Minister of Petroleum says N1.3tn Subsidy Payment in 2011 Due in Large Part to Kerosene

Minister of Petroleum Resources, Mrs. Diezani Allison Madueke, who appeared before the House of Representatives ad-hoc committee investigating the management of funds spent of fuel subsidy, has said the exorbitant amount spent on subsidizing petroleum in 2011 was due in large part to payments on Kerosene subsidy.

“The 1.3 trillion represents both PMS and Kerosene together,” Madueke said in her presentation. The Petroleum minister explained the payments of kerosene subsidy in arrears “created the spike last year”.

In her presentations she said the NNPC was trying to recover the 2008 and 2009 arrears, which it had until then “carried solely”. The payments from both year amounted to N250bn, and additional current payments on kerosene subsidies brought the figures to slightly over N300bn.

“The Kerosene subsidy, which was fairly high, was based on a price of N50 per litre, which as you may recall this honourable house insisted we maintain at all times. We did our best to maintain it officially,” Madueke said.

Further explaining the N245billion budgeted for subsidy payment in 2011, the Petroleum minister said that amount had been put in the budget for a period of two months since the federal government had high hopes for subsidy removal.

“That was because at the time, it was calculated on the basis that deregulation was expected to have taken off there after… of course that did not happen.”

Madueke added that the authorization of payments on subsidy was the responsibility of the ministry of finance, not the ministry of petroleum and could therefore not provide further clarity on how the funds were dispensed.

The hearing continues for a third day on Wednesday, 18 January and the minister of finance Dr. Ngozi Okonjo-Iweala is expected to appear before the committee on Thursday, 19 January.