NECA Backs FG On Fuel Subsidy Removal

 

The Nigeria Employers’ Consultative Association (NECA) says it is in support of fuel subsidy removal as planned by the Federal Government.

“Our position is for us to remove subsidy while you deal with the issues of the four refineries. If we make the four refineries functional, then we’ll have no business importing, and that will crash the issue of subsidy totally,” NECA Director General, Adewale Oyerinde said on Channels Television’s Sunrise Daily programme on Tuesday.

“Come to think of it, the controversy around the subsidy regime is one that some have called a scam or organised crime. When key officials in the OPS (Organised Private Sector) and key officials of government are also saying that, then it calls for deep reflection,” he added.

The NECA boss highlighted that there had been calls for a judicial inquiry to tackle the much-debated subsidy issue. He recommended that the government revisit the reasons for the non-functionality of the country’s four refineries.

“We’ve had turnaround maintenances over time. Four refineries in a country as big as ours, probably the only country in OPEC that is not refining sufficiently,” he stated.

READ ALSO: N3.36tn Allocated For Fuel Subsidy In 2023, Debt Profile Hits $102bn – FG

“We believe strongly that we should do away with subsidy; it is unsustainable and it is a drain in Nigeria’s revenue. Very few people are benefiting from it, not the whole of Nigerians. But before you deal with the issue of subsidies, let’s address the low-hanging fruit, that is, fixing the refineries. We can do it.”

Subsidy Removal: Govt Must Lead By Example, Says PENGASSAN

 

The President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Comrade Festus Osifo, has disclosed the position of the union on the issue of petroleum subsidy removal.

Comrade Osifo said that while the union acknowledged that payment of subsidy for petrol is no longer sustainable, the government must take shrewd measures to ensure the reality of this.

Osifo made this known at the PENGASSAN Energy and Labour Summit 2022 in Abuja on Tuesday.

He said, “It is clearly not sustainable for us to be spending close to 7 trillion in the payment of subsidy. We quite know from the information available to us that the financial situation of this country is in dire straits. We know as well that the amount of money we are using in servicing debt is even getting higher than our revenue, so it shows clearly that we are in dire straits but our leaders must lead by example.

“Today, if you check the budget that was passed, there is what is called Service Wide Vote. The Service Wide Vote today is going to three trillion naira. The accounting system of Service Wide Vote is questionable, we live in profligacy. Today, go to several states and see what our governors are doing.

“They cannot tell us that we are passing through austerity; they cannot tell us that they need our help but they are still living, as usual, we must cut our coats according to our size. We have challenged and told them, why can’t you come out and lead by example and say okay, I am going to cut down on ABC and E and actually you go ahead and do it?

“The National Assembly will come out and say we are going to cut our budget by 50 per cent, and then the same goes across the board. When you have done that it is easier for you to now engage the union leaders.”

The PENGASSAN leader likened the current situation surrounding the subsidy removal between the government and the unions to a man trying to cut costs in his home but going around marrying more wives.

He said, “The challenge that we have today is just like a man who wakes up in the morning and tells his child I can no longer pay your school fees that things are difficult, he tells his wife we have to reduce the quantity of food in this house because there is austerity but at the same time this man goes around to marry the second wife, marry the third wife, marry the fourth wife and the man goes around to now start taking 5 bottles of alcohol a day instead of one he was taking.

“So that calls for the question, the children will now call him and ask daddy, are you sure we are actually in austerity? Are you sure what you are telling us is true because you must start practising what you preach?”

‘Are We Drinking The Petrol?’: Sanusi Queries 66m Litres Daily Fuel Consumption, Wants NNPC Disbanded

 

Former Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, on Saturday, queried the volume of Nigeria’s daily consumption of Premium Motor Spirit also known as petrol.

Sanusi described as unbelievable the claim by the Nigerian National Petroleum Company (NNPC) Limited that Nigeria consumes 66 million litres of fuel daily.

