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Osinbajo made the admission during the debate by vice presidential candidates of five political parties taking part in the 2019 general election, on Friday, in Abuja.
He, however, said that the subsidy “is being taken from the balance sheet of the NNPC (Nigeria National Petroleum Corporation)”.
He argued that “subsidy helps” and that once it is removed, the prices of almost all goods and services will skyrocket and that the common man will be the worse off for it.
“Subsidy is useful now,” Osinbajo maintained.
Over the years, even before the All Progressives Congress (APC) won the 2015 presidential election, the party has been vocal, and sometimes confrontational against the payment of subsidies to independent petroleum marketers.
Indeed, petroleum subsidy has been one of the many avenues through which massive corruption is being carried out in the country.
In January 2012, Nigeria was literally shut down as hundreds of thousands of citizens took to the streets in protest of the decision of the then President, Goodluck Jonathan, to stop the payment of petroleum subsidies. That protest was led mainly by members of the opposition political party at the time, majority of whom are now in the ruling APC.
Following the nationwide protests, Jonathan restored the subsidy payments and peace was restored.
About a year after President Muhammadu Buhari took over power in 2015, he announced that he was removing the payment of subsidy, and this resulted in an increment in the pump price of petroleum in the country. Premium Motor Spirit (PMS), commonly referred to as petrol, rose from N87 to between N141 and N145.
In December 2016, Osinbajo boasted that the removal of fuel subsidy saves Nigeria N15 billion on a monthly basis.
“Amongst others, the downstream sector has been deregulated with the elimination of petroleum subsidy. This policy has removed from government, a burden of not less than N15.4 billion monthly,” Osinbajo said, through Abubakar Malami, the Attorney General of the Federation who represented him at an event.
But by April 2018, the Minister of State for Petroleum Resources revealed that the federal government pays over N1.4 trillion in what he termed “under-recovery” for the supply of petroleum products across the country. The term “under-recovery” simply means subsidy.
But Osinbajo, in May, insisted that “the federal government is not, at the moment, paying for any subsidy”.
“If you are buying and selling fuel, you would have to be able to pay for it. So, it’s not a question of government provision for a subsidy, the federal government, at the moment, isn’t paying any subsidy.”
He insisted that it was the NNPC, not the FG, that bears the cost of petrol subsidy. But the NNPC is owned and run by the Government. In fact, President Buhari also doubles as the substantive Minister of Petroleum Resources, and, according to the NNPC Group Managing Director, Maikanti Baru, gives the final directive on whatever happens in the ministry.
Recently, the National Assembly recently commenced an investigation into allegations that the NNPC diverted over $1 billion from the dividends of the Nigerian Liquefied Natural Gas (NLNG) and used same for illegal petrol subsidy payments.
However, a report by the Chairman of the Senate Committee on Gas, Bassey Albert, on Wednesday, cleared the NNPC of any wrongdoing.