The Rich Get the Real Subsidies, Not the Poor – SAN Femi Falana
Femi Falana expatiate Subsidies for housing, transportation, electricity, and food are all forms of good governance on a global scale. So instead of subsidies being a problem, it is who benefits from them. Subsidies in Nigeria are predominantly provided by, for, and to the wealthy. pointing out handful, explaining how they’re being mismanaged, and show how enormous sums of money might be recovered to pay for development as well as fuel subsidies.
1. The Federation Account was improperly used for N40 billion
The Ministry of Interior had contracted with Continental Transfert Technique to collect the $2,000 annual CERPAC fee (Combined Expatriate Residence Permit and Alien Card) from each expatriate in Nigeria. The 2019 revenue amounts to an annual average of N40 billion. This collection, which contravenes Section 162 of the Constitution and the Immigration Act of 2015, is subsequently distributed among the Federal Government, 30, the Interior Ministry, 7, the Immigration Service, and the Continental Transfert Technique, 58%.
At the Federal High Court, we contested this illegality and prevailed in our cases. The court ordered the NIS to start collecting the money and sending it to the Federation Account. However, the contractor and the federal government filed an appeal against the ruling, and they still split the N40 billion annually.
2. An additional $1.5 billion in revenue is due to the Federation Account.
I alerted the federal government to the fact that the Deep Offshore and Inland Basin Production Sharing Contracts Act’s 15-year tax incentives for oil and gas firms had ended in June 2014 in July 2015. We created a Bill to modify the legislation when the Federal Government rejected our request. Before the 8th National Assembly was dissolved, the bill that Senator T. Orji had endorsed and sponsored failed to pass the Senate’s first reading.
On November 4, 2019, President Buhari gave his assent to a modified version of the same Bill that had already been approved by both houses of the 9th National Assembly. According to Senate President Ahmed Lawan, who argued for the bill’s adoption, the new law will boost the country’s revenue by at least $1.5 billion annually.
3. Outstanding $62 billion in royalties
I urged the federal government to recover unpaid royalties owed by the international oil companies under the Deep Offshore and Inland Basin Production Sharing Contracts Act throughout my campaign for its amendment. The Federal Government acknowledged that the nation had suffered a staggering loss of $60 billion. However, my request that the enormous fund be collected was ignored.
After being petitioned by the governments of Rivers, Akwa Ibom, and Bayelsa States, the Supreme Court issued an order on October 20, 2018, directing the Federal Government to collect royalties owed for the previous 18 years. The Federal Government acknowledged the $62 billion in unpaid royalties that the IOCs have withheld, but it has chosen not to collect them.
4. The FG was denied $500 million in revenue by a group of dishonest public officials.
Through an agreement between the Nigerian Port Authority and TPMS, a private corporation, the international Cargo Tracking Note Scheme was launched into Nigeria in 2010 to safeguard international commerce and stop the movement of dangerous cargo and arms shipments. Less than a year later, the deal was terminated.
When the illegal suspension of the Cargo Tracking Note system came to our attention, we objected, and on May 28, 2015, the restriction was lifted—only to be reinstated in 2016.
President Buhari signed an executive order in 2022 allowing a business to run the Cargo Tracking Note. The President was overruled and the contract was taken over by 5 businesses that were supported by senior government officials. A lawsuit against the federal government has since been filed in Federal High Court by the business that obtained the contract. Nigeria has also lost at least $500 million, and a number of dishonest public officials have jeopardized the country’s security.
5. The sale of public companies and assets
In the banner of privatization, successive governments have sold businesses and assets owned by the Federal Government to members of the ruling elite. After that, the buyers started removing assets. The federal government sold 142 public enterprises to members of the affluent class between 2004 and 2002, according to the Bureau of Public Enterprises.
The so-called “core investors” have grabbed the 10% shares allowed for the workforce of every privatized business, in violation of section 5(3) of the Privatization and Commercialization Act.
6. 14 banks will receive $7 billion.
The CBN fixed $7 billion from the country’s foreign reserves in 14 commercial banks in Nigeria sometime in 2006. The banks did not receive payment for the deposit or interest that had accumulated. The CBN stated that “the forbearance” had been forgotten when I reported the incident to one of the anti-graft organizations.
7. CBN purchases Polaris from Heritage, Keystone, Union, and Polaris Banks
After spending trillions of Naira to revitalize Heritage Bank, Keystone Bank, Union Bank, and Polaris Bank, the CBN assumed control of them and then secretly sold them. Taking Polaris Bank as an example, CBN invested N1.3 trillion in it before selling it for N50 billion.
