N10.43trn subsidy: You’re wrong, industry stakeholders, others tell FG

Panic as fuel scarcity hits Port HarcourtBy Dayo Johnson, Regional Editor, South-West, Udeme Akpan, Victor Young, Michael Eboh, Ediri Ejoh & Shina Abubakar

Strong reactions have continued to trail the Federal Government’s deregulation of the downstream sector of the petroleum industry, following increase in pump price of petrol to between N160 and N162 per litre.

Stakeholders in the polity, yesterday, dismissed figures reeled out by Information and Culture Minister, Alhaji Lai Mohammed, to justify reasons for removal of fuel subsidy and petrol price hike.

Lai Mohammed had, while briefing journalists in Abuja, Monday, said the government spent N10.413 trillion as fuel subsidy between 2006 and 2019.

Nobody can get subsidy figure right —PENGASSAN

But the Petroleum and Natural Gas Senior Staff Association, PENGASSAN, which reacted through its General Secretary, Lumumba Okugbawa, said: “Nobody can get the subsidy figure right.

“What government is presenting is the figure it prepared which we doubt because we are aware that marketers falsify figures to get bogus subsidy claims. This has led to what is generally regarded as subsidy scam.

“We all can recall that some marketers and their cronies have been prosecuted and are being prosecuted by the Economic and Financial Crimes Commission, EFCC, over subsidy scam.  We are aware that the subsidy regime has created several emergency millionaires.

“On our part, we know that the so-called subsidy is what the nation can avoid by focusing on local refining of products because we do not control international price mechanism.”

FG should hold stakeholders’ confab urgently, says Aremu

Also reacting, Vice President of IndustriALL Global Union, and immediate past General Secretary of National Union of Textile, Garment and Tailoring Workers of Nigeria, NUTGTWN, Issa Aremu, said: “We should immediately hold a policy dialogue to discuss policy reforms and not the monologue that is happening because we cannot afford any social dislocation that may result from the bottled-up anger of people in this pandemic era.

“The government must hold a stakeholders’ meeting for government, private sector, organized labour, civil society organization and other relevant  groups and individuals to discuss the issue of policy reforms.

“It should not only be on government revenue, but we should also look at the welfare of the citizens, job creation, appropriate pricing and appropriate service to the people.

“We should be able to manage reforms to avoid dislocations and disruptions of socio-economic environments. There should be quick engagement of the citizens. The downstream sector of the petroleum sector of the economy must and should not be reduced to pricing issue.

“What has happened to the Petroleum Industry Bill, PIB? What about local refining and modular refineries? Nigerians can pay any price provided it is refined locally where the jobs are not exported through import-driven petroleum sector.

“The earlier government holds an all embracing stakeholders’ meeting to discuss policy reforms and way forward for the nation and its citizens, the better for all of us.”

Govt transferring its incompetence to Nigerians – Lakemfa

Former General Secretary of Nigeria Labour Congress, NLC, Owei Lakemfa, lamented that what the nation was witnessing in the name of subsidy was government transferring its incompetence to the people

He said: “On the fuel price hike, it is the same argument and excuses that have been made by successive governments, from military regime up till now. There is nothing different. This government, many times, has told us that there is no subsidy.

“The Vice President has told us so, and President Buhari has said if anybody said there is subsidy, it is a fraud. So, where did they get this subsidy that they had been paying? They did advertisements in a number of media organisations claiming that fuel is cheapest in Nigeria.

“Again, this is the old argument. If our fuel is the cheapest, and they referred us to Saudi Arabia, what is the minimum wage in Saudi Arabia? The social services they are providing in Saudi Arabia — housing, free education among other things, are they available to Nigerians? “In those countries they are mentioning, there is mass transit, trams, underground system, railways are working. So, you do not necessarily need to have a car or take a taxi. In fact, taxis are expensive.

“It is middle and upper class that drive cars or take taxis. People generally, including ministers, in some of those countries go by rail or tram. So, if the price of a litre of fuel is costlier in those countries, it is understandable.

“The masses have options. It is like in US; a lot of people use their cars only at weekends for leisure. If you are going to work or any business, you take the tram, the train or underground rail, and go to your destination.

“It is not an intelligent argument at all. The real and primary issue about fuel price in Nigeria is the gross incompetence of government. If you have four refineries and you cannot run a single one, it is gross incompetence.

“They argue that there is corruption. If you have a government that says its primary job on which basis they came to power, is to check insecurity, improve the economy and check corruption, and you cannot run one refinery because of corruption, then you are joker.

“Since President Olusgun Obasanjo’s time, they claimed they were going to build new refineries in the year 2000. They promised to build 18 refineries after issuing 18 licenses. From 2000 till now, 20 years after, no refinery has been built.

