In this season of unusual happenings, governors of the nation’s 36 states voted yesterday to bring an end to the trillion Naira waste better known as fuel subsidy. Believed to be one of the best characterisation of Nigeria’s culture of cronyism, high level corruption and abuse, the fuel subsidy regime which cost taxpayers N1.4 trillion in three years, merely served big shots at the Nigerian National Petroleum Corporation (NNPC) and the presidency along with their well connected business friends and not the nation’s down trodden targeted by the policy.

Rising from the National Economic Council (NEC) meeting, comprising the 36 state governors, cabinet ministers, Central Bank of Nigeria (CBN) governor and special advisers to the president, the governors along with other members of the council called for oil subsidy removal as well as a probe of the N1.15 trillion outstanding claims of subsidy and related expenditures presented to the Federal Government by the NNPC.

The controversial amount of money covered payment for the goods, movement and supply of petroleum products across the country between 2005 and 2010 financial year.

BusinessDay had in early February reported that Nigerians and the nation were losing in the fuel subsidy gambit. Quoting from a document obtained from the presidency, BusinessDay reported: “ In this environment, however, it is the people that suffer. They pay higher prices, usually between N80 and N120 per litre, but have to queue to get that, while the government still pays the subsidy on these fuels”.

A regulated environment ensures that all the risks in the business are transferred to the government and the people of Nigeria, as all the risks in the businesses in the chain make money without sweat. A regulatory environment based on licenses, relationships, and government patronage has made some individuals stupendously rich, leaving the country and its people very poor.

At the end of the over five-hour meeting presided over by the Acting President Goodluck Jonathan, at the Presidential Villa, Abuja, yesterday, Mansur Muhktar minister of finance, joined by Emmanuel Uduaghan, Delta State governor, Gbenga Daniel, governor of Ogun State and Lamido Sanusi, CBN governor, said the council has directed that a thorough probe of the amount of money be carried out to verify the true state of the subsidy before going ahead to make any payment to NNPC.

“Right now, we have an invoice from the NNPC in the amount of N1.15 trillion to the ministry of finance for various expenditures incurred on behalf of the Federal Government, including cost of crude and products lost owing to pipeline vandalism and losses incurred from supplying petroleum products at regulated prices. So this is the size of the hole we are talking about”, Muhktar said.

According to him “there are outstanding claims from the NNPC to the tune of N880billion this dates back to 2005. These are claims that have not been settled. We have been doing the auditing systematically for all payments. We have an independent auditor that audits whenever the Petroleum Product Pricing Regulatory Agency (PPPRA) makes submissions, that is why the payment circle takes over 45 days. We submit it to external auditors and they bring it back to us.

He lamented that despite the N35 per litre subsidy by the Federal Government, the masses who were supposed to be the ultimate beneficiaries of the subsidy end up not enjoying the benefit stressing that “the key thing is as long as you have a distorted price mechanism it really creates all sorts of inefficiencies and leakages”. “And the people that get this money are the very few in the society, so should we continue to enrich certain persons to the detriment of all of us?” Uduaghan asked?

Daniel said “the subsidy has not translated to the benefit of the people on the street because people are still buying it at the free market prices. The issue therefore is where are the subsidies and if the subsidy is running into billions of naira then the NEC feels we do have a responsibility to stop this leakage one way or the other”.