The state and federal governments are set for a showdown over the planned suspension of fuel subsidy removal which has been the reason for the persistent poor remittances to the federation account by the Nigerian National Petroleum Corporation (NNPC).
The federal government yesterday announced it would not go ahead with the subsidy removal until further notice.
The suspension was announced when the chairman of the National Assembly, who is also the Senate president, Ahmad Lawan, met with the minister of finance, Zainab Ahmed, minister of state for Petroleum Resources, Timipre Sylva, and the group managing director (GMD) of the NNPC, Mele Kyari.
The federal government gave assurance that there will not be fuel subsidy removal until all mechanisms are put in place to cushion the effect.
State governors have consistently maintained their call for the removal of fuel subsidy because it reduces what is distributed to them from the monthly federal allocations.
Since 2021, the NNPC has been paying for fuel subsidy by direct deduction from proceeds of crude oil sales. This trend has persistently affected its remittances to the federation account, thus resulting in lower monthly allocations to the state governments.
LEADERSHIP recalls that the National Economic Council (NEC) estimated that the NNPC consistently failed to remit the expected N200 billion monthly to the Federation Account Allocation Committee (FAAC) because of payment of fuel subsidy.
In 2021 alone, petrol subsidy payments gulped N1.43 trillion, shrinking revenue accrued to the federation account to N542 billion, representing a whopping shortfall from the projected N2.51 trillion.
The Nigeria Labour Congress (NLC) and Civil Society Organisations (CSOs) have mobilise their members for a possible nationwide picketing if the government removes fuel subsidy.
LEADERSHIP reports that the removal of the subsidy on PMS will see the price rise from N162-N165 to over N300 per litre, an amount the union and the CSOs say will adversely affect every aspect of the economy and things harder for longsuffering vulnerable Nigerians.
The minister of finance, Zainab Ahmed, who presented the stand of the federal government on the subsidy, had begged union leaders to shelve their planned strike action.
According to the minister, one of the reasons the removal of the subsidy cannot work is that fact funds needed to cushion the effects were not provided for in the 2022 budget.
“Issues around fuel subsidy removal came after the budget was passed. Consultations were made with stakeholders and it was discovered that there is still high inflation in the country,” Zainab said, adding that modalities will be put in place to ensure the effects of subsidy removal are lessened.
“There would be rehabilitation of the whole refineries in the country that will ensure refining of products locally,” Zainab said, adding that the possible date for the removal of the fuel subsidy is not certain but that June 2022 is something they are working on if there is legislative backing.
“Discussion is ongoing between labour unions to ensure the removal is done gradually in such a manner that doesn’t affect the citizens,” she said.
But Senate President Ahmed Lawan, who expressed concern over the issue of the subsidy removal, said hasty decision will affect the ordinary citizens.
Lawan, who begged the labour unions in the country not to go on strike, said “the issue of subsidy removal should be handled with utmost care.
“This must involve proper planning, and appropriate timing such that the impact and consequences will not add to the hardship being faced by citizens,” Lawan said of the subsidy removal.
“Make no mistake when the government said this is not the time for the removal, because subsidy has been abused and we must find a way to handle it so as to cushion the effect,” Lawan said, even though he did not rule out the subsidy removal in the future.
Lawan, who insisted Nigerians should not suffer when the subsidy is eventually removed, expressed concern over the planned strike by the NLC and the Trade Union Congresses (TUC).
The Senate president, who appealed to the union leaders to sheathe their swords on the strike, said the government is working assiduously to ensure that citizens are taken care of when the subsidy is removed.
“We are going to work together so that our people do not suffer but benefit”, Lawan told the ministers and the NNPC GMD during the meeting.
Minister of state for Petroleum, Timipre Sylva, said the subsidy removal will take effect only if the National Assembly amends the law, especially the 2022 Budget.
“The legislature should put in place laws that will ensure the smooth removal of fuel subsidy regime. We can’t remove subsidy now. That is the stand of the government,” Sylva said.
On his part, the GMD of the NNPC, Mele Kyari said the corporation will always fill the gap anytime it is asked to do so.