“Are we drinking the petrol?” the former governor of the apex bank queried the “inflated” figure when he delivered a keynote speech at the seventh edition of KadInvest, an annual event organised by the Kaduna State Investment Promotion Agency.

Sanusi lamented the bogus amount spent on subsidy payment annually, and demanded that the NNPC be unbundled and disbanded, noting that the company should not continue as a cash cow for a few Nigerians.

He blamed the lack of revenue in the country on what he called the subsidy free-for-all.

 

Former Central Bank of Nigeria, Lamido Sanusi, at KadInvest on Saturday. Credit: Twitter/@Kabirusalisu_

 

“NNPC tells us officially that we are consuming 66 million litres per day…We are consuming more than Indonesia, Pakistan, Egypt, Cote d’Ivoire, more than Kenya.

[READ ALSO] Oil Theft: FG Defends Destruction Of Vessel, Says No Investigation Needed

“In 2019 officially, we were importing 40 million litres per day. In 2022, officially, we are importing 66 million per day. In three years, we have increased our petrol consumption by 50%. Please tell me, is it the population? Is it the number of cars? Just ask yourself if it makes sense that in three years you increase your consumption of petrol by 50%,” he said.

 

‘Nigeria, A Rentier State’

 

A file photo of GCEO of NNPC, Mele Kyari.

 

Continuing, Sanusi said, “Nigeria has continued to be a rentier state. It does not exist for development but as a sight of rent, and extraction to make those who control the state rich to turn them into billionaires overnight.
He noted that Nigeria can’t keep pushing the brink but must come back and address the issues at hand so that future generation won’t suffer.

The ex-CBN governor, who cited a data from the Federation Account Allocation Committee, said only 50% of states generated enough recurrent revenue to cover their wages, overheads and debt services.

He said the cost of servicing debt in Nigeria with the Federal Government for the first half of 2022 was N2.597 trillion whereas revenue was N2.4 trillion.

“In other words, debt service is now 108 percent of revenue. Every naira the Federal Government earns goes to service debt and it is not enough, it has to borrow to service the debt, and then begin to pay salaries, borrow to pay overheads, borrow to build roads,” he said.

 

President Muhammadu Buhari presenting the 2023 Budget.

 

‘We Are Leaving A Mountain Of Debt For Our Children’

 

“Let me ask you: what do you think we are leaving our children behind (with)? A mountain of debt. Every generation wants to leave a legacy so that our children and grandchildren will be praying for us and ask God for mercy on us, not cursing us.

“You leave them with a mountain of debt, you have not educated them, money that will should put into their education, into their healthcare, even assuming this fuel subsidy is genuine, we have taking that money to give ourselves cheap petrol. We are borrowing to enjoy cheap petrol so that our children will oay that debt.

“We see the problem and we are going to continue. I’m sorry for the next president who comes in June and says I’m removing fuel subsidy on day one. I don’t know what kind of political stability you’ll have,” Sanusi stated.

At the event on Saturday, President Muhammadu Buhari was represented by the Minister of State, Industry, Trade and Investment, Maryam Katagum.

Africa’s richest man, Aliko Dangote; and the presidential candidate of the All Progressives Congress, Bola Tinubu; were also present as well as Governors Nasir El-Rufai (Kaduna), Abubakar Bagudu (Kebbi), and Abubakar Badaru (Jigawa).

 

A file photo of Customs Comptroller General, Hameed Ali.
A file photo of Customs Comptroller General, Hameed Ali.

 

Subsidy Removal

 

The Minister of Finance, Budget and National Planning, Zainab Ahmed, had said the Federal Government projected to spend N6.7 trillion on petrol subsidy payments in 2023.

However, Buhari last Friday, while presenting a N20.51 trillion 2023 budget proposal to the National Assembly, pushed for the removal of fuel subsidy in 2023, saying that the policy is not sustainable considering current economic realities.