8. Crude oil theft
According to the Nigerian Extractive Industries Transparency Initiative (NEITI), between 2009 and 2020, crude oil theft cost Nigeria 619.7 million barrels of crude oil worth N16.25 trillion ($46.16 billion). General Babagana, Nigeria’s most recent national security adviser, predicted that theft of crude oil might cost the country $23 billion by 2023.
9. Gold and other solid mineral theft
The theft of the nation’s mineral wealth is not just confined to petroleum; highly placed criminal elements also smuggle out solid minerals. Dr. Uche Ogah, a former minister of state for mines and steel development, has revealed that wealthy individuals in Nigeria smuggle gold using private jets. He made this statement during a Senate Committee on Solid Minerals, Mines, Steel Development, and Metallurgy investigational hearing on the $9 billion annual loss due to illegal gold mining and smuggling. Senator Orji Uzor Kalu said during his testimony at the hearing that illegal gold smuggling cost Nigeria close to $54 billion between 2012 and 2018.
10. The wealthy owe N5.4 trillion to AMCON.
Commercial banks were on the verge of failure a few years ago as a result of the hazardous loans that members of the ruling class had taken out. The Federal Government established the Asset Management Corporation of Nigeria (AMCON) to buy off the loans with trillions of Naira given by the CBN in order to stave off the looming economic catastrophe. About 370 corporate organisations owe AMCON debts totaling N5.4 trillion, however they have not been repaid.
11. Discriminatory remission of import duties
A small group of favored businesspeople can bring any kind of commodities into the nation and purchase dollars at the official rate. For them, import taxes of N16 trillion have been waived over the past five years.
12. NNPC’s attempt to track and observe fuel-tanker sabotage
The installation of technology monitoring programs and structures under the Petroleum Equalization Fund (PEF) for N17 billion was approved by the Federal Executive Council (FEC) on August 8, 2018. While the N17 billion budgeted for it was diverted, the technology that was intended to track and monitor ships delivering fuel and other petroleum products was not purchased.
13. CEOs of government companies stole N10 trillion
On December 19, 2018, the Buhari administration disclosed that, as of August 2018, government entities, including the CBN, owed nearly N10 trillion in unremitted operational surplus. The specifics were given. The aforementioned sum of N10 trillion is still owed.
14. Buyers of government properties owe N6 trillion in unpaid ground rent
On March 29, 2023, the Senate highlighted that the federal government had built and distributed more than two million homes to recipients across the 36 states and the FCT since 1992 without providing proof that the ground rent on the properties had been paid. In order to collect approximately N6 trillion in outstanding ground rent from property owners across the nation, the Senate established an Ad Hoc Committee.
15. $29.17 billion worth of crude oil that was stolen
Between January 2011 and 2014, 60.2 million barrels of crude oil worth $12.7 billion were illegally exported to the United States, according to a group of lawyers NIMASA hired. This is not a recovered item. Additionally, the House of Representatives looked into and confirmed that during the same time period, unreported crude oil exports totaling $17 billion were made to foreign countries. The affected businesses are known, but the government lacks the will to hold them accountable and recoup the $29.7 billion worth of stolen petroleum.
16. Theft of N16.25 trillion in oil
According to the Nigerian Extractive Industries Transparency Initiative (NEITI), oil theft cost Nigeria 619.7 million barrels of crude oil worth N16.25 trillion ($46.16 billion) between 2009 and 2020. The looting and smuggling of crude oil from Nigeria has not been stopped by the security services.
However, a private business called Tantita Security Services Nigeria Ltd (TSSNL) found pipelines that were being used to move crude oil from a 40,000 barrel per day Forcados pipeline to the high seas for export. The accused oil corporations, including an IOC who participated in this colossal crime, have not yet been brought to justice.
17. FIRS and NCS deduct collection fees.
The enabling legislation for the Federal Inland Revenue Service and the Nigeria Customs Service permit them to deduct a portion of the taxes and duties they collect as collection costs. In this way, the FIRS deducted N533.39 billion between 2016 and 2020 while the Nigeria Customs Service withdrew N128.64 billion as the cost of collection in 2022.
The Constitution’s section 162 requires that all funds collected by the Government of the Federation be paid into the Federation Account, and regulations allowing agencies of the Federal Government to deduct collection charges are in conflict with this provision.
