Over N10 trillion was spent on fuel subsidy between 2006 and 2020 without a significant impact on the masses, says Group Managing Director of Nigerian National Petroleum Corporation (NNPC) MeleKoloKyari.
Also, the subsidy regime was affected by marketers who were smuggling the subsidized PMS to neighbouring countries to make more profit and others who faked documents to collect subsidy for fuel they never imported.
Kyari explained that the Federal Government removed the subsidy on Premium Motor Spirit (PMS) because the subsidy regime was also characterised by fraud by some cabals and not beneficial to the masses, who were the original target beneficiaries.
The NNPC GMD spoke in a Hausa Radio programme monitored in Kaduna at the weekend, adding that the fuel subsidy was the root of all the atrocities and frauds in the oil sector.
Kyari said the government has removed the subsidy with a plan to reinvest on projects that would have a direct impact on the masses.
“The crude oil is a global commodity and its price is not hidden; everyone can calculate and know how much is the cost of every final product from the crude at the international market. But, since the inception of the country, the Government has been paying subsidy on petrol to make it cheaper for Nigerians to buy below the cost price.
“This subsidy is designed to assist the masses of Nigeria, that is the intention, but in reality, the masses are not the beneficiaries. First, the masses are not the owners of exotic cars, buying fuel, owning the filling stations and doing the oil business.
“This subsidy that the government has been paying over the years is the root of all the atrocities and fraud committed in this country. For example, if you look at it from 2006 till 2020, we have spent over N10trillion on fuel subsidy. Apart from that, there is also subsidy on foreign currencies, everybody knows how much is dollar in the market, but the government is also subsidising it. So, this and the fuel subsidy within this period is around 14 to 15 trillion Naira.
“What was happening with the subsidy is that some marketers were smuggling fuel to other neighboring African countries because it was cheaper in Nigeria due to the subsidy. Another one is those who use to fake documents and bring to Government to collect subsidy for fuel they never imported and the previous Government was paying them.
“So, it was not the masses of Nigeria that were enjoying this subsidy, except some cabals, who are rich and powerful; they were enriching themselves with the subsidy money at the detriment of the masses who were the primary target of the subsidy. The masses are only enjoying the subsidy when it comes to the effects on the cost of transportation, and we are going to do something about this.
“This money has been wasted over the years, it cannot be justified. So, with the right leaders in place, this money should have been channeled to other areas of development. Even though I understand that there is a lack of trust between the leaders and the citizens, if we have just leaders, this money can be judiciously utilised.
“But, what we have seen in the last five yearshas shown that, if we have just and trusted leaders, that money can be judiciously utilised to the benefit of the masses. We have seen that the resources at the disposal of the Government in the last five years, is not up to a quarter of what the previous Government got in the previous five years.
“So, what the Government is trying to do is to withdraw this subsidy and take it to where the Nigerian masses will feel the impact, by building hospitals, schools, roads, industries and so on, where people can see physically what the money is being used for.
“This subsidy has been removed since March this year; that time, price of crude oil was less than $30 per barrel, and as a result of that, the price of fuel dropped, so, we dropped the price of fuel to the level of global market price, it was dropped to N125.
“From this money, Nigeria has been able to pay workers salaries without retrenching despite the effects of the Covid-19 on the global economy. In the whole of West Africa, it is only Nigeria that didn’t retrench workers as a result of the Covid-19 pandemic. Apart from that, part of the money will be used to support farmers and other businesses,” Kyari said.