 

A file photograph of Finance Minister, Zainab Ahmed.
A file photograph of Finance Minister, Zainab Ahmed.

 

The exact volume of Nigeria’s daily consumption of petrol and rising subsidy payment have been subjects of controversy of late with the Comptroller-General of the Nigeria Customs Service (NCS), Hammed Ali, faulting NNPC’s official figure of recent.

Similarly, El-Rufai last Thursday said the NNPC has no business being in the oil sector and should be privatised with immediate effect.

Fuel Subsidy Is Organised Crime, Says Peter Obi

A file photo of the presidential candidate of the Labour Party, Peter Obi.

 

The presidential candidate of the Labour Party, Peter Obi, says the government is behind oil theft in the country.

Obi, who is the guest speaker at the Private Sector Economic Forum of Lagos Chamber of Commerce and Industry (LCCI), asserted that no one can steal oil except the government.

“Subsidy is organised crime,” he said while addressing the audience at the event on Monday in Lagos. “We need an aggressive production of local refining.”

“Make resources available to ensure a private-sector led oil refining,” the former Anambra State governor advised the Federal Government.

The presidential candidate who made the remarks while answering questions from panellists at the event also reacted to a question on the issue of cost of governance.

“I have allergies to waste,” declared Obi who obviously took a swipe at the government again.

He insisted that there was a need for an overhaul of the security architecture in the country, proposing multi-level policing from the federal to the community security system.

Oil theft, debt burden, subsidy regime, foreign exchange, and other economic issues were core areas the forum expected each of the candidates to address ahead of the 2023 elections.

The LCCI, which has organised the event for the past 16 years, said it was interested in the economic agenda of each of the candidates aspiring to take over the leadership mantle at the end of President Muhammadu Buhari’s administration.

Petrol Will Cost ₦462/Litre Without Subsidy, Says NNPCL

A file photo of a fuel nozzle.

 

The Nigerian National Petroleum Company Limited (NNPCL) says premium motor spirit (PMS) will cost consumers N462 per litre without the Federal Government’s subsidy.

This is according to a statement by the NNPCL Group General Manager, Group Public Affairs Division Mr. Garba Deen Muhammad on Sunday.

“The NNPC Ltd notes the average daily evacuation (Depot truck out) from January to August 2022 stands at 67million litres per day as reported by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA. Daily Evacuation (Depot loadouts) records of the NMDPRA do carry daily oscillation ranging from as low as 4 million litres to as high as 100 million litres per day, ” the statement read.

It added that the “rising crude oil prices and PMS supply costs above PPPRA (now NMDPRA) cap had forced oil marketing companies’ (OMCs) withdrawal from PMS import since the fourth quarter of 2017.

“In the light of these challenges, NNPC has remained the supplier of last resort and continues to transparently report the monthly PMS cost under-recoveries to the relevant authorities.

According to the NNPC, the average Q2, 2022 international market determined landing cost was US$1,283/MT and the approved marketing and distribution cost of A46/litre.

“NNPC Ltd shall continue to ensure compliance with existing governance framework that requires participation of relevant government agencies in all PMS discharge operations, including Nigerian Ports Authority, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Nigerian Navy, Nigeria Customs Service, NIMASA and all others,” the company said.

Furthermore, NNPC Limited admitted that it “recognizes the impact of maritime and cross border smuggling of PMS on the overall supply framework. NNPC also acknowledges the possibilities of other criminal activities in the PMS supply and distribution value chain.

“As a responsible business entity, NNPC will continue to engage and work with relevant agencies of the Government to curtail smuggling of PMS and contain any other criminal activities”.

Petrol Subsidy Costs N18.39bn Daily – Finance Minister

 

The Minister of Finance, Zainab Ahmed, has put the projected daily payment for fuel subsidy at N18.39 billion.

She stated this during an investigative hearing of the House ad hoc committee which is investigating the petroleum subsidy regime between 2017 to 2021.

