President Muhammadu Buhari on Wednesday said N305 billion had been earmarked for petrol subsidy in the 2019 budget proposal.
Mr Buhari stated this in his budget presentation speech to a joint session of the National Assembly in Abuja.
Recall that the Buhari administration had withdrawn subsidy on petrol in 2016, forcing independent oil marketers to pull out of importation of the product.
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Their withdrawal left the NNPC as the sole importer of petrol, whose pump price remained capped at N145 per litre against a landing and supply cost of N185/litre.
Since then, the NNPC has been drawing from the Nigeria Liquefied Natural Gas, NLNG, dividend fund to cover the under-recoveries amounting to N40/litre in importation of petrol.
So far, the NNPC has utilised 1.05 billion dollars or N320 billion of the fund to cover the under-recoveries, according to its Group Managing Director, Mr Maikanti Baru.
“We have allowed N305 billion equivalent to one billion U.S. dollars for under-recovery by the NNPC, Nigeria National Petroleum Corporation, on Premium Motor Spirit in 2019.
“Let me take this opportunity to address and clarify the under-recoveries on petrol.
“In a period of economic challenges where purchasing power is weak, we must reduce some of the burden on Nigerians,” he said.
However, this has drawn the anger of the Senate, which believes the oil company lacked the legal powers to unilaterally spend the money without appropriation by the National Assembly.
According to analysts, the provision for subsidy in the 2019 budget proposal will lay to rest the disagreement between the lawmakers and the NNPC on the matter.
Mr Buhari said the problem with subsidy in the past was abuse and corruption especially by independent oil marketers.
“Today, the government-owned NNPC is the sole importer of PMS, and therefore the under-recovery is from the NNPC trading account.
“This means the possibility of some oil marketers filing bogus claims is removed.
“We will continue working to bring it, subsidy, downward to ensure such revenue sources are freed up to meet the developmental needs of our people,” the president said.