States won't be able to pay salaries due to rising subsidies, say governors

 States won't be able to pay salaries due to rising subsidies, say governors

The Premium Motor Spirit (petrol) subsidy in particular has put a significant financial strain on the states, according to the Nigeria Governors' Forum.

This was announced by the NGF, the group that unites all 36 of the federation's governors, regardless of political affiliation, in a memo submitted to the House of Representatives.

The House Ad Hoc Committee on the Volume of Fuel Consumed Daily in Nigeria, which is looking into the actual quantity of PMS the nation consumes each day, requested memoranda, and this document was produced in response.

The memo, headlined "Findings on the Volume of Fuel Consumed Daily in Nigeria," dated July 1, 2022, and written to committee chairman Abdulkadir Abdullahi, was signed by the head of legislative liaison for peace and security at the NGF, Fatima Usman Katsina.

The governors referred the House to a November 2021 report by the National Executive Council's special committee that dealt with the Nigeria National Petroleum Corporation on the appropriate pricing of PMS in Nigeria. The committee was led by Nasir el-Rufai, the governor of Kaduna State, and included the governors of Edo, Jigawa, Ebonyi, Akwa Ibom, and Ekiti states, as well as the governor of the Central Bank of Nigeria, the minister of the NNPC and  the permanent secretary MBNP.

"Although the operating climate has dramatically worsened since the report was released, with NNPC now frequently reporting zero remittance to the Federation Accountant as profit from joint venture, production sharing contract, and other operations," the memo stated in part.

According to the report, "federation (FAAC) net oil and gas income have been dropping since 2019 and are predicted to decline significantly in 2022 by between N3 billion and up to N4.4 billion unless action is made now," the NGF reminded. The following are some of the key results regarding the amount of fuel consumed in the nation, according to the memo:

"Payments to the Federation Account Allocation Committee have gotten smaller as NNPC continues to recoup shortfalls from the Federation's crude oil sales revenue in an arbitrary manner. Even without accounting for the naira's diminished purchasing power as a result of inflation and deteriorating FX rates, FAAC deductions for the PMS subsidy are higher than they were in 2019.

"An examination of the average monthly PMS use by states revealed that over 65% of the nation's consumption is accounted for by just one third of the population. According to the data, 65% of the nation's consumption of PMS was concentrated in the following States: Lagos, Oyo, Ogun, Abuja, Delta, Kano, Kwara, Edo, Rivers, Kaduna, Kebbi, and Adamawa. The majority of states with high PMS rates are either near to or share borders with neighboring nations.