FG Names Autogas As Alternative Fuel, Targets 1m Vehicles’ Conversion
Meanwhile, the federal government has identified compressed natural gas, popularly known as Autogas, as an alternative to petrol and it plans to work with marketers to convert one million public vehicles from using petrol to autogas ahead of its plan to fully deregulate the downstream sector of the petroleum industry,
The government said the ultimate plan was to have at least one million vehicles converted in three years.
Speaking at a meeting with marketers yesterday in Abuja, the minister of state for petroleum resources, Timipre Sylva, said government was looking at providing 50 percent funding for marketers to bring equipment from Original Equipment Manufacturers (OEMs) for both vehicle conversion kits and petrol station conversion technologies.
Sylva said government wanted to have the CNG system running across the country to provide Nigerians with alternative fuel before petrol subsidy is removed some time in the future.
He told the marketers: “Today I invited you here specially just to discuss one issue, the issues of the structures that we need to put in place before the removal of subsidy. We all agreed more than a year ago that before we deregulate, or going side by side with deregulation, we must provide an alternative fuel to our people.
“And the alternative we agreed upon was the autogas alternative to provide for our people. Since this agreement between us, a lot work has been going on and we have come to a stage where we need to take it further but we cannot move further without ensuring that you, as our partners, are fully on board,” he stated.
He explained that for the project to move forward, there have to be a critical number of vehicles converted and a corresponding critical number of dispensing stations in place.
“If not, you will have a situation where converted vehicles do not have places to refuel or you will have a situation where fuel stations do not have converted vehicles to fuel,” he pointed out
Sylva, who admitted that after year the project was launched by President Muhammadu Buhari in Abuja vehicle conversions have not been going on, said effort has been in putting in place the system for the conversion.
“We have been talking to country OEMs and we have come to some arrangement with them. We have received commitments from the country OEMs that will give us half of what we require and the government will match them with the other half”, he stated, adding that the OEMs need local partners to put the equipment in place in existing facilities across the country.
According to him, the funding would come from the N250 billion provided by the Central Bank of Nigeria (CBN).
But expressing reservations on the viability of the project, the marketers pointed out that the CNG system in Benin City, Edo State, owned by NIPCO Plc has not been profitable after many years in operation.
The immediate past chairman of Major Marketers Association of Nigeria (MOMAN), Tunji Oyebani, explained that a lot needs to be done to bring investments in.
e to invest”, he pointed out.
Earlier, the chairman of MOMAN, Olumide Adeosun disclosed that the group had working groups looking what was needed to partner with the government on the project.
Adeosun noted that the financials around the project were a major issue including interest rate and gas availability from the supply side.
Clarifying some of the issues, the Technical Adviser on Gas Business to the Minister, Brenda Ataga said the government would pay 50 percent equity contributions to the export credit that the OEMs would provide.
She explained that the export credit loans would be at 2-4 percent with a payback period of five years.
The federal government had in December 2021 rolled out an autogas programme called the National Gas Expansion Programme.
The programme involves the conversion of fuel-powered cars, generators from petrol to gas. It is aimed at deepening domestic usage of natural gas in its various forms.
After the launch, the government said that vehicle owners in the country will pay N250,000 to convert their cars to autogas.
Justice Derefaka, Technical Adviser on Gas Business and Policy Implementation to Minister of State for Petroleum, Timipre Sylva, had explained that vehicle owners will have different payment plans to convert their cars to autogas.
“The cost varies,” Derefaka said during an interview on Channels Television’s Sunrise Daily. “So, in terms of cost implication, it depends on the cylinder of the vehicle and, of course, for a typical SUV cylinder, it is a bit higher but on the average, it is around N200,000 to N250,000 and this is for a four-cylinder vehicle, but it becomes a little bit higher for a six-cylinder SUV vehicle.”
Buhari Not In Support Of Fuel Subsidy Removal – Petroleum Minister
In a related development, Timipre Sylva has said President Buhari is not in support of the removal of subsidy on the Premium Motor Spirit (PMS), popularly known as petrol.
Rather, he explained that the Federal Government planned to complete consultations before coming out with a clear policy direction on the matter.
“I will tell you categorically that at this moment, the complete removal of subsidy is not on our plate at all,” said Sylva during this week’s edition of Channels Television’s Newsnight.
