Fuel subsidy: FG admits N872bn deductions from states/LGs' accounts

2010-02-22
THE PUNCH Newspaper- Chiawo Nwankwo and Ifeanyi Onuba


A major legal battle between the 36 states of the federation and the Federal Government may be imminent, as the former have expressed opposition to further deduction of N476.6bn belonging to them and their councils from the Federation Account. The deductions are meant to finance the controversial fuel subsidy.

A huge sum of N872bn had been skimmed off their accounts for the period covering 2006 to 2009.

The Minister of Finance, Dr. Mansur Muhtar, had disclosed the governors’ opposition to more deductions from their states’ funds last week.

He had said the governors declared the deductions as “unacceptable” just as he admitted that the N872bn already deducted posed legal challenges.

Muhtar had said this shortly after the meeting of the Federal Executive Council last Wednesday in Abuja.

An investigation showed that while the states and the councils had coughed out N872.2bn, the Federal Government’s portion for the period under review was N738bn.

A document entitled: “The burden of subsidy: 2006-2009,” which was exclusively obtained by our correspondents, contained the figures paid by each of the 36 states and the outstanding sums.

The Federal Ministry of Finance prepared the document.

According to the document, the total subsidies of the 36 states stand at N1.35trn, while that of the Federal Government is N1.14trn.

This brings the total burden of subsidies from January 1, 2006 till December 31, 2009 for the three tiers of government to N2.5tn.

Muhtar had said, “Another issue that has surfaced is the legal dimension to the deductions that had been made in the past.

“Recently, figures were released to the state governors in response to how they have to bear on subsidy, and many of them feel that it is unacceptable because they are not actually deriving any benefit.

“But it is also illegal because it is not backed by any legislation in relation to appropriation. So, they are new issues that have surfaced, which we have to contend with as we continue our dialogue with labour.”

Details from the document showed that the highest subsidy burden was borne by the oil-producing states, with Akwa Ibom State on top with N79.1bn.

The state is followed by Rivers, Delta and Bayelsa with N72.94bn, N69.83bn and N35.59bn respectively, within the period under review.

However, these states still have outstanding amounts of N43.24bn, N39.86bn, N38.16bn and N19.45bn respectively.

This implies that Akwa Ibom would have lost a staggering N122.37bn when the total deduction must have been completed, followed by Rivers State’s N112.8bn and N108bn belonging to Delta State.

It was gathered that the huge amount deducted from the allocations of the major oil-producing states as subsidy was the revenue they would have earned from the Excess Crude Account if the money was shared.

The excess crude account currently stands at $4.2bn after last week’s sharing of $2bn out of the fund by the Federation Account Allocation Committee.

Further, the subsidy document showed that Kano, Ondo, Lagos, Katsina, Oyo and Kaduna states had lost N32.55bn, N27.86bn, N24.48bn, N24.27bn N23.37bn and N22.84bn respectively.

Borno had N22.38bn; Imo, N22.37bn; Niger, N21.53bn; Bauchi, N20.68bn; Jigawa, N20.59bn; Benue N19.90bn; Edo, N19.93bn; Sokoto N18.84bn; and Osun N18.41bn.

Others include Abia, N18.33bn; Kogi, N17.93bn; Anambra, N17.85bn; Adamawa, N17.82bn; Kebbi, N17.68bn; Ogun, N17.06bn; Taraba, N16.58bn; Plateau, N16.52bn; and Yobe N16.31bn.

In the same vein, while N15.94bn, N15.90bn, N15.72bn, N15.22bn and N13.67bn had been deducted from the allocations of Zamfara, Cross River, Enugu, Kwara and Ekiti states as subsidy respectively, Gombe, Nassarawa, Ebonyi and Abuja had borne N13.47bn, N13.43bn, N12.94bn and N2.57bn in that order.

A week to the last FEC meeting, Acting President Goodluck Jonathan had held meeting with the ministers of petroleum, finance and other stakeholders on how to move forward with the planned de-regulation policy.

The deregulation, which the government had planned to introduce by the end of last year, was, however, put on hold following President Umaru Yar’Adua’s medical vacation in Saudi Arabia.

While no firm decision was taken at the meeting, it was agreed that discussions should continue after the various stakeholders stuck to their previous positions.

Muhtar, who is also the Chairman of the Deregulation Implementation Committee, said, “At the moment, we are still engaged in dialogue but certainly, let me come out very clearly. It is still very clear that, basically, the underlying challenges still remain with us.

“The desirability and indeed the necessity of deregulating this sector as a means of achieving efficiency and ensuring adequate supply as well as removing the subsidy burden was fully underscored by comments of all those that spoke at the meeting.”

While a litre of petrol sells for N65 in some states like Lagos, Ogun and its environs, the product sells for between N80 and N100 in other states like Akwa Ibom, Anambra, Imo and Delta.

The country is currently convulsed by shortage of fuel, just as the government had last year declared its unwillingness to continue with subsidy payment following its discovery as a conduit for official corruption.

Osun State Governor Olagunsoye Oyinlola’s Chief Press Secretary, Mr. Lasisi Olagunju, told our correspondent on the telephone that he would speak on the matter on Monday (today) when he would have received a full briefing from the state Ministry of Finance.

Akwa Ibom State Governor Godswill Akpabio’s CPS, Mr. Usoro Usoro, could not be reached while the Commissioner for Information, Mr. Aniekan Umanah, said he was not aware of the matter.

The governor of Kwara State, Dr. Bukola Saraki, who is also the chairman of the governors’ forum, His mdedia aides said the matter was beyond them.

The CPS to Edo State Governor Adams Oshiomhole, Mr. Peter Okhiria, promised to get back to our correspondent but did not do so at press-time.

 

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