Subsidy Fund: Fresh Crisis Brews Between FG, States

A fresh crisis is brewing between the federal and state governments over fuel subsidy deductions by the former from the federation accounts.

The state governors, in a communiqué issued after their meeting on Wednesday night in Abuja, said the Federal Government was still making illegal deductions from the federation account in the name of fuel subsidy.

The communiqué, which was signed by the Chairman of the Nigeria Governors’ Forum, Mr. Rotimi Amaechi of Rivers State, reiterated the call by the forum for a review of the revenue sharing formula.

The governors faulted the deduction, saying that it negated the principles of federalism and budgetary provisions.

According to them, the Federal Government is still making huge deductions for fuel subsidy, in spite of the increase in the price of petrol.

The governors’ communiqué reads, “The forum deliberated extensively on the continuing unconstitutional deductions by the Federal Government from the federation account in the name of oil subsidy which negates the principles of federalism and budgetary provisions.

“It noted that despite the increase in pump price of petrol, the quantum of subsidy deduction is still worrisome.”

The governors said they had set up a committee that would meet with President Goodluck Jonathan over the deductions.

The seven-member committee, headed by Amaechi, would meet with the President after his one-week holiday.

The Federation Account Allocation Committee meeting in Abuja was stalled on October 17, 2011, following the state governments’ rejection of the Federal Government’s deduction for fuel subsidy.

The Chairman of State Commissioners of Finance, Mr. Eze Echesi, had in an interview with journalists, said the state governments protested extra-budgetary fuel subsidy deductions by the Nigeria National Petroleum Corporation and the Petroleum Products Pricing Regulatory Agency.

Also on October 17, the Edo State Governor, Mr. Adams Oshiomhole, at the annual conference of the Institute of Chartered Accountants of Nigeria, had said that his state Accountant General informed him that the NNPC deducted N100bn for fuel subsidy.

He had said, “The PPPRA even did worse than that: he told me they deducted N131bn and these figures are over and above what was in the budget and we all know that in a democracy, no one has the right to spend what has not been appropriated.”

Our correspondents learnt that the governors, at the Wednesday meeting, reasoned that with the increase in the petrol price from N65 to N97, the amount being deducted for fuel subsidy should drastically reduce.

One of the governors confided in our correspondents that the committee set up by the forum had been mandated to ask the Federal Government to account for the fuel subsidy deduction since January 2012 to date.

The governor stated, “The fuel price has been increased to N97 and the Federal Government is still making huge deductions. We want to know the amount that has been generated since the partial removal of fuel subsidy.”

Although state governments did not state the amount being deducted, an advertisement by the Federal Ministry of Finance in some national newspapers in February had indicated the money deducted.

In January, the Federal Government paid N19.624bn for fuel subsidy; states, N15.52bn; and local governments, N7.674bn.

Within the same period, the Federal Government saved N16.29bn from the partial removal of fuel subsidy; states, N12.885bn and local governments, N6.371bn.

Besides the fuel subsidy deductions, the forum also deliberated on security challenges in the country.

The forum, which was briefed by the National Security Adviser, Gen. Owoye Azazi (retd.), called for closer cooperation between state and federal governments.

In addressing the security challenges, the group said that there was the need for increased empowerment of the state governors to perform their role as chief security officers of their states.

On the revenue allocation formula, the governors reiterated their commitment to the earlier report that proposed the revenue allocation formula of 35 per cent for the Federal Government, 42 per cent for states; and 23 per cent for local government administrations.

They also said that there was an urgent need to completely eradicate polio from the country. Nigeria remains among the last three polio endemic countries in the world along with Afghanistan and Pakistan.

The forum advocated a holistic approach to polio eradication in the country.

“It was specifically agreed that for maximum effect, deputy governors should take charge of State Task Force on polio eradication,” the forum added.

On Wednesday, the forum listened to a presentation on tax matters with particular focus on the unique Tax Identification Number, the Personal Income Tax (Amendment) Act, 2011 and other actions designed to increase revenue at the state level.

Culled Punch

  1. Sirajo Usman Koko Reply

    Shame on u our govs, bkoz in d 1st place u think oga gudlok go gv u dat moni direct to ur pocket dats y u support him in fuel subsidy removal bt nw dat he betrayed u den u kan open ur mouth nd start publishing dat fuel subsidy is illegal nd unconstitutional. U mean b4 u dnt knw say is unconstitutional? Na God cauth u. May God almighty help dis nation wt gud leaders pls

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