THE Minister of Finance, Dr. Ngozi Okonjo-Iweala, has announced the drawing down of N12. 6 billion from the excess crude oil account to fund government measures to cushion the effects of the petroleum downstream sub-sector deregulation.
Emerging from this month’s Federation Accounts Allocation Committee (FAAC) in Abuja, at the weekend, she said that another N2 billion would be spent, monthly, by the three tiers of government to subsidise kerosene for which government announced price cuts two weeks ago.
Okonjo-Iweala said that under the proposed measures, the federal government would give N100 million to 32 states of the federation which would also contribute double that amount as their counterpart funding, while the four states (Lagos, Kano, Port-Harcourt and Oyo, as well as, Abuja, with large urban population would receive N2 million each from the federal government and also contribute double that amount. The fund is for the purchase of buses for transportation.
According to the minister, President Olusegun Obasanjo was very concerned about the effects of the deregulation on Nigerians, particularly the poor, and therefore eager to see the immediate implementation of the measures proposed to reduce their suffering.
Her words, “I came this morning to discuss a very important issue which is the implementation of the cushioning measures. Like you know Mr. President is very eager to move on with the implementation of these measures to cushion the effects (of full deregulation) on the Nigerian people. So he has asked me to move on it. We discuss with the states, how we are going to implement these measures.
“Number one is the issue of transportation. And the procurement of buses for the Nigerian population in which the federal government has said, for 32 states, it will give N100, million grant into which the states will also put double that amount to procure buses for the people and then for four states and the Federal Capital Territory it will be N200 million given by the federal government and the states to put double that (N400, million).
“Those states have a large population of urban. Although the buses are not only meant for urban, they can also be for rural use. We met to discuss how to implement this with the Hon. Commissioners of Finance and the Accountant-General of the various states who are also participating in this FAAC.
“The conclusion we came to was that on the issue of buses, even though we are in a hurry, particularly as Mr. President has instructed to implement this quickly, there is need for further consultations between the Hon. Commissioners and their governors on the issue of how we implement this.
“The second issue is on kerosene. Everybody is agreed on the need to cushion the effects of kerosene with all tiers of government participating in the cost of this, which will be about N2 billion a month, to subsidise the cost of kerosene to the Nigerian people, to the poor of the country.
“Each tier will participate according to its revenue allocation formula. Will contribute in that regard. We wait for further consultations between commissioners and governors. But I want to assure everyone that the president and the state governors are desirous to move in this path and we will try to hurry these consultations between commissioners and the governors.
“It comes to N12.6 billion which will be taken out of excess crude oil money. That is a lot of money plus another N2 billion a month, for kerosene.”
Dr. Okonjo-Iweala explained that contributions of both the federal and state governments would be drawn from the shares of the two tiers of the excess oil crude account which is estimated at N609 billion at the end of the year.
The National Economic Council has agreed to save 50 per cent against the volatility of the crude market if it is to be used to cushion the volatility of oil prices. The palliatives measures would be funded from the other 50 per cent.
“50 per cent of the money we saved will be spent in 2005 and the federal government has already included its own portion in its budget. Now that part of that 50 % we are going to spent will be used in the cushioning measures. The states are also to contribute their own portion from their share of the excess crude.
“These are only short term measures. The bulk of the excess crude savings to go into roads and power sector. The president has already said that, recognizing that these are the areas where most Nigerians want to see improvement on. So the budgets of FERMA, the main ministry (of Works), and power and steel have improved considerably .“
