Deregulation: FG saves N1.4 trillion on subsidy payment

Osibanjo

Vice President, Prof. Osibanjo

Vice President, Prof. Osibanjo
Vice President, Prof. Osibanjo
Kazeem Ugbodaga

The Federal Government says it has saved N1.4 trillion which could have been paid as subsidy to oil marketers since the deregulation of downstream petroleum sector.

Nigeria’s Vice President, Prof. Yemi Osibanjo disclosed this on Thursday at the Presidential Policy Dialogue, organized by the Lagos Chamber of Commerce and Industry held at the Eko Hotels and Suites, Victoria Island, Lagos, Southwest Nigeria.

He said the deregulation of the downstream petroleum sector had equally had significant increase in the availability of Premium Motor Spirit, PMS throughout the country as this had been achieved at a price of N145 per litre as against over N200 per litre being paid in most parts of the country prior to the deregulation.

“This action has led to reduced daily demand for PMS for which the daily demand has reduced from 1,600 trucks per day to 850 trucks per day. This has resulted in the savings of N1.4 trillion on subsidy payments, thereby conserving budget resources and reducing demand for foreign exchange required to import such volumes, which were also smuggled to neighbouring countries because of the previous price differential,” he said.

Osibanjo also said the federal government apart from the N332 billion released for capital expenditure recently which was more that the entire amount released last year, the government was set to release another N100 billion for capital expenditure in the next few days.

“The main sectors for which the funds have been released are power, works and housing; defence; transportation and agriculture. One of the first areas in which we brought change about is in public financial management. This has had a consequential effect of saving jobs as well as money. The reality is that every “ghost worker” eliminated at the Federal level is a job saved.

“Other policy instruments used in this regard include the Treasury Single Account, which has brought transparency into inflows and outflows of government monies. The on-going implementation of the Integrated Payroll and Personnel Information System is bringing about monthly savings of N8 billion, while the creation of the Efficiency Unit is projected to save N14billion in 2016 fiscal year.

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“A great effort has been made to improve non-oil revenues; this includes bringing an additional 700,000 companies into the tax net as compared to the targeted 500,000 set at the beginning of the year. Non-oil revenue from both FIRS and Customs continues to lag behind projections partly due to seasonal factors and economic conditions. The FIRS has implemented VAT-Collect for auto-tracking and remittance of VAT, increased collaboration with State Governments in tax collection.

“FIRS has achieved 73.17% of its target for the first half of the year. In a similar vein, the Customs have undertaken substantial revision of incentives, control and enforcement measures.

In deepening the diversification efforts agriculture is clearly a major priority of this government. The obvious gains are food security and a reduction in the financial burden and pressure on foreign exchange resulting from importing foods that we can produce.,” he stated.

On road rehabilitation, the vice president said government had paid N70 billion to contractors who had not been paid in over two years with over 70 construction firms benefiting, adding that this had resulted in the recall of not less than 5000 workers.

“Indeed, work has started on sections of Kano-Katsina; Kano-Maiduguri; Ilorin-Jebba; and Lagos-Ibadan roads amongst others. You are all witnesses to the fact that the power situation had started to improve after this Administration came into office. The data available shows that average generation rose from 3565MW from January to May 2015 to as high as 5000MW in February 2016.

“The situation however has become more challenging by the recent spate of insecurity in the Niger Delta, impacting on the supply of gas for electricity generation. The sabotage of the Forcados export terminal alone cost the loss of 40% of gas supply to power plants.

“However, efforts are underway to continue to diversify sources of energy including hydro, biomass, coal and solar among others. The recent signing of agreements with 14 solar companies, which is expected to add 1,125 megawatts to the National Grid, is an example in this regard.