The Nigerian Governors’ Forum, NGF, Nigeria Labour Congress, NLC, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Peoples Democratic Party, PDP, and stakeholders in the oil and gas sector yesterday railed against the N3 trillion proposal of the Federal Government to cover the 18-month period that fuel subsidy would remain.
It will be recalled that the Federal Executive Council, FEC, at its weekly meeting in Abuja on Wednesday, received a proposal to spend N3trillion for the period.
The governors, labout and private sector players contended that the money is too much to be spent on subsidy in a tottering economy.
Head, Media and Public Affairs of the Nigerian Governors’ Forum, NGF, Mr Abdulrazaque Bello-Barkindo, said since they do not have the power to stop the Federal Government from taking this action, a committee will be set up by the NGF and Labour to investigate the subsidy regime and proposed N3trn subsidy for 2022.
Bello-Barkindo said: “The governors and the NLC have met and they have decided to set up a committee that will look at the proposed N3trn for subsidy and look at how the subsidy regime can be tackled, instead of throwing away N3trn.
“N3trn is a lot of money. The committee will look at the volume of fuel that is refined and the total number of litres imported for local consumption. These are questions that need answers.
“The committee will come up with findings on subsidy because the Federal Government cannot continue to throw figures at us, we need to investigate this subsidy regime because a lot of money goes into it.”
On its part, the Nigeria Labour Congress, NLC, whose reaction came through its president, Ayuba Wabba, said: “Nigerians should not accept the figure hook, line and sinker. The proposed N3trillion should be interrogated because there is no empirical data to back up the claim.
“There must be transparency, accountability in the process, including the quantity of product being subsidized. We should be able to know and determine the quantity of Premium Motor Spirit, PMS, Nigerians are consuming per day.
“We must not forget about the issue of subsidy scam for which some individuals and companies were prosecuted and some are still being prosecuted by the Economic and Financial Crime Commission, EFCC.
“We should do what is right because it’s the tax-payers money. There must not be an open-ended figure and there must be transparency and accountability. The N3 trillion is too bogus for us to accept just like that.
“We cannot continue to discuss the issue of subsidy, but local refining. We are against subsidy removal, whether now or later, if it means increase in the pump price of fuel. We must get the four public refineries to work and encourage private individuals to set up refineries, even if it is modular refineries.
“From former President Olusegun Obasanjo till now, every government has actually promised to fix the refineries but after assuming power and realizing the incentives in importation, they abandon the promise to fix the refineries and concentrate on importation and have continued to export jobs out of the country.
“The government should also do something urgently on the value of the nation’s currency because as long as the government continues to devalue our currency, things will continue to be expensive.
“The value of the currency is a major determinant of the cost of the product. It is a shame that a country that is the sixth largest producer of crude, and in fact, Nigeria is the only member of OPEC that is importing refined petroleum products.”
On cooperation with governors on subsidy fraud, Wabba, said: “NLC has not started any cooperation with the governors; we have not worked out any level or parameter for cooperation.
“Yes, at our meeting with them, they are also disputing the quantity of PMS being consumed and the subsidy figure because there is no empirical data to back up the claims which their states’ funds are deducted to fund the subsidy claims.”
Reacting to the development yesterday, the National President of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Ide J. C. Udeagbala, said it was high time Nigeria started looking at other options in dealing with the subsidy issue.
He stated: “The N3 trillion being demanded to fund the subsidy amounts to 17 per cent of the 2022 budget. Considering the general struggle to fund the budget, how wise is it to devote such a huge sum in funding subsidy? We cannot eat our cake and have it. What we should be looking at is how to get our refineries working, that is the best way forward.
“On a visit to Trinidad and Tobago, I found that the country has only one refinery. When I asked how they manage their fuel supply whenever they are doing turnaround maintenance, TAM, I was told there was no such thing as TAM. So, we should find out how often other countries shut down their refineries for TAM, if at all.
