Subsidy Will Bring Back Fuel Queues, Buhari Warns

  • As ASUU, TUC tackle FG on refineries

President Muhammadu Buhari on Monday said any attempt by his regime to return to the era of subsidising Premium Motor Spirit, popularly known as petrol, would lead to “several negative consequences.”

Buhari said this at the opening of the First Year Ministerial Performance Review Retreat at the Presidential Villa, Abuja.

According to him,   one of the dangers of retaining fuel subsidy is the return to the era of long queues at filling stations where Nigerians spent days and nights before they could buy petrol.

But in their separate reactions, the Trade Union Congress and the Academic Staff Union of Universities faulted the President, saying his regime should fulfil its promise to repair the country’s refineries.

Following the economic downturn caused by the COVID-19 in March, the Federal Government deregulated the downstream sector of the nation’s oil and gas sector, allowing petrol prices to be determined by market forces.

In March, the government reduced the pump price of petrol from N145 per litre to N125 per litre following the collapse of global oil prices.

But in the last three months, the pump price of petrol has increased. Last week, marketers adjusted their pump prices to between N158 and N162 from N148 to N150 in August.

The scarcity of the petrol, especially in December and January, had rocked the country for many years, causing long queues of desperate motorists at filling stations.

Following the severe fuel scarcity, the country experienced in the first quarter and parts of the second quarter of 2016, the Federal Government on May 11, 2016 increased the petrol price to N145 per litre from N86, putting an end to fuel subsidy to marketers, in what was described as partial liberalisation of the sector.

Buhari, who was represented by Vice-President Yemi Osinbajo at ministerial retreat, said one of the effects of deregulation which his regime adopted at the beginning of the COVID-19 lockdown in March and when global oil prices collapsed was that PMS prices would change with changes in global oil prices.

Explaining the increase in fuel price, Buhari said when global prices rose, it led to increase in the price of petrol locally.

The President said, “There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising the PMS price.

“First of all, it would mean a return to the costly subsidy regime. Today, we have 60 per cent less revenue, we just cannot afford the cost.

“The second danger is the potential return of fuel queues – which has thankfully, become a thing of the past under this administration.

“Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices.

“Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services.”

Buhari, however, assured Nigerians that his regime was mindful of the pains that higher prices meant, saying their sacrifices were not being taken for granted.

He said, “We will also remain alert to our responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily.”

‘FG spent N1.7tn to supplement electricity tariffs’

Buhari also said he was disappointed with the services of the nation’s power distribution companies.

He said his regime had spent N1.7tn to supplement tariff shortfalls.

He said this could no longer continue.

Buhari said, “Let me say frankly that like many Nigerians, I have been very unhappy about the quality of service given by the Discos, but there are many constraints including poor transmission capacity and distribution capacity.

“I have already signed off on the first phase of the Siemens project to address many of these issues.

“Because of the problems with the privatisation exercise, government has had to keep supporting the largely privatised electricity industry.

“So far, to keep the industry going we have spent almost N1.7tn, especially by way of supplementing tariffs shortfalls.”

He said the hike in electricity tariffs would be based on improved power supply.

“The NERC (Nigerian Electricity Regulatory Commission), the industry regulator, has approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.

“Under this new arrangement, only customers who are guaranteed a minimum of 12 hours of power and above can have their tariffs adjusted.

“Those who get less than 12 hours supply, or the B and D and E customers must be maintained on lifeline tariffs, meaning that they will experience no increase. This is the largest group of customers.”

Buhari said his regime had also taken notice of the complaints about arbitrary estimated billing.

Accordingly, he said a mass metering programme was being undertaken to provide meters for over five million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process.

The President added that the NERC had committed to strictly enforcing the capping regulation which would ensure that unmetered customers were not charged beyond the metered customers in their neighbourhood.

“In other words, no more estimated billings,” the President declared.

Buhari described as coincidental the timing of the adjustments in price of petrol and power tariff.

“It is important to stress that this is coincidental in the sense that the deregulation of PMS prices happened quite some time ago, it was announced on March 18, 2020 and the price moderation that took place at the beginning of this month was just part of the ongoing monthly adjustments to global crude oil prices.

“Similarly, the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made.

The President said his administration adopted a N2.3trn Economic Sustainability Plan to mitigate the effect of the economic slowdown.

The Secretary to the Government of the Federation, Boss Mustapha, in his welcome remark, said the retreat would help the government to address the country’s current economic challenges, and consolidate on achievements.

He said as of September 2, 2020, a total of 282 memos had been presented to the Federal Executive Council, out of which 191 had been approved.

Petrol price in Nigeria among the cheapest in Africa, says FG

At another event in Abuja on Monday, the Federal Government defended the hike in the price of petrol.

It said despite the recent increase in the price of petrol to N162 per litre, the price of the commodity in Nigeria remained among the cheapest in Africa.