“The total amount of subsidy per day is 18.397 billion per day,” she said. “So if you are projecting for the full year, it would be 6.715 trillion. If you are projecting for half year, it would be 50 percent of that.”

According to the Minister, this was calculated using the information provided by the Nigerian National Petroleum Company (NNPC) and the regulator.

She said the information showed that 64.96 million litres of fuel is the projected average daily truck out.

She also said N1.774 trillion was paid to independent oil marketers as subsidy in four years.

FG Has Nothing To Do With Increase In Price Of Petrol – Sylva

FILE: The Minister of State for Petroleum, Timipre Sylva speaks during an interview on Channels Television’s Newsnight on January 24, 2022.

 

The Minister of State for Petroleum Resources, Timipre Sylva, says the Federal Government is not responsible for the increase in the price of petrol across the country.

According to Sylva, the government is still subsidising petrol.

Speaking at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) stakeholders’ consultation forum on regulations, Sylva said the marketers are most likely to blame.

READ ALSO: Fuel Subsidy Is Estimated At N6.72tn For 2023 – Finance Minister

“I can tell you authoritatively that we have not deregulated,” he said.

“The government is still subsidising. If there are increases in price, it is not from the government. It is probably from the marketers.

“But I will talk to the authorities to actually regulate the price. But this is not from the government. We have not deregulated.”

While the official pump price of the product is pegged at N165 per litre, many filling stations have been selling for as high as N180.

Meanwhile, petrol subsidy claims continue to skyrocket.

According to the Nigerian National Petroleum Corporation (NNPC) Limited, petrol subsidy claims reached N2.6 trillion in the first half of 2022, surpassing revenue generated from the sale of crude oil.

Fuel Subsidy Is Estimated At N6.72tn For 2023 – Finance Minister

(File) Nigeria’s Minister of Finance, Budget, and National Planning, Zainab Ahmed the borrowings are within “sustainable limits.”

 

The Federal Government on Thursday projected to spend N6.7 trillion on petrol subsidy payments in 2023.

Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.

READ ALSO: 2022 Budget: FG Has Released N4.7trn To Finance Expenditure So Far – Zainab Ahmed

Speaking at the presentation of the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper (MTEF&FSP) in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said subsidy payment projection is based on two prevailing scenarios — business-as-usual or reform.

“Scenario 1 is the Business-as-Usual. This is assuming that the subsidy on PMS, which is estimated at N6.72 trillion for the full year 2023, will remain and be fully provided for,” she said.

“Scenario 2 – the Reform scenario: This assumes that petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.”

She, however, said both scenarios have implications for net accretion to the federation account and projected deficit levels.

According to the Minister, the Federal Government has recorded a N2 trillion budget deficit between January and April.

She explained that the deficit further highlights the fiscal challenges confronting the current administration.

Ahmed also said that the Nigerian National Petroleum Company Limited which has funded the fuel subsidy until June will henceforth leave that responsibility to the federation, an action she said will create a strain on the economy.

In January, the Federal Government postponed the planned petrol subsidy removal for 18 months, citing “high inflation and economic hardship”.

The Minister of Information and Culture, Lai Mohammed, had told Nigerians that many other countries had also introduced measures to help citizens cope with high oil energy prices due to the Russia-Ukraine war.

“When you consider the chaos, the social disharmony and… instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so,” Mohammed had said.

Why Nigeria Can’t Remove Fuel Subsidies Now – Lai Mohammed

A file photo of the Minister of Information, Lai Mohammed.

 

The Minister of Communication and Culture, Lai Mohammed, has said that the Federal Government cannot, at the moment, remove subsidies on the Premium Motor Spirit (PMS), popularly called petrol.

Mohammed, who spoke during an exclusive interview with Reuters in London, said many other nations were introducing measures to help citizens cope with high oil energy prices, hence Africa’s most populous country could not be an exception.

