Mixed reaction over 5% petroleum user’s charge for road maintenance By LANRE ABDUL

There is controversy over the recent move by the House of Representatives to enforce the implementation of the five per cent user’s charge on pump price of petrol and diesel.

The House of Representatives recently set up an Ad-hoc Committee which has called for the full implementation of the 5% user’s charge.

Chairman of Ad-hoc Committee, Hon. Francis Waive, during an investigative public hearing on the implementation and remittance of the 5% user’s charge on pump price of petrol and diesel.

Waive during the hearing said with the help of stakeholders, the committee would establish the true status of the user’s charge and ensure accountability, compliance with the statutory obligations and ultimately that Nigeria and Nigeria roads would benefit from the funding mechanism clearly provided for by law.

What is 5% user’s charge?

The FERMA Act 2007 provides for a 5% user’s charge on the pump price of petrol, diesel and of which 40% will accrue to the Federal Roads Maintenance Agency (FERMA) and 60% to be utilized by the established State Roads Maintenance Agencies. This charge is intended to fund the maintenance of federal and state roads.

A motion sponsored by Rep. Frederick Agbedi, highlighted that since the law’s enactment, the now-defunct Petroleum Products Pricing Regulatory Agency (PPPRA) has failed to remit the funds to FERMA despite multiple legislative directives.

In 2016, the Senate Committee on Works ordered PPPRA to remit ₦634 billion representing unpaid funds from 2007 to 2015, but no evidence shows these funds were fully accounted for or disbursed. Further investigations by Senate committees in 2019 yielded no significant progress, it was learnt.

According to officials, the non-remittance has severely impaired FERMA’s ability to maintain roads, leading to infrastructure deterioration, increased accidents, higher vehicle maintenance costs, and economic losses. PPPRA had justified its failure by claiming the charge would raise fuel prices, despite legal obligations.

A representative of the Chief Executive Officer of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMPDRA), Engr. Farouk Ahmed , in his submission affirmed the non-implementation of the 5% user’s charge due to the unavailability of the modalities for the collection of the allocated fund.

He stated that the Commission is ready to implement the enacted law once the modalities are put in place.

The Managing Director/CEO, FERMA, Dr. Emeka Agbasi, in his submission, raised the justification for the remittance of the 5% user’s charge to FERMA, stating that the agency has been underfunded with only the annual budgetary allocation which represents 20% of FERMA’s Financial requirement.

He added that user’s charge is a common and effective mechanism globally for funding of road infrastructure maintenance.

To fully realize the 5% user’s charge, Agbasi urged the Committee to include clear and mandatory provisions for the collection, administration, and auditing of the 5% user’s charge, create a FERMA Road Fund Account, and full enforcement of the existing FERMA Amendment Act.

Controversy trails charge

There has been mixed feeling over the planned implementation of the user’s charge with stakeholders expressing divergent views on the propriety of the charge.

Those opposing the charge argued that the implementation of the user’s charge would add to the burden of Nigerians through increased price of premium motor spirit (PMS) otherwise known as petroleum and diesel.

Mike Osatuyi, a former General Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), in a chat with this medium stated that implementing the 5% user’s charge would add to the cost of petroleum products.

He stated that the new charge would be borne definitely by the consumers.

“If they add the 5%, it would increase the price because you have to pass the burden to the consumers, that is simple,” he said.