It’s goodbye to subsidy as FG clears N48bn outstanding debt

The federal government has paid N48.2 billion outstanding subsidy arrears to oil marketers. Kemi Adeosun, minister of finance, disclosed this on Tuesday. Adeosun said the payment was made  to enable the oil marketers import petroleum products and meet up their other financial needs.

“The N48.2 billion outstanding subsidy arrears owed oil marketers in 2015 has been paid,” she said in a statement by Salisu Dambatta, director of information for the ministry of finance. “The gross total outstanding subsidy claims accruable to the oil marketers for 2015 stood at N48.2 billion, while deductable tax liabilities payable to the Federal Inland Revenue Service (FIRS) stood at N5.2 billion only.”

The minister also directed the Debt Management Office (DMO) to pay the claims after deducting tax liability of N5.2 billion, which was computed by FIRS. The statement said oil marketers without tax liabilities were paid in full, while those with net subsidy claims and FIRS liabilities, were paid net claim after deduction of tax liabilities.

“Oil marketers that were indebted to FIRS and the seven oil marketers that are indebted to the Asset Management Company (AMCON) were not paid until they settled their debts with the two agencies,” the statement read.

The federal government had removed subsidy in 2015, introducing a price modulation system, which left the prices lower than the subsidised rate due to low crude prices. With rising crude oil prices and lack of foreign exchange, the federal government opted for liberalisation of the oil sector.