What was the point? Fuel subsidy payments to continue as funds begin to run out

by Tolu Orekoya

After wrangling over the fuel subsidy payments, telling the country that a healthy portion of subsidy funds for 2012 had gone to making back payments for 2011, and the House investigation on the payments, the finance ministry is going ahead to continue the payments that were held up, even as they ring the alarm about the funds allocated for 2012 running out.

From Reuters:

Nigeria has cleared fuel import subsidy payments that were held up while authorities verified they were for genuine deliveries, as part of efforts to combat fraud, the finance ministry said on Wednesday.

Nigeria’s finance minister said last week she had ordered a “slow down” to fuel subsidy payments to allow checks to stop scams that have cost it billions of dollars.

Fuel shippers say they are facing delays at import terminals while their subsidy payments are scrutinised, and some private firms have halted deliveries, while others are relying on swaps for crude oil to receive payments.

“Following the recommendation of the committee set up to verify and reconcile the claims, the ministry has now resumed payment of claims,” Minister of State for Finance Yerima Ngama told reporters at the presidency.

“I want marketers to know that claims have now been processed and payment to be made subsequently.”

A parliamentary probe into the subsidy scheme released last month found it was riddled with fraud that had cost Nigeria $6.8 billion in just three years – equal to a quarter of the national budget. It was one of the biggest corruption scandals in the history of Africa’s top energy producer.

The report is now in doubt, as its author, lawmaker Farouk Lawan, is being questioned by police over allegations he took a bribe from a fuel marketer to keep him off the list.

But Ngama also revealed that Nigeria now has only 370 billion naira ($2.28 billion) left allocated to pay fuel subsidies this year, heightening fears it will be unable to pay it or will have to borrow heavily to do it.

Nigeria spent 900 times more than budget for on the subsidy last year. Central Bank governor Lamido Sanusi has said provisions for the subsidy will run out well before year end.

The fuel subsidy remains popular despite its disastrous economic consequences – no government has succeeded in scrapping it. President Goodluck Jonathan tried in January and massive strikes and protests forced him to relent.


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