Tinubu asks Reps for N500 billion to mitigate the effects of subsidy termination

  • The Senate reconsiders the ‘uneven’ disbursement of the N483 billion intervention loan once more.
  • Ondo government seeks to mitigate the impact of subsidy loss, pleading with residents

President Bola Tinubu yesterday asked the House of Representatives to amend the 2022 supplementary appropriation Act to allow the Federal Government to source N500 billion for palliatives to cushion the effect of petrol subsidy removal, with five weeks remaining from the eight weeks agreed upon by the Federal Government and organized labour for the conclusion of subsidy removal talks and palliatives.

This comes on the heels of a recent warning to the Federal Government by the Debt Management Office (DMO) that 73.5 percent of revenue produced this year will be used to service debt.

The President stated in a letter to Speaker Tajudeen Abbas, which was read at Wednesday’s plenary, that the money will come from the N819.5 billion 2022 Supplementary Appropriation Act.

Former President Muhammadu Buhari proposed an extra budget for capital projects in 2022 in response to the impact of floods on farmlands and road infrastructure.

The budget’s term has now been extended to December 31, 2023.
“The request has become necessary in order to source funds to provide necessary palliatives to cushion the effect of Nigeria’s recent removal of fuel subsidy,” said the President. I anticipate that the House will consider the request quickly.”

Abbas informed members that the House would debate the issue during Thursday’s plenary session and asked them to be prepared to contribute to the discussion.

Tinubu announced the withdrawal of gasoline subsidies upon taking office as president, causing the price of petrol to triple across the country. Following the announcement, the Nigerian National Petroleum Company Limited (NNPCL) authorized its stores across the country to sell petrol for N480 to N570 per litre, an almost 200 percent increase from the initial price of less than N200.

Read: Tinubu is congratulated by the Senate on his election as ECOWAS head 

The Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) immediately called for a statewide strike in protest of the expulsion. However, the planned walkout was called off after a meeting with the government in which some compromises were reached.

While the administration has been praised for acting quickly on the removal of petroleum subsidies, there are still concerns regarding the impact of the removal, particularly in relation to the increase in the price of PMS and its multiplier effect on practically every area of the country’s economy and consumers.

Meanwhile, the Senate has resolved to initiate a new investigation into the Development Bank of Nigeria’s (DBN) alleged uneven disbursement of N483 billion loan to Medium and Small-Scale Enterprises (MSMEs) in the six geopolitical zones in 2021. During Wednesday’s plenary, the Senate Chief Whip, Senator Mohammed Ali Ndume (APC, Borno), proposed a motion that was co-sponsored by 64 other members.

Remember that the ninth Senate established an ad hoc team to investigate the claim that the Southwest, particularly Lagos State, had the highest number of loan beneficiaries, accounting for around 47 percent of the total loan.

The DBN officials then told the panel that while making loans, they scrupulously followed to the standards established by their regulators and did not consider geopolitical factors.

Ndume, who was visibly upset with the outcome of the previous probe and the committee’s recommendations, stated that the Senate should reconsider the problem due to the enormous gap in loan disbursement.

However, there was some little drama while senators deliberated on the motion. Seriake Dickson (PDP Bayelsa), in proposing an additional prayer, urged that the committee’s probe be expanded to include all CBN intervention loans, including the COVID-19 palliative and Anchor Borrowers’ loans.

However, the additional prayer was dropped under the guise that it would render the ad hoc committee’s work interminable.

Earlier, Orji Uzor Kalu (Abia North) stated that loans are obtained through application and completion of relevant standards, including bank guarantees.

Olamilekan Adeola (Ogun West) said Ndume believed his Northeast zone had been shortchanged but forgot that development financial institutions had established procedures for loan disbursement. He asked that the proposal be reconsidered if Ndume felt guilty about the facts.

Sani Musa (Niger East), who chaired the last ad hoc committee, stated that there is a distinction to be made between bank loans and palliatives. While recognizing that development organizations have loan criteria, he stated that the criteria may not be strictly fulfilled. He said that DBN had returned 66% of the loans it had made.

Musa further stated that Northerners’ interest in applying for the loan may be limited by religious beliefs that no interest should be paid on loans, despite the fact that banking organizations charge 17% interest on loans.

But Ndume interrupted him, stating he completely understood the workings of development institutions and their regulations, but that the material he presented came from the DBN and the microfinance companies involved’s websites.

Sen. Isah Jibril, a financial expert and retired banker, advised that the DBN, among other institutions, is not entirely a Nigerian institution, but has foreign bodies like the World Bank and International Monetary Fund (IMF) as investment partners, and they have their own criteria that the Nigerian system cannot compromise.

He recommended Nigerians who did not meet such conditions to pursue less stringent organizations such as the Bank of Industry and the Bank of Agriculture.

In another development, Ondo State’s acting governor, Lucky Aiyedatiwa, stated yesterday that the state government is commencing and implementing plans to implement palliative measures to mitigate the impact of subsidy removal. According to Ayedatiwa, who mentioned this in a statement, the government is already aware of the hardships and difficulties encountered by the people as a result of the reduction of gasoline subsidies and its associated impacts.

He voiced concern about the difficulty caused by the loss of fuel subsidies, which he said was exacerbating the plight of locals, particularly state workers.

The state is partnering with the federal government through the National Economic Council (NEC), which is led by Vice President Kashim Shettima.

He also stated that the state administration had been in discussions with the leaders of the state’s organized labor to ensure that state workers received the benefit.

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