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Why Finance Commissioners kicked against fuel subsidy — Phillip Nto

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By Babajide Komolafe

Recently, the Committee of Commissioners of Finance of the 36 states joined the rising number of people calling for the removal of fuel subsidy. In this interview, Dr. Philip Nto, Abia State Commissioner of Finance explained the rationale behind committee’s recommendation.

banking-and-finance-page-1-pixHe also speaks on efforts of the Abia State government to boost its internally generated revenue, and enhance budget implementation. Excerpts

You are a member of the Committee of Commissioners of Finance. The committee recently recommended the removal of fuel subsidy. What prompted your recommendation on such contentious issue?

You are right. But the Federal government is not sleeping over the issue. Pragmatic approach towards reversing such fears is on-going. But beyond that, let me tell you something.

Even before I was appointed the commissioner for finance, I was among those that always kick against anything called subsidy. Subsidy is not a healthy situation in any economic system. When you talk about subsidy, it means government paying for your expenditure.

Now, we don’t have good roads, we don’t have electricity, we have unemployment that is rising by the day. So why waste all these monies just to fund a small aspect of our expenditure?

Even when government says it wants to fund the fuelling of our vehicles and our generators, they are widening the gap between the rich and the poor. If you go to the house of a very wealthy man, you will see fleet of vehicles.

Calculate how much a rich man that has five cars will be spending on fuel and calculate how much subsidy he gets when fuelling the five cars. That will give you an idea of how much you are empowering the rich man with.

Then you now see a poor man whom we said we want to protect having only one tricycle and it means that you are only subsidising the man that has tricycle with about 10 litres of fuel while subsidising the rich man that has five cars with about 500 litres of fuel.

That shows that we are only empowering the rich more than the poor and by doing that widening the poverty gap. So, the rich will continue to get richer while the poor will continue to get poorer. Another issue you need to consider about the fuel subsidy is the relationship among the states.

If you look at states like Lagos and some others, where we have the oil merchants are the ones that are empowered more. This means we are using the money that is supposed to accrue to Abia state’s federation account to fund Lagos, Rivers, Abuja and others.

You see, all these rich merchants, they pay their taxes in Lagos, they buy things in Lagos and they don’t do any transaction in Abia state, yet we are using part of the money that is supposed to come to Abia to fund Lagos state.

That is why some people will be saying that some governors are performing, while others are not performing, even when you are using monies that are supposed to accrue to some states to fund infrastructural development in some others.

That was why we said no; allow us to take our money so that we can formulate policies that will help to empower our people economically.

Assuming you use N500 million to fund fuel subsidy, it means that is the amount that Abia state is losing to, maybe, somebody that is doing business in Lagos.

If actually, we want to go into real subsidy whereby we want the poor to be empowered, we go back to what we used to have during the military era where the poor will buy from particular filling stations and the rich from designated filling stations.

That is the only time you can say you are embarking on real principle of fuel subsidy.

Apart from that, you are only widening the gap between the rich and the poor. So that was why we decided that the fuel subsidy should be removed. I was among those that kicked against fuel subsidy because it is not healthy for our system and it is not healthy for Abia state.

So when do we expect the implementation of the recommendation by your committee?

We have sent our recommendation to the President and we are waiting for his response. I believe very soon he will respond. But we are still mounting pressure and we are calling on all Nigerians to look at the negative implications of fuel subsidy. Subsidy is only meant to empower the rich and not the poor.

What is the level of the implementation of Abia state’s 2014 budget?

This year’s budget was prepared under the medium-term expenditure project so that there will not be abandoned projects. So I may not state categorically the extent of budgetary performance in the state, all I know is that the budget is performing.

You know the budget is divided into two – the income and expenditure. Even the expenditure is divided into two – recurrent expenditure and capital. Nobody is complaining that the government owes and by implication the recurrent expenditure is performing.

Then if you look at the other aspect of it, the government is running, which is another aspect of recurrent expenditure. All our MDAs are running at full course.

The only aspect I may not speak categorically   is the extent we have performed is the capital expenditure, which was why I explained the principle of the medium-term expenditure.

For example, if you look at a project like the new government house, it is not a project you can finish within one year. Some of the projects will terminate this year, some will go beyond this year and all these will provide solid foundation for the take-off of the state.

The state government is doing a lot to reposition the state and also to attract investors. The first thing you must consider when you want to attract investors in a state is security.

Today, Abia is the most secured state in the country. Moving the industrial timber market to a more expansive area, moving the Umuahia market to a larger area are all geared towards making the state attractive to investors. We have been signing a lot of MoUs because the government has created the enabling environment for investors to come in.

What is the level of the implementation of the state’s budget?

This year’s budget was prepared under the medium-term expenditure project so that there will not be abandoned projects. So I may not state categorically the extent of budgetary performance in the state, all I know is that the budget is performing.

You know the budget is divided into two – the income and expenditure. Even the expenditure is divided into two – recurrent expenditure and capital. Nobody is complaining that the government owes and by implication the recurrent expenditure is performing.

Then if you look at the other aspect of it, the government is running, which is another aspect of recurrent expenditure. All our MDAs are running at full course.

The only aspect I may not speak categorically   is the extent we have performed is the capital expenditure, which was why I explained the principle of the medium-term expenditure.

For example, if you look at a project like the new government house, it is not a project you can finish within one year. Some of the projects will terminate this year, some will go beyond this year and all these will provide solid foundation for the take-off of the state.

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