Govs Spoil for Showdown over Subsidy Deductions

2012-04-24
THISDAY Newspaper- Chuks Okocha

The growing unease between the Federal Government and state governors over deductions for fuel subsidy and the withdrawals from the Excess Crude Account (ECA) is set to take the centre stage again.

The 2012 budget has N888 billion for subsidy, which put the monthly deductions from the federation account at N74 billion monthly – although this includes a carry-over of last year’s payments.

But the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA) have been deducting N150.2 Billion monthly from the federation account since the turn of the year, owing largely to increasing landing costs.

At this rate, governors fear that the subsidy deductions may hit N1.8 trillion by December 2012.

At their meeting last night, the 36 governors resolved to set up three separate committees to discuss the withdrawals from ECA for subsidy by the NNPC and the PPPRA.

Though the chairman of the Nigeria Governors Forum (NGF), Rt. Hon. Rotimi Amaechi, did not name the members of the committees, he said governors would meet with President Goodluck Jonathan on the issues raised in the communiqué of their meeting.

The governors are reportedly worried because of the comments by the Governor of Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sansui, that the amount budgeted for the 2012 oil subsidy would not be enough.

THISDAY also reported yesterday that with the increasing landing cost of imported petroleum products, the subsidy bill is heading for the N1 trillion mark again this year.

The three committees, of which Amaechi is a member, will meet Jonathan after their own meetings to adopt a final on the controversial withdrawals and deductions.

The governors’ meeting continues today after which the governors will meet Jonathan.

The meeting also discussed the polio menace and reiterated the need for the deputy governors to take over the eradication campaign.

Sanusi had told Reuters last week: “With oil prices where they’ve been since the beginning of the year, I’m sure that we will be exposed to that amount long before the year runs out.

“If I was asked for my advice, I’d simply say pay what you have in the budget and simply stop paying. (If not) they will have to take the money from the excess crude account (or) we will have to borrow money.”

“(The output) assumption was too optimistic... based on the most rosy forecasts of operating environment. When you’ve got militancy, you’ve got production shortages, you’ve got natural operational failures, a more conservative output figure to begin with would have been better,” Sanusi added.

A governor had told THISDAY that considering what Sanusi said that the money budgeted for subsidy would not be enough, “we don’t want to be taken unawares. There is the need to meet and take a position before it becomes late. If the money is to be deducted from the Excess Crude Account as the Central Bank Governor suggested, then, it will have a negative implication on the money to be shared in the FAAC and it also means less money for the states.”

 

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