$1.6 billion TAM and N971 billion fuel subsidy

NIGERIA’S profligate spending on fuel subsidy will continue in 2014 with the N971.1 billion provided for it in the budget. A breakdown of the budget released by the Ministry of Finance states, “Subsidy payments were maintained at the 2013 level of N971.1 billion.” Such spending this year is questionable, given the Turn Around Maintenance of the country’s four refineries that began in January 2013.

The renovation was geared toward making the refineries reach 90 per cent capacity utilisation, according to the Minister of Petroleum Resources, Diezani Alison-Madueke, who stated this in October 2012. To achieve the goal, she said the Federal Government would inject $1.6 billion into the refineries in Port Harcourt, Warri and Kaduna.  This was done. The TAM schedule she unfolded before the Senate Committee on Petroleum chaired by Magnus Abe in 2012 showed that a Japanese company, JGC, the original contractor that built the Port Harcourt Refinery, was contracted.

Alison-Madueke effusively said, “…we have put in place a new plan, complete with new schedules and timelines to bring the refineries back to life and get them to run at higher capacity. The maintenance and upgrade will start with the Port Harcourt Refinery, which has stayed the longest period without turnaround maintenance.” The repair of the last refinery, she added, “comes on stream by the beginning of the last quarter of 2014.”

But with more than one year of repairs in the other refineries, there ought to have been a rebound, felt in increased production output, which invariably should have reduced substantially the N971.1 billion voted for subsidy on imported fuel this year.