It also said notwithstanding the recent hike in electricity tariff, the cost of electricity in Nigeria was still cheaper or compared favourably with that of many countries in Africa.

The Minister of Information and Culture, Lai Mohammed, said these at a press conference in Abuja.

The minister said, “In spite of the recent increase in the price of fuel to N162 per litre, petrol prices in Nigeria remain the lowest in the West/Central African sub-regions.

“Below is a comparative analysis of petrol prices in the sub-regions (naira equivalent per litre): Nigeria -N162 per litre; Ghana -N332 per litre;  Benin -N359 per litre; Togo – N300 per litre; Niger – N346 per litre; Chad -N366 per litre; Cameroon -N449 per litre; Burkina Faso -N433 per litre; Mali -N476 per litre; Liberia – N257 per litre; Sierra Leone -N281 per litre; Guinea  -N363 per litre; and Senegal – N549 per litre.

“Outside the sub-region, petrol sells for N211 per litre in Egypt and N168 per litre in Saudi Arabia.

“You can now see that even with the removal of subsidy, fuel price in Nigeria remains among the cheapest in Africa.”

Subsidy gulped N10.4trn in 14 years – Minister

He noted that fuel subsidy alone gulped N10.413trn between 2006 and 2019.

He said, “The cost of fuel subsidy is too high and unsustainable. From 2006 to 2019, fuel subsidy gulped 10.413trn. That is an average of N743.8bn per annum.

“According to figures provided by the NNPC, the breakdown of the 14-year subsidy is as follows: in 2006, subsidy was N257bn; in 2007, it was N272bn; 2008 -N631bn; 2009 -N469bn; 2010 -N667bn; 2011 -N2.105trn; 2012 -N1.355tn; 2013 -N1.316tn; 2014 -N1.217tn; 2015 -N654bn; 2016 -figure not available; 2017 -N144.3bn; 2018 -N730.86bn; and 2019 -N595bn.”

He also said, “Please note that despite the recent service-based tariff review, the cost of electricity in Nigeria is still cheaper or compares favourably with that of many countries in Africa,’ the minister declared.

He listed the cost of power in naira per kilowatts in some African countries to include; Nigeria -49.75; Senegal -71.17; Guinea -41.36; Sierra Leone -106.02; Liberia -206.01; Niger -59.28; Mali -88.23; Burkina Faso -85.09; and Togo -79.88.

Meanwhile, the Trade Union Congress of Nigeria, and the Academic Staff Union of Universities have faulted the President’s assertion that the reintroduction of fuel subsidy would bring back queues at the filling station.

President’s claim not genuine, modular refineries part of Buhari’s manifesto —TUC

The TUC President, Quadri Olaleye, in  an interview with The PUNCH, said the  President’s claim was not genuine.

Olaleye noted, “Government should fix the refineries. If we meet the quantity that we need, we won’t need to be talking about forex. President Buhari should order the CBN to make dollars available. And the modular refinery they are talking about should commence operations; it was part of their campaign items, but till now we have not seen any in operation.”

Olaleye said the rise in fuel price was caused by the inability of the importers to get dollars from the Central Bank of Nigeria.

The TUC president stated, “The claim that queues would return to the filling stations if they return subsidy cannot be genuine.

“They should show us the evidence that the landing cost is what they are subsidising. In my last press statement, I said it was the CBN that was causing this problem and why?

“The Central Bank is not giving dollars at the official rate to the importers of fuel. So, these people (fuel importers) are sourcing their dollars from the black market and that is the problem; it is not about subsidy.”

Buhari regime promised to repair refineries five years ago – ASUU

The ASUU President, Prof. Biodun Ogunyemi, in an interview with one of our correspondents called on the Federal Government to fix the country’s refineries as it promised five years ago.

Ogunyemi maintained that if the government had fixed the refineries, the issue of fuel subsidy wouldn’t be a challenge.

He stated, “We have to look at the issue from time back when this government came into power. What did they promise us? They promised to fix the refineries. Five years down the line why is it that they cannot even fix just one refinery so that we stop importing petrol. They have nobody to blame but themselves they cannot be telling us they are still talking of the politics of subsidy five years after.”

He explained that everything about the fuel subsidy was shrouded in secrecy and as such, it was all falsehood.

“It has been said over and over by those who know about it that this subsidy thing is a scam.  Some people are just sharing money.  Nobody can even tell us in a convincing manner how much it costs to produce a litre of fuel in this country. The whole thing is shrouded in secrecy and ambiguity.

“We cannot be an oil-producing country and we remain the only country which has no refinery of our own.  Why do we have four refineries in our country and none of them is working.

“Even this thing they are doing, there is no end to it. The fate of Nigerians will be hanging in the balance if the cost of crude oil increases in the global market.  It means the sufferings of Nigerians will continue to rise along with it.”

The Punch

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