The Real Subsidies Are Not For The Poor, But The Rich, By Femi Falana

Globally, subsidies, whether for food, transportation, energy or housing, are part of good governance.

So, the issue is not subsidies but who benefit from them. In Nigeria, subsidies are primarily of the rich, by the rich and for the rich. I will highlight a few, how they are being manipulated and how huge sums of money can be recovered not just to subsidise fuel but also provide funds for development.

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1. Diversion of N40 billion from Federation Account

A company, Continental Transfert Technique had been hired by the Ministry of Interior to collect the Combined Expatriate Residence Permit and Alien Card, CERPAC, fee of $2,000 per annum from every expatriate in Nigeria. The revenue from 2019 comes to an average of N40 billion per annum. This collection which violates Section 162 of the Constitution and provisions of the Immigration Act 2015, is then shared on percentages of Federal Government, 30; Interior Ministry, 7; Immigration Service, and Continental Transfert Technique, 58 per cent. We challenged this illegality at the Federal High Court and won the cases. The court directed the NIS to collect the funds henceforth and remit same to the Federation Account. But the contractor and the Federal Government appealed against the judgement and have continued to share the N40 billion per annum.

2. Additional Revenue of $1.5 billion payable to Federation Account

In July 2015, I drew the attention of the Federal Government to the fact that the 15-year fiscal incentives given to the oil and gas companies operating under the Deep Offshore and Inland Basin Production Sharing Contracts Act had expired in June 2014. When the Federal Government ignored our request, we drafted a Bill for the amendment of the law. The Bill which was adopted and sponsored by Senator T. Orji scaled the first reading in the Senate but was not passed before the dissolution of the 8th National Assembly. However, the same Bill was modified and passed by both houses of the 9th National Assembly and assented to by President Buhari on November 4, 2019. In justifying the passage of this Bill, then Senate President Ahmed Lawan announced that the new law would increase the revenue of the nation by not less than $1.5 billion per annum.

3. Outstanding royalties of $62 billion

In campaigning for the amendment of the Deep Offshore and Inland Basin Production Sharing Contracts Act, I requested the Federal Government to collect outstanding royalties payable by the International Oil Companies under the Act. The Federal Government admitted that the country had lost a whopping sum of $60 billion. But my demand for the collection of the huge fund was ignored.

The governments of Rivers, Akwa Ibom and Bayelsa states then approached the Supreme Court which on October 20, 2018 ordered the Federal Government to collect the royalties for the past 18 years. The Federal Government confirmed that the outstanding royalty withheld by the IOCs is $62 billion but has refused to collect it.

4. FG denied revenue of $500 million by a group of corrupt public officers

The international Cargo Tracking Note Scheme to protect international shipping and prevent the movement of dangerous cargo and arms shipments was introduced into Nigeria in 2010 via an agreement between the Nigerian Port Authority and TPMS, a private company. Barely a year later, the agreement was suspended. When our attention was drawn to the illegal suspension of the Cargo Tracking Note system, we protested and the suspension was lifted on May 28, 2015 only to be suspended again in 2016.

In 2022, President Buhari issued an executive order which authorised a company to operate the Cargo Tracking Note. But five companies sponsored by top government functionaries overruled the President and hijacked the contract. The company that won the contract has since sued the Federal Government at the Federal High Court. Meanwhile, Nigeria has lost at least $500 million while the security of the nation has been compromised by a bunch of corrupt public officers.

5. Sale of public assets and enterprises

Successive regimes have been selling assets and enterprises owned by the Federal Government to members of the ruling class in the name of privatisation. The buyers turned round to engage in asset stripping. According to the Bureau of Public Enterprises, between 2004 and 2002, the Federal Government sold 142 public enterprises to members of the ruling class. The 10 per cent shares reserved for the staff of every privatised enterprise have been cornered by the so called “core investors” contrary to the provision of section 5(3) òf the Privatization and Commercialisation Act.

6. $7 billion fixed in 14 banks

Sometime in 2006, the CBN yanked off $7 billion from the nation’s foreign reserves and fixed it in 14 commercial banks in Nigeria. The deposit and the accrued interests were not recovered from the banks. When I reported the matter to one of the anti-graft agencies, the CBN claimed that it had forgiven “the forbearance”.

7. Sale of Polaris by Heritage Bank, Keystone Bank, Union Bank and Polaris Bank by CBN

The CBN took over Heritage Bank, Keystone Bank, Union Bank and Polaris Bank, spent trillions of Naira to revitalise them only to turn round to sell them under the table. For instance, CBN invested N1.3 trillion in Polaris Bank but sold it for N50 billion!

8. Theft of Crude oil

The Nigerian Extractive Industries Transparency Initiative, NEITI, has revealed that Nigeria lost 619.7 million barrels of crude oil valued at N16.25 trillion ($46.16 billion) to crude oil theft between 2009 and 2020. Immediate past National Security Adviser, General Babagana said that Nigeria might lose $23 billion in 2023 to crude oil theft.

9. Theft of gold and other solid minerals

The theft of the nation’s mineral resources is not limited to crude as solid minerals are equally smuggled out of the country by highly placed criminal elements. Former Minister of State for Mines and Steel Development, Dr Uche Ogah, recently disclosed that private jets are being used by the rich for gold smuggling in Nigeria. He stated this at an investigative hearing on $9 billion annual loss to illegal mining and smuggling of gold organised by the Senate Committee on Solid Minerals, Mines, Steel Development and Metallurgy. During his contribution at the hearing, Senator Orji Uzor Kalu disclosed that Nigeria lost close to $54b from 2012-2018 due to illegal smuggling of gold.

10. AMCON is owed N5.4 trillion by the rich

A few years ago, commercial banks were going to collapse due to toxic loans taken by members of the ruling class. To prevent the impending economic doom, the Federal Government set up the Asset Management Corporation of Nigeria, AMCON, to buy off the loans with trillions of Naira provided by the CBN. AMCON has not been able to recover the loans of N5.4 trillion from about 370 corporate bodies.

11. Indiscriminate import duty waivers

A few privileged members of the business community buy dollars at official rate while they are allowed to import all manners of goods into the country. In the last five years, import duties worth N16 trillion were waived for them.