, the PPPRA always announced the range of prices that must not be exceeded by marketers.

He argued that “in spite of the recent increase in the price of fuel to N162 per litre, petrol prices in Nigeria remain the lowest in the
West/Central African sub-regions.

He drew comparison with Ghana, Benin, Togo, Niger, Chad, Cameroon, Burkina Faso and other countries, stressing that the cost of petrol in Nigeria remains the lowest.

Also speaking on what he called service-based electricity tariff adjustment by the Distribution Companies (DISCOS), the Information Minister said that it was no longer logical for government to be spending over N1.7 trillion supplementing electricity tariffs shortfalls.

“The government does not have the resources to continue along this path. To borrow just to subsidize generation and distribution, which are both privatized, will be grossly irresponsible,” he stressed.

He however said that to protect majority of Nigerians who cannot afford to pay “cost-reflective tariffs from increases, the industry regulator, NERC, has approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.

“Under this new arrangement, only customers with guaranteed minimum of 12 hours of electricity can have their tariffs adjusted.

“Those who get less than
12 hours supply will experience no increase.

“Government has also noted the complaints about arbitrary
estimated billing.

“Accordingly, a mass metering programme is being undertaken to provide meters for over 5 million Nigerians, largely driven by preferred procurement from local manufacturers, and creating
thousands of jobs in the process.

“NERC will also strictly enforce the capping regulation to ensure that unmetered customers are not charged
beyond the metered customers in their neighbourhood.

“In other words, there will be no more estimated billings.

“Under the Economic Sustainability Plan, the government is providing solar power to 5 million Nigerian households in the next 12 months.

“This alone will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation, thus ensuring that more Nigerians will have access to electricity via a reliable and sustainable solar system”.

Even with the recent electricity tariff review, Mohammed insisted that “the cost of electricity in Nigeria is still cheaper or compares favourably with that of many countries in Africa”.

He listed Senegal as N71.17 per kilowatt hours; Guinea (N41.36); Sierra Leone (N106.02); Liberia (N206.01); Niger (N59.28); Mali (N88.23); Burkina Faso (N85.09) and Togo (N79.88).

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