Nigeria is Africa’s largest oil exporter but still has to import almost all its fuel needs due to a lack of refining capacity. The Federal Government shelved plans to abolish fuel subsidies earlier this year, a move that raised concerns with the International Monetary Fund (IMF).

“When you consider the chaos, the social disharmony and … instability such an action (abolishing subsidies) would facilitate, is it worth it? I don’t think so,” the Minister said.

READ ALSO: ASUU Issue Not As Simple As It Seems – Lai Mohammed

The Minister believes that a new industry law that allocates money to oil-producing communities would stop attacks and blamed the European Union’s climate change policies for stifling investment in the sector.

He added, “We believe that climate change is real and important for emission control, but there is a bit of double standard in the EU policy regarding climate change,” he said.

In addition to attacks on oil infrastructure, several parts of the north are plagued by violence orchestrated by bandits while dozens were killed in church attacks in Kaduna and Ondo States last month.

“We are leaving the country much more secure than we met it,” Mohammed said.

He equally noted that President Muhammadu Buhari’s administration has made progress made against Boko Haram since 2015.

Nigeria suffers intermittent fuel shortages and has raised its deficit forecast twice this year and increased borrowing to cover the cost of the subsidy.

The country’s petroleum production has also fallen short of government targets, with $1 billion in revenue lost to crude oil theft in the first quarter of this year, according to the sector regulator.

Similarly, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) expressed worry over the rising incidents of vandalism and theft along the key pipeline conveying refined petroleum products to Mosimi, Ibadan, Ore, and Ilorin fuel depots.

NMDPRA Chief Executive, Farouk Ahmed, said this when the top executives of the South-west Independent Petroleum Marketers Association of Nigeria (IPMAN) visited him in Abuja.

While the nation suffers intermittent fuel shortages and has raised its deficit forecast twice this year and increased borrowing to cover the cost of the subsidy, its petroleum production has also fallen short of government targets, with $1 billion in revenue lost to crude oil theft in the first quarter of this year, according to the sector regulator.

Fuel Queues: APC Lacks ‘Political Will’ To Solve Subsidy Issues – PDP

Fuel queues surfaced in Lagos on Tuesday, February 8, 2022.
Fuel queues surfaced in Lagos on Tuesday, February 8, 2022.

 

The Peoples Democratic Party on Saturday said President Muhammadu Buhari and the All Progressives Congress lack the political will to solve the “perennial” issues of fuel subsidy.

“The resurgence of long fuel queues in our filling stations in major cities across the country further explains the lack of political will by the President Muhammadu Buhari  led All Progressives Congress administration in solving the perennial subsidy issues,” a note on the PDP’s verified social media accounts said.

“Nigeria is better with PDP.”

Fuel queues, which has rocked the Federal Capital Territory intermittently in the past few weeks, resurfaced in Lagos on Sunday.

Oil marketers had complained of the price of petrol compared to how much it took to deliver it to the final consumer.

 

However, the Federal Government has insisted that the pump price of petrol should remain at N165.

On Wednesday, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said it has resolved to maintain the status quo ante, even as the Nigerian National Petroleum Corporation (NNPC) and the Pipeline and Product Marketing Company (PPMC) responded positively to the association’s request by releasing products from their tank farms that can last 32 days.’

The sight of long fuel queues has since abated in parts of Lagos.

‘Why remove subsidy?’

Nigeria has subsidised petrol since the early years of the 2000s.

Although the country is one of the largest producers of crude oil, the bulk of petrol consumed in the country is imported due to the paucity of local refining capacity.

Experts have long called for petrol subsidy removal, saying it diverts much needed resources that could have been invested in infrastructure, education, health and other development sectors.

READ ALSO: Buhari Asks US, UK, Others To Ban IPOB

The Buhari administration had planned to remove subsidies in June this year but the move was halted after consultations with stakeholders such as the Nigeria Labour Congress.

