N13trn subsidy spend equals health, education, agriculture, defence budgets in five years – NEITI

THE Nigerian Extractive and Transparency Initiative (NEITI) has asserted Nigeria would be better off with full deregulation of the petroleum downstream sector.

The executive secretary of NEITI, Orji Ogbonnaya Orji, saying this on Thursday, April 13, maintained Nigeria must do away with subsidy and embrace full deregulation to reap the maximum benefits of its oil resource.

The NEITI boss stressed that full deregulation of the petroleum sector would permanently lay to rest the conversation around corruption in the oil industry.


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Citing NEITI’s latest policy brief titled, ‘The cost of fuel subsidy: A case for policy review’, Orji revealed that Nigeria expended over N13 trillion ($74 billion) on fuel subsidies between 2005 and 2021.

He explained that the figure, in relative terms, was equivalent to Nigeria’s entire budgets for health, education, agriculture, and defence in the last five years, and almost the capital expenditure for 10 years between 2011 and 2020.

He listed the economic opportunity costs of fuel subsidy as including slashing allocations for the health, education, and technology infrastructure sectors; deterioration of the downstream sector with the declining performance of Nigeria’s refineries; and recording zero production in 2020.

He also enlisted other opportunity costs to subsidy payments as disincentivized private sector investment in the down and mid-stream petroleum sector; low employment generation since the refining process is done outside the shores of Nigeria; worsening national debt; declining balance of payment, forex pressures and depreciation of the naira; and, of course, product losses; and inefficient supply arrangements (scarcity) and the attendant queues.

He stressed the need for the government to embrace full deregulation of the petroleum sector as mandated by the Petroleum Industry Act (PIA.)






     

     

    “Recall that the PIA made copious provisions for the deregulation of the downstream sector of the petroleum industry. A Presidential Steering Committee on the implementation of the PIA was set up in 2021 to coordinate the implementation of the Act. Not much is in the public domain on the progress of the Committee’s work,” he observed.

    He, therefore, called on the civil society to step up advocacies for the conclusion of the Committee’s work and submission of its report to President Muhammadu Buhari before the expiration of this administration with clear recommendations to the next administration on what had been done and the outstanding work.

    Commenting on crude oil theft, Orji noted that NEITI policy brief on the issue and data pulled from NEITI industry reports of the oil and gas sector showed that between 2009 and 2020 (12-year period), Nigeria lost 619.7 million barrels of crude oil valued at $46.16 billion, or N16.25 trillion.

    “The volume of crude oil losses represents a loss of more than 140,000 barrels per day. Between 2009 and 2018, Nigeria also lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion,” he added.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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