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Nigeria Spends Over N500bn On Kerosene Subsidy – PPPRA



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Teddy Oscar, Abuja

The Petroleum Product Pricing and Regulatory Agency (PPPRA) on Wednesday revealed that about $34 million (over N500 billion) was spent to subsidise the importation of kerosene between 2010 and 2013.

PPPRA executive secretary, Reginald Stanley, dropped the hint to rescue the managing director of the Petroleum Products and Marketing Corporation (PPMC), Engr. Haruna Momoh, who evaded the question on the actual cost at which this volume of product was supplied.

Stanley spoke at day two of the ongoing investigative public hearing on the supply, distribution, expenditure and subsidy on kerosene by the House of Representatives’ committee on petroleum resources (downstream).

He further revealed that within the 19 months of 2012 and 2013 period, there were total of over 3 billion litres of kerosene imported into the country by the Nigerian National Petroleum Corporation (NNPC), which had a corresponding amount of N543.89 billion as the subsidy claim, adding that “between $33, 393, 000 and $34, 290, 000 is spenton each cargo of kerosene, and between $1,113 and $1,143 is spent on importing each ton of the product.”

Stanley also disclosed that a total of N331 billion was approved to be paid to NNPC as subsidy claim covering a three-year period of 2009 and 2011, after the issue of the presidential order on kerosene subsidy suspension.

Earlier, Momoh hinted that despite the difficulty experienced by Nigerians in accessing the product for domestic use, PPMC made 9,732,437.17 metric tons of kerosene available to the Nigerian public between 2010 and 2013.

Momoh added that this volume of kerosene was sourced from their Off-Shore Processing Agreement (OPA) Swap arrangement in which a value of crude oil is exchanged for refined products and the remaining from local refineries.

Meanwhile, the House of Representatives on Wednesday urged the Federal Government to urgently implement the rice agreement it had with stakeholders last year.

In a motion urgent national importance moved by Hon. Nasiru Baballe Ila, the House also mandated its committee on customs to summon all relevant stakeholders in order to fashion out a way forward on the rice transformation agenda.

Ila, in his debate on the motion, observed that the Federal Government increased duty on rice importation from 50 percent to 100 percent in 2013 to further stimulate local farming and subsequently go into local production.

“The good intention of the Federal Government has been sabotaged by unquantifiable smuggling at a rate never witnessed in the past,” saying Nigeria lost over N300 billion from sharp practices on the matter. Over three million tons of parboiled rice was smuggled into Nigeria in 2013 through Benin Republic. This culminated in that country gaining over N200 billion in dutiable levy.

“To further worsen the situation for Nigeria, Benin Republic deliberately removed 18 percent VAT (value added tax) on all parboiled rice imports destined for Nigeria, whilst the duty of 12.5 percent is to be charged on the benchmark price of only $200 per metric tonne, thereby bringing down effective duty to only $25 per metric tonne against the $570 per metric tonne dutiable rate being charged at Nigerian ports.

“Nigeria Customs Service, which is the second largest revenue generator to the government coffer lost over N300 billion from sharp practices of smuggling. It is pertinent to note that import duty on rice is the major source of revenue to the Service,” he said.

According to him, following the November 2013 meeting between the government and stakeholders on rice, the committee observed the fall in rice prices internationally from $600 to $350, and recommended that Nigeria should bring its own down to $190 per metric ton.

Also on Wednesday, the House has introduced two new bills on the floor of proceedings, including: Nigerian Development and Counterpart Fund Bill, 2004 and National Biosafety Management Agency Bill, 2014.

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