“The reality is that subsidy is not sustainable and will have to go. We must start looking at other options.”
On its part, the Independent Petroleum Marketers Association of Nigeria, IPMAN, said although the Federal Government might generate much through crude oil sales at higher prices, it would spend a bulk of it in subsidising petrol importation.
On consumption volume, National Operations Controller of the group, Mr. Mike Osatuyi, said: “I do not think Nigeria can consume 103 million litres of petrol daily. It is not possible. May be they are also considering the volumes going to other nations through smuggling.
“With the subsidy, we should expect more petrol to be smuggled to other West African countries in 2022.”
On investment, he said: “With the completion of work on the Petroleum Industry Act, PIA, we should expect more domestic and foreign investments inflow into the upstream sector now than in the past.
“This is majorly because investors, especially the International Oil Companies, IOCs, which have joint ventures with the government through the Nigerian National Petroleum Company Limited, now have more confidence in the nation than before.
“But we are not very certain that with the current increased borrowing, the government will be able to set aside much funds for capital investment in the upstream sector.
“But there are very strong indications that the private investors will not invest their funds in a regulated environment. As far as subsidy remains, many local and foreign investors will not be willing to invest.”
Similarly, an economist who is CEO, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said: “The truth is that you cannot eat your cake and have it. We should expect the cost of funding the subsidy to be much higher this year because of the surge in crude oil price.
“If the oil price remains high for most part of the year, the subsidy cost could go as high as N2.5 trillion or even more by the end of the year.
“This would surely affect funding for critical infrastructures such as roads, railways, healthcare education, and even security. The petroleum products smugglers, beneficiaries of the fiscal leakages in the fuel subsidy ecosystem and their collaborators will continue to smile to the banks for the next one and half years.
“Some states will struggle to pay salaries, especially states that are heavily dependent on federal allocation. Some may have to lay off some of their workforce. Many will struggle to meet their financial obligations as sub-nationals.
“Meanwhile, prospective investors in the downstream oil sector would withhold their investments until the policy environment becomes conducive. Additionally, a major confidence crisis has been created around the Petroleum Industry Act as a result of this capitulation. These are the price we would have to pay as a country for the policy reversal.”
Also, former Chairman of Major Oil Marketers Association of Nigeria, MOMAN, who is the Managing Director of 11 Plc, Adetunji Oyebanji, said the resolve to sustain petrol subsidy clearly showed that the nation mortgaged its future.
He said: “Good luck to Nigeria. We have chosen to mortgage the future to avoid discomfort for today. There will be a price to pay, starting with a huge budget deficit in 2022. That will lead to inflation, higher borrowing costs and devaluation.”
In its reaction, Peoples Democratic Party, PDP, said it was appalled by what it called the bare-faced move of President Muhammadu Buhari’s administration to hide under fuel subsidy to fritter away a whopping N3 trillion, describing it as outrageous and an unpardonable crime against Nigerians.
Although the party noted that it had no problem with subsidizing petroleum products for Nigerians, it kicked against “this wicked plot by the APC government to use a heavily padded fuel subsidy claims to surreptitiously funnel trillions of naira into the pockets of corrupt political leaders and their cronies in government, ahead of their shameful exit in 2023.”
In a statement signed by spokesman, Debo Ologunagba, the PDP demanded a full disclosure of specifics of the subsidy templates, “including details of cost of importation of petroleum products into the country to warrant the additional N2.557 trillion being requested by the APC administration.”
The statement read: “The PDP already has information of how APC leaders pushed for the additional N2.557 trillion to the N443 billion already approved for fuel subsidy in the 2022 budget just to create a surplus as slush fund ostensibly for the 2023 elections.
“The APC government cannot justify the proposed increase in fuel subsidy in the face of incontrovertible evidence of slowing economy and consequential decrease in consumption of petroleum products in Nigeria due largely to the rudderless, irresponsible and insensitive economic policies of the APC as well as the adverse effect of the COVID-19 pandemic.
