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Petroleum Monitoring Committee Crude oil production increased to 2.6 million bpd. Nigeria loses 300,000 barrels of oil daily Archives

FG Spends N600 Billion On Subsidy

Kunle Aderinokun, 14 October 2009

Abuja The Federal Government has estimated that it will this year spend N600 billion on petroleum subsidy which will be withdrawn from excess crude savings account (ECA).

This is as the Implementation Committee on the Reforms of the Downstream Petroleum Sector yesterday intensified consultation with the stakeholders, particularly the labour unions, on actualisation of the proposed plans for the reforms of the Downstream Petroleum Sector.

Sources told THISDAY that the Finance Minister Dr. Mansur Murthar revealed this at the ongoing consultation between the federal government and stakeholders in the oil and gas reform.

Muhtar was quoted to have said that the government sees "subsidies as a major challenge in the downstream petroleum sector which needs to be addressed". He stressed the need for all stakeholders to collaborate with government in the implementation of the envisaged reforms. Muhtar further disclosed that about 29 per cent of the foreign exchange sales were used to finance the importation of refined petroleum products in January.

The federal government team is expected to continue consultations next week with the Nigerian Labour Congress (NLC) and members of the Organised Private sector, including Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Economic Summit Group (NESG), among others.

Earlier on, the Implementation Committee which comprises of the Minister of Finance - Dr Mansur Muhtar as Chairman, Minister of Petroleum - Dr Rilwanu Lukman, Minister of State for Petroleum - Odein Ajumogobia, Special Adviser to the President on Petroleum - Dr Emmanuel Egbogah and Chief Economic Adviser to the President - Alhaji Tanimu Yakubu, among others, had met with major oil marketers and IPMAN to discuss the envisaged reforms and have a common understanding on the issues with key stakeholders with a view to addressing the various challenges confronting both the government and the marketers.

Muhtar who presented the position of government was said to have informed those present at meetings of the need for government to start "addressing inefficiencies in the downstream petroleum sector", highlighting the rationale for the reforms, as well as policy measures that will remove supply bottlenecks and enhance domestic product supply within a competitive environment.

At the meeting, representatives of major oil marketers exchanged ideas and expressed concern regarding their inability to import substantially, arising from the inability on the part of the government to settle outstanding liabilities (which run into billions of Naira) by the government/PPPRA. He stressed the difficulties faced by the marketers in accessing credit facilities from the banks as well as volatility in foreign exchange market.

He also stated that there were steady, but significant declines in the volume on products imported by private marketers between January and August, 2009. The marketers also highlighted the fact that high interest charges are accrued on current liabilities due to delayed payments.

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