States Seek To Take Over Fuel Subsidy Payments

Zamfara State Governor, Abdulaziz Yari
5 mins read 2

The governors of the 36 states of the federation are moving an initiative that will see each state taking responsibility for subsidising petroleum products consumed within its territory, This Day report.

Arising from their discontent over the claim by the Nigerian National Petroleum Corporation (NNPC) that it supplies a ridiculous 60 million litres of petrol daily to the domestic market, the governors are contending that instead of deducting the difference between the landing cost of petrol and the official pump price of the product before remitting net crude oil receipts to the Federation Account, every state should be responsible for paying its own subsidy according to its consumption.

The push by the governors to take over the responsibility of paying subsidy payments on fuel in their respective states could prove to be a major solution to the inefficiency and graft that has characterised fuel imports and consumption in the country for decades.

Other than the crippling impact fuel subsidies have had on the treasury, the shortfall in remittances by NNPC to the Federation Accounts often leaves the three tiers of government sharing less revenue than actual oil receipts accruing to the coffers of the state-run oil firm.

Should states assume control of subsidy payments to oil marketers, they would get more revenue from the Federation Account and would have to negotiate with residents to determine the price at which petrol should be sold in their territories, meaning that some states could pay more or less as petrol subsidy.

Control by the states could also lead to efficiency in the importation of petroleum products and could see daily consumption dropping to about 30 million litres a day.

However, governors unable to use the extra revenue at their disposal judiciously to ensure that there is no fuel scarcity in their states would have to contend with irate residents.

Speaking with journalists shortly after the meeting of the Nigerian Governors’ Forum (NGF) Wednesday night, the chairman of the forum and governor of Zamfara State, Abdulaziz Yari, said the state chief executives expressed reservations over the sudden rise in petrol consumption and cash call expenditure, which now runs into trillions of naira.

Elaborating on the proposed initiative, Yari said the move would actually help to reduce the volume of petrol imported and also the amount spent on subsidy.

He said the proposal was to be tabled before Thursday’s National Economic Council (NEC) meeting for deliberation and approval.

Yari, who described the NNPC’s claim of importing 60 million litres of petrol daily as unbelievable, however, said the three tiers of government would need to apply caution in implementing the new initiative to avoid disruption in fuel supply.

“Well, we don’t want to play into the hands of these people so that there will be another fuel scarcity. You know the problem is also from Nigerians, they would blame us for causing the scarcity and they won’t know why there was a shortage.

“Because for us to commence the investigation on how much each state consumes, these people will instigate chaos that we would regret and Nigerians would look at it from that perspective and will start accusing the government of laxity and not being proactive.

“So it is not about the investigation, it is about trying to reposition things for the future,” he said.

Yari said the forum agreed that the states should go and ascertain the volume of product that is needed in each of their territories.


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