The Nigeria Governors’ Forum has expressed concerns about the continuous payment of fuel subsidy by the Nigerian National Petroleum Corporation.
The NGF’s Chairman and Ekiti State Governor, Dr Kayode Fayemi, drew the attention of the corporation to the burden that subsidy payment had become to the country’s economy.
Fayemi, who spoke during a courtesy call on the new Group Managing Director of the NNPC, Mr Mele Kyari, solicited greater prudence, accountability and transparency from the corporation.
He said, “It is important to highlight that subsidy remains a major drawback to government revenues. We may need to consider a new deal on how the government will absorb the cost of subsidy.
“This has become necessary, given the new reality of low oil revenues and rising government commitments. We believe that at the current course, subsidy costs will continue to offset any recovery in the oil market.
“The country recorded one of its lowest costs of subsidy in 2016 when oil traded at an average of $48.11bn. Total subsidy that year was around N28.6bn; but the amount rose to N219bn in 2017 and N345.5bn by mid-2018, as the price of oil and domestic PMS consumption rebounded.
“These are important considerations for us, with direct implications for energy security and economic stability in the country.”
In a statement by the NGF’s Head of Media, Abdulrazaque Bello-Barkindo, Fayemi said that having met Kyari while he (Fayemi) was a Minister of Mines and Steel and worked with him, he believed that he (Kyari) was a man of integrity who would deliver on his promises to the nation.
He added, “Over the last few years, the forum has built a working relationship with the corporation on matters related to the size and distribution of oil revenues in the country.
“Both organisations have held a series of engagement meetings to discuss ways to address the challenges bedevilling the oil industry.
“This partnership remains critical to us because it is integral to the fiscal stability of both the federal and sub-national governments, given the central role oil revenues play in funding our budgets.”
Fayemi also said the NGF had pushed for a number of accountability measures working with President Muhammadu Buhari.
He said, “We had resolved that the collection and remittance of oil royalties should be returned to the Department of Petroleum Resources as stipulated under the Petroleum Industry Law.
“Similarly, the collection and remittance of the Petroleum Profit Tax should be returned to the Federal Inland Revenue Service in line with extant laws.
“It was in this vein that Mr President directed that a revised revenue remittance template be developed jointly by the NNPC, the Ministry of Finance, the Office of the Accountant General of the Federation and the Revenue Mobilisation Allocation and Fiscal Commission.”
The governor added that the NGF would like to work with the NNPC to develop a realistic revenue forecasting model for oil revenues to help state governments plan appropriately to mitigate, to a large extent, the recurring fiscal shocks.
Others at the meeting were the Vice-Chairman of NGF and Governor of Sokoto State, Aminu Tambuwal, and the NGF’s Senior Economist, David Nabena.