FG Begins Payment of 2012 Fuel Subsidy Claims

 Minister of Finance, Ngozi Okonjo Iweala


By Kunle Aderinokun and Ejiofor Alike
A potential fuel shortage in the country following the suspension of subsidy payments to importers of petroleum products has been averted as the payment of verified claims to the affected marketers has started.  This followed the suspension of payment of 2011 subsidy arrears.

This is coming as the Federal Ministry of Finance has said that it had spent N451billion out of the N888 billion budgeted for the payment of subsidy in this year’s budget, on the payment of arrears for 2011 alone to beneficiaries.

The ministry also said that next month’s meeting of the Federal Accounts Allocation Committee (FAAC) would decide on the resumption of the payments for the arrears of 2011, adding that it would pay only verified marketers.

It was however gathered that the ministry, through the Debt Management Office (DMO), has started issuing Sovereign Debt Notes (SDN) to marketers for 2012 subsidy to enable them collect their money from the Central Bank of Nigeria (CBN).

To avoid what it called “extra budgetary expenditure”, the ministry had suspended payment of arrears of 2011, after the claims overshot the budget.

The arrears of 2011 were in respect of the import permit issued to marketers in December 2011, which also covered the first quarter of 2012.
But to avert fuel crisis, the DMO has begun to release the SDN for the payment of subsidy for 2012, which covers the second quarter of 2012.

Marketers, who spoke to THISDAY, confirmed that payments for 2012 subsidy has commenced.

“They have started releasing payments for 2012 subsidy, while the arrears for the 2011 remain suspended, pending the resolution of the contentious issues. Marketers have also been asked to come to the DMO for their Sovereign Debt Notes for 2012,” said one of the marketers.

However, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said yesterday that while her ministry would be ready to work with relevant agencies for the common good of Nigerians, it would not be stampeded into making hasty payments on fuel deliveries that had not been substantiated or verified.

In a statement by her Senior Special Assistant, Mr. Paul Nwabuikwu, the minister noted that in line with this focus, her ministry would continue to pay all marketers whose claims of fuel importation had been verified as genuine, adding that speculation that prudence in subsidy payments would cause fuel scarcity was wrong.

“Indeed, to say that the Ministry’s efforts to learn lessons from the past and reform the way payments are made will lead to fuel scarcity is simply not the case,” she said.

She disclosed that based on PPPRA and NNPC’s claims, N451 billion of the N888 billion subsidy budget for 2012 had already been spent on arrears for 2011.
“Since the NNPC/PPPRA’s estimate for the 2011 arrears was N232 billion, this means that more than double the projected amount has already been spent and those agencies are still bringing in more claims,” she said. 

She said this is clearly not sustainable, adding that her ministry has a responsibility to ensure that the lapses that may have led to this unhealthy situation are not repeated.

“That is the least that the ministry owes the Nigerian people. In line with the directive of the President, the ministry will continue to work towards the improvement of the fuel subsidy regime based on the lessons learnt from our recent experiences.

The ministry is determined to put in place a strong framework for the fuel subsidy regime that is both transparent and sustainable,” she explained.

She stated that the “ministry’s approach to improving the subsidy regime is predicated on ensuring that the country’s finances are managed in a manner that clearly protects the interests of the Nigerian people; putting in place a system that ensures that only the genuine claims of genuine

marketers are honoured and also performing its functions in an efficient and proactive manner to ensure that Nigerians get fuel at the right time and at the right price”.

The NNPC had earlier raised the alarm that the Ministry of Finance was about to plunge the country into fuel crisis, by providing in the 2012 budget, fuel subsidy based on the daily consumption figure of 19 million litres, instead of the actual figure of over 33million litres that the ministry gave to the Federal Government.

But the ministry insisted that the issue of underestimation did not arise because the NNPC and PPPRA which had the responsibility did not provide any basis for estimation of consumption.