“The President of the Federal Republic of Nigeria is not in support of removing subsidy at this time,” he said.
The minister of finance, budget, and national planning, Zainab Ahmed, had in November last year hinted that Nigeria would effect the complete removal of fuel subsidy in June 2022 and replace them with a N5000-a-month transportation grant to the poorest Nigerians.
Amid mixed reactions over the issue, the Senate President, Ahmad Lawan, last Tuesday said President Buhari never directed the removal of fuel subsidy.
Sylva, on his part, explained that the President’s position in opposing fuel subsidy was predicated on its effect on citizens at the bottom of the pyramid.
NLC Insists On Planned Jan; 27 Nationwide Protest
Nevertheless, the leadership of Nigeria Labour Congress (NLC) has insisted that the planned nationwide protest over fuel subsidy removal, which is slated for 27th January, 2022, will still go on.
This is coming few days after 36 state governors under the aegis of Nigeria Governors’ Forum (NGF) resolved to engage the Congress on the proposed removal of fuel subsidy.
In a petition circular addressed to all state governors over the proposed hike of petrol price yesterday, the Congress said government must withdraw its plans to increase the pump price of petrol, adding that subsidy removal was a transfer of government failure to poor Nigerians.
The petition, which was jointly signed by the NLC national president, Comrade Ayuba Wabba and the secretary, Emanuel Ugboaja, maintained that federal government must re-engage organised labour in Nigeria to find mutually acceptable solutions to the “current quagmire” in Nigeria’s downstream petroleum sub-sector.
Part of the petition read, ” Your excellency should use your position as a member of the National Economic Council to convey our foregoing persuasions and demands to the federal government. ”
We also warn that Nigerian workers would have no other choice than to down tools once the government goes ahead to force another round of petrol price increment on Nigerians.
“The protest is only geared at alerting government on the sufferings that Nigerians are going through and the additional insufferable trauma that Nigerians would be subjected to if the government goes ahead with the hike in the price of refined petroleum products.
“There is no gainsaying the fact that the perennial increase of the pump price of petrol and other refined petroleum products by government is actually a transfer of government failure and inability to effectively govern to the poor masses of our country, central to this is the failure of government to manage Nigeria’s four oil refineries and inability to build new ones,” the petition added.
Suspension Of Petrol Subsidy Removal Indication Of FG’s People-oriented Govt – APC
Weighing in on the matter, the ruling All Progressives Congress (APC) has applauded the decision by the federal government to suspend the planned removal of subsidy on petroleum products, saying it shows the Buhari administration has the interest of Nigerians at heart.
According to the governing party, “the federal government took into consideration the fact that the removal of subsidy at this time will heighten inflation and cause undue hardship on the citizenry.”
In a statement by national secretary of its Caretaker/Extraordinary Convention Planning Committee (CECPC), Sen. John James Akpanudoedehe, APC noted that because programmes and policies of government are meant to benefit the people, “if the timing of the planned subsidy removal would cause hardship on citizens, then a review was necessary.’
The statement further noted: “We commend President Muhammadu Buhari for always putting the welfare and wellbeing of Nigerians first as he has serially displayed in the implementation of programmes and policies of this administration.
“In line with the new Petroleum Industry Act (PIA), the federal government is already putting in place measures, particularly boosting our local refining capacities, to reduce the country’s reliance on expensive import of refined petroleum products. This will in due course usher in the eventual and full deregulation of the country’s petroleum sector.”
On its part, the National Union of Road Transport Workers (NURTW) said the intended increase in the pump price of petrol was ill-timed and insensitive to the appalling suffering, hardship and hunger that Nigerians are currently facing, occasioned by the harsh economic situation in the country.
While addressing journalists in Abuja, the president of the NURTW, Tajudeen Ibikunle Baruwa said after the meeting of the National Administrative Council (NAC) of NURTW held in Abuja, the union agreed that any such increase at this critical period amounts to a direct attack on the already impoverished masses of the nation and will have spiraling effects on all other sectors of the economy.
The union also said the drivers who constitute their membership will be at the worst receiving end of such increase/subsidy removal and, without any monthly remunerations to fall back on, will be entirely left on their own to bear the brunt of such action.