“Nigerians have already noted that the proposed increase is consistent with APC’s typical padding of fuel subsidy ahead of every election cycle. Is it not revealing that while fuel subsidy was N24 billion in 2016 and rose to N144.53 billion in 2017, it spiked to N878 billion in 2018 ahead of the 2019 elections; remained at N551.22 billion in the election year of 2019, only to drop to N102 billion in 2020, after the elections?
“It is clear that the APC (government) increased fuel subsidy to N1.4 trillion in 2021 and now barefacedly seeks additional N2.557 trillion to have a cumulative subsidy bill of N3 trillion in 2022 to prosecute the 2023 elections, having realized that it has a tough battle with Nigerians because of its monumental failures.
“It is even more disturbing that the proposed increase is to be funded through external borrowings, which will further impoverish Nigerians, mortgage the future of our nation and burden future generation of Nigerians just to finance the insatiable greed of APC leaders.
“The PDP, standing with the Nigerian people, vehemently rejects the bandying of incoherent, unsubstantiated and heavily doctored figures by the APC government in its desperate lies on domestic consumption and landing costs.
“Our party challenges the APC to present the details of importation costs to Nigerians as no genuine pricing template can support such increase in fuel subsidy beyond the appropriate pricing which experts posit cannot be above N500 billion.
“The PDP, therefore, calls on the National Assembly to stand with the people and reject the scandalous N2.557 trillion addition for fuel subsidy at this critical time as approving such would be a great and unpardonable disservice to Nigerians.”
Meanwhile, the Nigerian National Petroleum Corporation Limited has disclosed that it incurred N127.035 billion in December, 2021 as petrol subsidy, a 73 per cent drop from N220 billion recorded in November.
The December figure brought the total amount spent by the government on petrol subsidy in 2021 to N1.573 trillion.
NNPC, which is the sole importer of petrol, deducts payments for petrol subsidy directly from its expected contribution to the Federation Account and carries it in its books as value shortfall.
The company in its presentation to the Federation Account Allocation Committee meeting of 19th and 20th January, 2022, said the amount would be recovered from the January 2022 proceed due for sharing at the February FAAC meeting.
The latest subsidy figure questions the validity of claims made by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed , who stated that the country spent a monthly average of N270 billion of petrol subsidy last year.
Checks on subsidy payments by NNPC in 2021 showed that the highest amount was N220 billion recorded in November. This is followed by N199 billion recorded in October.
Other monthly figures are September N123.70 billion; August N149.28 billion; July 173.13 billion, June 143.28 billion,; May 114.34 billion,; N126.29 billion, April; N126.29 billion, March; N111.96 billion, February; N60.4 billion and January N25.37 billion.
NNPC in the report to FAAC, also disclosed that crude oil and gas export revenue received in December 2021 amounted to $5.13 million and $40.14 million respectively.
It stated that feedstock gas receipt from NLNG was $113.39 million which included receipt of $51.85 million “which slipped to December that ought to have been received in November 2021.
“Other Receipts: The sum of $62.35 million being miscellaneous receipts, Gas and Ullage fees and Interest income was received in December 2021”.
On domestic crude oil and gas sales, NNPC reported that “the sum of N352,518,463,538.25 was the gross domestic crude oil and gas revenue for the month of December, 2021.
“The recoveries were: Strategic Holding Cost and Pipeline repairs amounting to N3,976,516,985.27, Product losses worth N3,307,613,578.83 . The November, 2021 Value Shortfall recovery on the importation of PMS amounted to N270,831,143,856.56. The recovery consists of November 2021 Value Short Fall of N220,110,853,427.56 plus the outstanding Value Short Fall recovery of N50,720,290,429.00 for the month of October, 2021.
“The Estimated value shortfall of N127,035,585,356.25 is to be recovered from the January, 2022 proceed due for sharing at the February, 2022 FAAC meeting”.