FINANCE Minister, Dr. Ngozi Okonjo-Iweala yesterday said, she ordered a slow down to fuel subsidy payments in order to allow for verification as well as for genuine deliveries.
This, according to her, was an effort to battle the subsidy scheme, which has been riddled with lingering fraud that is costing the country several billions of dollars.
'I decided that we should slow down the payments until we verify ... that what we are paying is really being paid for genuine product delivered, to avoid the mistakes we made in the past,' Okonjo-Iweala said at a news conference in Abuja.
The minister said she had come to the realisation that the subsidy must be slowed after paying out N451 billion- more than half of the N888 billion the country budgeted for this year, just on arrears for last year.
'It was at that point in time I decided,' she said. 'We will not be stampeded to make payment until we verify that what we are paying is correct. We are taking it very cautiously.'
But fuel shippers say they are facing delays at import terminals while their subsidy payments are scrutinised, and some private firms have halted deliveries, while others are relying on swaps for crude oil to receive payments.
Oil product marketers say Nigeria now faces fuel shortages as a crackdown on fraud and the government's lack of funds to pay for subsidies reduces supply.
However, the parliamentary probe found that the extent of the fraud was so massive that Nigeria was paying for almost double the much fuel it consumed.
A parliamentary probe into the subsidy scheme released last month found it was riddled with fraud that had cost Nigeria $6.8 billion in only three years.
Analysts say this is equal to a quarter of the national budget and remains one of the biggest cases of corruption scandals in Nigeria, the continent's principal oil and gas producer.
Although Nigeria leads Africa in oil production, years of corruption and mismanagement have left the continent's second biggest economy with defunct refineries unable to meet even a part of demand, making the country dependent on costly imports.
Under this scam, companies that neither never bought any fuel nor sold it to the country's neighbours at higher prices received enormous state windfalls.
Okonjo-Iweala said the delays would continue until a committee she had set up to review subsidy payment arrears finishes its work. She, however, did not give any timeline.
Accountant-General of the Federation, Jonah Otunla, also disclosed at the conference, that the government had already spent a princely N1.44 trillion ( about $8.83 billion) in the first half of 2012, maintaining that N1.036 trillion was on recurrent expenditure.
The largest component of this was on fuel subsidy, he further stated.
'The corrupt subsidy scheme is by far the biggest drain on the public purse and the main reason why Nigeria seems incapable of saving despite pumping two million barrels of oil a day at record high prices', according to analysts.
'It spent 900 times more than budget for on the subsidy last year. Central Bank governor Lamido Sanusi has said provisions for the subsidy will run out well before year end'.
'Despite being economically ruinous for Nigeria, the fuel subsidy remains popular and no government has succeeded in scrapping it.
President Goodluck Jonathan tried in January and faced massive strikes and protests that shut the country down for a week.
He reinstated it, but raised the pump price by 50 per cent' according to analysts at Reuters.