18. Refusal of $6.065 billion approved for refinery turnaround maintenance
Through the NNPC, successive governments spent roughly $6.065 billion between 1993 and 2016 on the so-called turn-around maintenance and rehabilitation of the four refineries at various points in time.
The fact that the refineries’ turn-around maintenance was neglected is widely known. The EFCC should therefore invite the contractors and order them to refund the aforementioned $6.025 billion.
19. Renovation of 4 refineries and investment in the Dangote refinery
The Dangote Refinery received a $2.7 billion investment from the Federal Government, and 300,000 barrels of crude oil per day will be provided by NNPCL. Additionally, the government has given the contracts for the $1.5 billion, $1.4 billion, and $1.5 billion renovations of the Kaduna and Warri refineries, as well as the two refineries in Port Harcourt.
We are obligated to request that the 4 refineries’ current renovation and upgrade be observed by the Nigeria Labour Congress and Trade Union Congress.
20. Governors’ pensions, special pay for prominent public officials, and security votes
Top public officials have improperly removed themselves from the regular pay scale. For instance, members of the National Assembly receive emoluments ranging from N13 million to N15 million per month, which is contrary to section 70 of the Constitution, which states that the Revenue Allocation Mobilization and Fiscal Commission shall fix the salaries and allowances of legislators.
The 36 State Governors receive security votes totaling hundreds of millions of dollars each month in addition to their salaries. Since then, the generosity has been extended to all senior public officials, including the chairman of municipal and state governments as well as the leaders of their respective ministries, departments, and agencies. Senior public leaders receive over N241 billion in security votes annually.
As if this subsidy weren’t terrible enough, state governors now receive a pension worth billions of Naira. However, in response to public outcry, the Lagos State Government cut the ex-governor pension in half, while the governments of Kwara, Imo, and Zamfara States stopped paying the excessive compensation to ex-governors and deputies. All other state governments are urged to follow the lead set by the aforementioned three state governments.
21. NNPCL diverted $33 billion in dividend and feed gas.
Nigeria and the OICs both possess a portion in Nigeria LNG Limited. In 1989, funds from the Federation Account were used to purchase Nigeria’s 49% stake in the joint venture. The Nigerian Liquefied Natural Gas (NLNG) company generated $114 billion in revenue, $9 billion in taxes, $18 billion in dividends, and $15 billion in feed gas purchases to the federal government, according to information released by the former president Buhari on March 29, 2021. However, the $33.9 billion dividend and feed gas were diverted by the NNPCL instead of being paid into the federation account as required by the constitution.
22. Abuse of the gasoline subsidy fund that included trillions of Naira
Although NNPC is given a daily allocation of 445,000 barrels of crude oil for domestic consumption, it has been established that between 1999 and 2023, Nigeria imported the following amounts of fuel:
1. 1999-2006 =N813 billion;
2. 2007-2009= N794 billion;
3. 2010-2014= N3.9 trillion;
4. 2015-2023= N11 trillion.
The nation was shocked last week when Mr. Mele Kyari, Chief Executive Officer of the Nigerian National Petroleum business Limited (NNPCL), claimed that the federal government still owed the business N2.8 trillion in gasoline subsidy payments. But the Buhari administration has verified the massive fraud that has distinguished the gasoline subsidy scam.
Thus, on March 27, 2022, Mr. Timipre Sylva, a former minister of state for petroleum resources, expressed his public regret over the controversy surrounding the nation’s daily consumption of gasoline. He claimed that the subsidy system had encouraged illegal activities like smuggling, which had a detrimental effect on the country’s oil resources. According to him, the number can occasionally reach 90 or even more million liters. I have no idea how that occurs. If anyone is searching for a criminal enterprise at this pace, look no further than the fuel subsidy, I’ve remarked. The Bola Tinubu administration should look into the criminal enterprise.
In Conclusion
From the aforementioned, it is abundantly evident that the ruling class enjoys generous subsidies from the periphery capitalism system while the general populace suffers from painful economic hardships. To put pressure on the federal government to stop the dollarization of the economy, the indiscriminate granting of duty waivers, the theft of crude oil, gold, and other mineral resources, as well as to restore the nation’s looted wealth, we must therefore appeal to the Nigeria Labour Congress and Trade Union Congress. In other words, these’subsidies’ ought to be recovered until the nation’s refineries are fixed so that the nation can offer real subsidies that can actually make living in Nigeria bearable.