Many Nigerians believe fuel subsidy is one of the few benefits that gets directly to citizens but the scheme has also been rocked by fraudulent activities.

On Tuesday, in a written note, to Bloomberg, President Buhari defended his administration’s decision to continue to subsidise petrol.

He said the government is working on boosting local capacity in order to stem the inflationary pressures that are likely to be triggered by a removal of subsidies.

“Most western countries are today implementing fuel subsidies. Why would we remove ours now?” What is good for the goose is good for the gander!” The President said.

“What our western allies are learning the hard way is what looks good on paper and the human consequences are two different things.

“My government set in motion plans to remove the subsidy late last year. After further consultation with stakeholders, and as events unfolded this year, such a move became increasingly untenable.

“Boosting internal production for refined products shall also help. Capacity is due to step up markedly later this year and next, as private players and modular refineries (Dangote Refinery, BUA Group Refinery, Waltersmith Refinery) come on board.

“The exchange rate is still susceptible to external shocks that can suddenly and severely affect Nigerian citizens. As we step up domestic production – both in fuel (enabled by PIA) and food (agricultural policies) – the inflationary threat shall diminish, and we can move toward unification.”

Why Nigeria Has Not Removed Fuel Subsidy – Buhari

A file photo of an attendant filling the fuel tank of a car.

 

President Muhamamdu Buhari has defended the federal government’s decision to keep paying fuel subsidies.

In a response to Bloomberg, the President said the effects of removing fuel subsidies would have been too harsh on the Nigerian people.

He said the government is working on boosting local capacity in order to stem the inflationary pressures that are likely to be triggered by a removal of subsidies.

“Most western countries are today implementing fuel subsidies. Why would we remove ours now?” What is good for the goose is good for the gander!” The President said.

“What our western allies are learning the hard way is what looks good on paper and the human consequences are two different things.

READ ALSO: Buhari Asks US, UK, Others To Ban IPOB

“My government set in motion plans to remove the subsidy late last year. After further consultation with stakeholders, and as events unfolded this year, such a move became increasingly untenable.

“Boosting internal production for refined products shall also help. Capacity is due to step up markedly later this year and next, as private players and modular refineries (Dangote Refinery, BUA Group Refinery, Waltersmith Refinery) come on board.

“The exchange rate is still susceptible to external shocks that can suddenly and severely affect Nigerian citizens. As we step up domestic production – both in fuel (enabled by PIA) and food (agricultural policies) – the inflationary threat shall diminish, and we can move toward unification.”

The President’s comment comes as parts of the country, including commercial nerve centre Lagos, battle an acute shortage of fuel.

Marketers Threaten To Halt Fuel Supply In North-West States Over N40bn Debt

A file photo of an attendant filling the fuel tank of a car.

 

The Independent Petroleum Marketers Association of Nigeria, Gusau Depot, has threatened to stop transporting petroleum products within Sokoto, Kebbi, Zamfara and parts of Katsina state.

The threat came following the Federal Government’s failure to settle its N40bn outstanding payment to IPMAN members, IPMAN’s Zonal Chairman, Yahya Kamba, said.

According to Mr Kamba, the payment is based on importation and transportation claims of up to 11 months.

 READ ALSO: Govt Can’t Do Everything, Private Sector Can Do Better, Says Prof Ife

He said the Federal Government has reneged on the agreement reached with the association.

“It is not a subsidy,” Mr Kamba said. “It is money that we marketers contributed. We have to pay a certain amount for every litre we purchase from the government. Just for the country to have a uniform pump price.

“We contributed this money just the way pensioners contribute their own. So there is no reason anyone can give us to say they have no money. We are asking for our contribution.

“Our arrangement is for the Ministry to pay us every week; when you transport this product, you are supposed to be paid within a week; but now we are counting months. We have counted up to 11 months. The payment has stopped since June 2021.”