The Nigeria Natural Resource Charter (NNRC) says the government’s high spending on petrol subsidy poses a destabilising effect on public finance and erodes needed investment in human capital development.
This is contained in a report released in Lagos on Thursday by NNRC, a non-profit policy institute that promotes the effective management of natural resources for public good in its 2019 Benchmarking Exercise Report (BER).
The 45-page report which has the theme: ”Evaluating Petroleum Resource Management in Nigeria”, was jointly authored by a team of research institutions including Centre for Public Policy Alternatives and BudgiT.
Others are Centre for Social Justice, Centre for the Study of the Economies of Africa, Social Action and We The People.
The report said that the N750 billion spent on petroleum subsidy in 2019 was beneficial to the richest, and 20 per cent of Nigerians, but to the detriment of the majority of poor citizens.
“For every one naira that the Nigerian government (federal, state and local) earned in 2019, 0.136 kobo or about 13.6 per cent is allocated for subsidy,” it said.
According to the report, subsidising fuel importation in order to peg the market price at N145 has continued to deprive the country funds that could have been channeled to other critical areas of the economy.
It noted that the N450 billion budgetary provision for subsidy in the 2020 Budget was more than the entire capital spending like provisions for Agriculture (N124bn), Aviation (N52bn), Education (N84bn), Health (N59bn), Industry, Trade and Investment (N38bn) and Water Resources (N91bn).
The report, therefore, urged the government to plan towards deregulating the downstream sector in the long term and also invest in areas that would cushion the likely effect of subsidy removal.
It also called for a strong legislative oversight of the current subsidy regime by the National Assembly to ensure transparency and accountability, especially on the part of the Nigerian National Petroleum Corporation (NNPC).
Commenting on the report, Ms Tengi George-Ikoli, Programme Coordinator, NNRC, said the natural resource charter was a set of principles intended for use by governments and societies to determine how best to manage natural resource wealth for the benefit of current and future generation of citizens.
George-Ikoli said the speedy passage of the Petroleum Industry Governance Bill (PIGB) was pivotal to effectively managing Nigeria’s oil and gas resources which was the mainstay of its economy.
She said: ”Nigeria’s growth is directly affected by the changes in the price of crude, I avert your minds to the last economic recession in 2016-2017.
“Without proper management of Nigeria’s petroleum resources, Nigeria could fall into another recession if prices depreciate further and our outputs reduce.”
