The Forum of Commissioners of Finance of the 36
states of the federation on Thursday in Abuja
passed a resolution for the removal of fuel subsidy.
The Chairman of the forum, Mr. Timothy Odaah, told
journalists shortly after this month’s Federation
Account Allocation Committee’s meeting, that the
resolution was passed following irregularities
observed in the fuel subsidy regime.
The forum passed the resolution just as fuel
scarcity that started last week spread in the
Federal Capital Territory, with many motorists
queuing for hours at filling stations.
The FAAC meeting, which was chaired by the
Accountant-General of the Federation, Mr. Jonah
Otunla, was convened to consider and approve the
statutory allocations for February.
Odaah, who is also the Commissioner of Finance,
Ebonyi State, said the resolution on the fuel subsidy
regime would be sent to the Nigerian Governors’
Forum for transmission to President Goodluck
Jonathan.
He described the payment of fuel subsidy as a
scam against some states, especially the less
industrialised ones, as it had made “the rich to
become richer, while the poor are becoming
poorer.”
He argued that if Nigerians had not protested
against the removal of fuel subsidy in January 2012,
most states would have experienced significant
level of development by now.
The Federal Government has a budget of N971.1bn
for fuel subsidy payment in the 2014 fiscal year,
same as in 2013.
Odaah, said, “We looked at subsidy on oil as more
or less a solution worse than the problem it is
meant to solve.
“Looking at it presently, you will discover that it is
not solving the problem, which it is meant to solve.
In the first place, the NLC (Nigeria Labour Congress)
and the majority of the Nigerian populace appear to
have been deceived into clamouring for subsidy.
“It is a system that robs Peter to pay Paul by
making the rich to grow richer and the poor to go
poorer.
“There are some states that are fully industrialised
and you use this subsidy in that particular place
and the people who benefit more are those from the
states that are industrialised.”
Odaah added, “The fuel consumption of those
industries uses more of the fuel subsidy unlike the
states that are under-industrialised.
“So, what we are advocating is that the subsidy be
removed so that every state or any member of the
federating unit sharing from FAAC will take his own
money, then decide to use it or grant subsidy in a
level that it will be able to afford.”
The forum also accused oil marketers of taking
advantage of the subsidy regime to engage in sharp
practices, noting that the payment of subsidy was
exerting immense pressure on the Excess Crude
Account.
Odaah said if the issue was not urgently addressed,
it would get to a point where the states would have
nothing to share from the Federation Account as
their allocations would be wiped out by subsidy
claims.
He added, “If you also look at the oil marketers,
they are also not showing the intention of the
Federal Government because it has created a very
big market for them in certain ways because
transparency is not coming up.
“There are some people who are eating on the
subsidy to the disadvantage of others. It is because
of that that we passed a resolution at FAAC because
many states are crumbling as subsidy payment has
eaten so much into the crude reserves.”
Odaah also said the forum frowned on the decision
of the Central Bank of Nigeria to withdraw 75 per
cent of public sector funds from Deposit Money
Banks, noting that this had made it difficult for the
states to access loans at low interest rates.
As a result of this development, he said the forum
called on the Federal Government to reverse the
policy to enable states and local governments to
raise funds for developmental purposes.
He said, “As of today, 75 per cent of the public
sector deposits is taken into the central bank. This
is a deliberate creation of scarcity of funds because
states and local governments cannot borrow money
because the interest rate has gone so high.
“There is a plan by the CBN to raise it to 100 per
cent. If that is done; then, we will be having absolute
scarcity of funds created by a manipulated means.
“So, we are calling on the Federal Government to
look at it and review it by bringing it down so that
cash will be available because the cost of funds is
growing too high and with that, states cannot meet
up.”
But Otunla, who also addressed journalists shortly
after the meeting, said a 12-man committee had
been set up to assess the impact of the fuel subsidy
regime.
The committee, to be made up of six
representatives each of the states’ commissioners
of finance and accountants-general, has one month
to submit its report.
“We discussed the issue of subsidy and we have
set up a 12-man committee comprising six
members from the commissioners’ forum and six
members from the Accountants-General Forum to
help us review the impact of subsidy on the
Federation Account,” he said.
Otunla said FAAC shared the sum of N641.29bn to
the three tiers of government as statutory allocation
for February.
He said during the month, the gross revenue of
N666.75bn was received, which was N125.87bn
higher than the N540.87bn received in January.
He said while an exceptional payment of N82bn was
made by the Nigerian Petroleum Development
Company, which helped to boost revenue for the
month and that the committee transferred the sum
of $1bn to the Excess Crude Account.
This brings the balance in the ECA to $3.5bn.
When contacted, the acting General Secretary,
Nigeria Labour Congress, Mr. Chris Uyot, said the
union had not changed its decision to resist any
ploy to increase fuel price through subsidy removal.
“We have a position on that; nothing has changed,”
he said.
In a communiqué issued after the March 6
emergency meeting of its Central Working
Committee, the NLC described the current fuel
scarcity as “a cruel conspiracy” between the
Federal Government and the marketers “to impose
hardship and trauma on the poor and hapless
Nigerians with a view to ostensibly increasing fuel
prices”.
