Minister of Finance, Mrs Ngozi Okonjo Iweala

By  Festus Akanbi

As the hike in the price of petrol kicks in, sources in the presidency at the weekend provided clarification on the funding of the Subsidy Reinvestment and Empowerment Programme (SURE) set up by President Goodluck Jonathan to cushion the effects of the price increase.

The programme, which will be headed by foremost industrialist and diplomat, Dr. Christopher Kolade, is meant to oversee and ensure the effective and timely implementation of projects to be funded with the savings accruing to the federal government from subsidy removal.

However, economic experts in the presidency, who spoke on the expectations from the committee, said there was no pool of N1.4 trillion of fiscal savings expected from the withdrawal of subsidy or increase in the price of petrol, because there is no provision for petrol subsidies in the 2012 budget, as the budget for this year will be operating on a deficit.

One knowledgeable source in the presidency, who spoke on the possible realities and scenarios on the funding for the palliative programme said for government to fund the projects put under SURE, it may well have to borrow by raising bonds or take money from either the excess crude account or the sovereign wealth fund.

He explained that another means of raising the desired funds is by improving the nation's tax revenue mobilisation through the increase of tax receipts.

“The 2012 budget does not include subsidy. If it did then it would be correct to say government will be reallocating this expenditure to SURE. If some of the projects are in the budget then that's fine or if some of the projects in the budget are going to be substituted.

“Otherwise, the SURE programme has to be financed by an additional revenue stream, say, through the excess crude or SWF or new tax receipts or/and new debt,” the source said.

Explaining the nature of the proposed borrowing, the presidency source said: “Even if we borrow to fund SURE projects, it means Nigeria is borrowing to finance production that has a positive trickle-down effect on the economy, instead of financing consumption which was the case when petrol had to be heavily subsidised.”

Another economic expert who spoke on the development explained that such funding will be in the mode of similar exercise in the agriculture and industrial sectors where operators can access funding at cheaper interest rates.

“By so doing, you are subsidising their production. They will be able to employ more people and this will have a positive development on their production and enable them to employ more people. This will certainly lift more people from the poverty bracket.

“In the event the revenue does not cover SURE, it will then mean the projects are covered by debt but this does not mean we are borrowing to fund corruption,” he said.

Also on the board of the committee responsible for the implementation of SURE is Major-General Mamman Kontagora (rtd.), who will serve as deputy chairman.

The mandate of the board includes overseeing the fund in the petroleum subsidy savings account, and the programmes specifically initiated to improve the quality of life of Nigerians in line with the transformation agenda of the president.

SURE is also meant to determine, in liaison with the Ministry of Finance and Ministry of Petroleum Resources, the subsidy savings estimates for each preceding month and ensure that such funds are transferred to the funds' special account with the Central Bank of Nigeria.

The programme is also expected to approve the annual work plans and cash budgets of the various project implementation units (PIUs) under the ministries, departments and agencies (MDAs) and ensure the orderly disbursement of funds by the PIUs in order to certify and execute projects.

It is also required to monitor and evaluate the execution of the funded projects, including periodic poverty and social impact analyses (PSIA), update the president regularly on the programme, and periodically brief the executive council of the federation on the progress of the programme, among other mandates.

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