January 17, 2018
The House of Representatives on Wednesday resolved to invite the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, to explain the payment of N300 billion subsidy on Premium Motor Spirit (PMS) popularly known as petrol, without approval from the National Assembly.
The House also asked the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr Maikanti Baru, and the Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), Mr Abdulkadir Umar, to appear before its Committees on Finance and Petroleum Resources.
Adopting a motion moved under matters of urgent public importance by Rep. Sunday Karimi (Kogi), the members urged the Federal Government to make provision for subsidy payment in the 2018 Appropriation Bill, if it is interested in continuing with the payment of subsidy on petrol.
Leading the debate on the motion, Karimi pointed out that between January and December the federal government through the NNPC claimed to have spent over N300 billion on payment of subsidy for petrol.
He described the payment made without the approval of the parliament as a breach of Section 4 of the 1999 Constitution which provided that no money should be withdrawn from the federation account except as prescribed by the National Assembly.
“In December 2017, the Vice President, Prof. Yemi Osinbajo, and the Minister of State for Petroleum Resources, Mr Ibe Kachikwu, have both admitted that the current landing cost of petrol is N171 per litre despite the fact that the Federal Government has pegged official rate at N145 per litre.
“At the moment, it is the NNPC that is paying for the cost or deferential of N26 per litre despite the fact that government has posited that it has removed petroleum subsidy in the 2017 Appropriation Act.
“NNPC conceded that fuel subsidy has returned because between January and March 2017, the corporation recorded an `under recovery’ of N46.86 billion and this trend continued at an increasing rate all through 2017.
“Under Recovery implies that expected open market price of PMS, which includes cost of importation and distribution of the commodity such as marketers margin, landing costs and freight cost is below the approved retail price.
“As a result, NNPC has been absorbing the extra cost and paying subsidy by itself.
“The 1999 Constitution (as amended) prescribes that no monies shall be withdrawn from the consolidated revenue fund or any other public fund of the federation, except in a manner prescribed by the National Assembly.
“As such, the payment of subsidy by the NNPC without appropriation or consent by National Assembly is illegal and unconstitutional,” Karimi said.
Contributing to the motion, Rep. Ahman Pategi faulted NNPC for paying subsidy to tune of 300 billion in 2017 without recourse to the parliament.
He said “probably NNPC is paying the subsidy to itself.
“This problem cannot be resolved so long as the price of crude is increasing’’.
On his part, the Deputy Chief Whip, Pally Iriase called for the full deregulation of the downstream sector to curb the corruption currently associated with it and open it up for private investment.
However, the Chairman House Committee on Petroleum Resources (Downstream), Rep. Joseph Akinlaja said that the N300 billion paid to marketers are areas of subsidy owed them by the federal government.
He, however, said that the marketers were agitating that they were still owed by the federal government.
Rep. Johnson Agbonayima said that the resuscitation of the country’s refineries can address the crises in the petroleum industry.
“Today, no refinery is working and I believe that something needs to be done,’’ he added.
