The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has revealed that the Nigeria National Petroleum Company (NNPC) Limited withheld approximately N8.4 trillion, which could have been part of Nigeria’s revenue, under the guise of using it to pay for fuel subsidy.
The Chairman of RMAFC, Mohammed Shehu, expressed support for the removal of the subsidy, stating that it has been a significant drain on the country’s limited resources.
Shehu emphasized that the commission has consistently maintained its position on the removal of petrol subsidy since the time of the late Hamman Tukur, who chaired the commission during the administration of former President Olusegun Obasanjo.
He said the agency’s position was premised on the fact that the continued “payment of humongous amounts to a privileged few in the name of subsidy” was a major drain on the nation’s scarce resources.
According to him, “the Nigeria National Petroleum Company (NNPC) Limited — one of the major sources of revenue to the federation account — had since stopped contributing to the national purse due to the subsidy regime.
“As one of the 14 federal executive bodies established by section 153 (1)(n) and empowered by paragraph 32 (a) and (c) of part 1 of the third schedule of the 1999 constitution (as amended), RMAFC has the constitutional mandate to monitor the accruals to and disbursement of revenue from the federation account and also advise federal and state governments on fiscal efficiency and methods by which their revenue can be increased.”
The chairman described the president’s pronouncement on the elimination of the petrol subsidy as a masterstroke that broke the jinx.
This, he said, was the appropriate step in the right direction.
“The country can no longer sustain fuel subsidies whose demerits far outweigh its benefits to the citizenry. It is saddening to note that since January 1, 2022, to date, the Nigeria National Petroleum Company (NNPC) Limited has not been contributing to the federation account due to the claimed subsidy payments,” he said.
“The total amount withheld by the NNPCL as claimed subsidies for this period amounted to N8,480,204,553,608.13 as reported by the office of the accountant general of the federation (OAGF) which is yet to be reconciled by the RMAFC, OAGF, and NNPCL.”
Shehu highlighted the lack of transparency in petrol subsidy transactions and the global determination of crude oil prices as factors that make it unwise to continue sustaining “phantom payments of subsidy at the detriment of other critical sectors of the economy.”
He emphasized that ending under-recovery payments would eliminate the uncertainty associated with the subsidy regime.
Furthermore, he stated that this move would free up funds that could be allocated to important national development and human capital enhancement projects, including the provision of affordable transportation, investments in education, improvements in healthcare, and infrastructure development.
While commending Tinubu for his “uncommon courage” and political will in doing away with the subsidy, Shehu urged the new administration to work out strategies that would cushion the attendant effects of the new policy.