“This government then came up and said, the refineries are too big, we are doing modular refineries. They told us in 2016, two years ago, we would have modular refineries. This is 2020, four years after, there is no modular refinery anywhere. All these are just promises and lies, fiction.

“When you import fuel and you pay at international price, you pay for refining abroad, they will add their profit as well, and you pay for freight to move the product to Nigeria. When the product arrives Nigeria, you pay for discharge, a lot of time, the ships are out there in the ocean, and they call them mother vessels.

“It takes days for smaller vessels to go bring the product. All these things cost money. Then you store them in tank farms. The freight has demurrage; there is cost for the movement to Atlas Cove, and tank farms.

“A lot of them would then be moved by road from the tank farms to all parts of the country, including Maiduguri. Of course, the prices are likely to be very high. It is normal. That is the fault of government.

“So, what the government calls subsidy is subsidizing the inefficiency and corruption in government. What we are witnessing in the name of subsidy is transferring government incompetence to the people.

“That is what they are charging the citizens for. So, if all this government can do over the years after replacing the PDP, after five years, is to plagiarize the argument of PDP, it has no basis for it to continue to say they are government and they are ruling.”

Connivance to steal nation’s resources

On electricity tariff, he said: “When you say those you are going to charge are those you can guarantee power for 12 hours, what sense does that make? So, you are going to charge them heavily, and you are not going to give them electricity for 24 hours?

“In any case, if a DISCO says I am going to give electricity for 12 hours for this amount, how do you guarantee that they are going to provide the electricity? All these stories about electricity that they are talking about, we have only one source.

“One, the electricity we generate for Nigeria by the generating companies, the GENCOs, are transferred to the transmission station in Oshogbo from where the distribution takes place.

“What they have been distributing has been less than 3,000 megawatts, MW. So, the 12 hours they want to guarantee some people, where are they going to get it from? It is clear that what they want to do is take more electricity and give to some people and leave the other parts of the country in darkness.

“To say I am going to give some people 12 hours and you are going to use the same 3,000 MW, some other people will be left out. So, they can give  part of Abuja 12 hours and put Nasarawa, Benue and others in darkness because they are not importing power from any country.

“It is the same megawatt generated by GENCOs and distributed  by the DISCOs  through the Transmission Company of Nigeria, TCN, in Oshogbo, are the same amount that they are going to  use for everybody.

“If the government says they are going to give some people 12 hours, that means they are going to put some parts of the country  in darkness. This is unconstitutional and the government should be tried for that.

“The constitution of Nigeria says you cannot discriminate against Nigerian citizens on any basis. This is discrimination against the poor.

“Now you claim, you have privatized power in 2012 and handed the company to private individuals in 2013. 2013 to now is seven years, as a government, the President of this country, Muhammadu Buhari, the Vice President, Yemi Osibanjo, the Minister of Power then, Babatunde Fashola, leaders of the National Assembly, and others, then said the privatization was fraudulent and they are not performing.

President Goodluck Jonathan made available to the privatized electricity distribution companies a loan intervention of  N213 billion in 2014. it remains unpaid till today. The financial bailout government gave to the power sector from 2015 to 2018 was over  N2.9 trillion. N600 billion was also given to the DISCOs in 2019, and last year, the World Bank approved $3billion loan for Nigeria in October for the power sector.

The government has been using our money to fund GENCOs and DISCOs, and they are telling us to pay more. No improvement of services whatsoever.

Give us your data, IPMAN, MOMAN task minister

Similarly, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi, said: “The Minister should not only roll out his figures, he should provide details to enable response, if necessary.”

Also, the chairman, Major Oil Marketers Association of Nigeria, MOMAN, who is also the Chairman/Managing director, 11 Plc, formerly MRS, Mr. Adetunji A. Oyebanji, said: “The subsidy was not free money, but a refund of monies incurred by marketers in the first instance. The term  is a misnomer. I believe that he might have been misquoted.”

Despite some issues associated with deregulation, he said: “Deregulation is the best foundation to grow the industry. They should open up NNPC assets like pipelines and depots to third parties. They should also grant all players equal access to forex, so we don’t have a single entity involved in importation.

“However, we are just starting the process. It is a beginning, eventually it will bring development to the industry, attract investment, create jobs and grow the economy.

“In a deregulated environment, prices will go up and down with market forces. It is to be expected.  At times, it will go up and at times it will go down. Since we are importing almost 100 percent, the movements will follow the movements in the international product prices.

“Only one importer is a monopoly. I don’t think that augurs well for competition. If all players have equal access to forex at the same rate, then we would have a level playing field.

“If coy A can bring in product cheaper than coy B, he can compete on price. This will not happen as long as only one entity is importing and determining who gets what.”

NESG lauds FG

Also, the Nigerian Economic Summit Group, NESG, has applauded government’s decision to raise fuel and electricity prices, noting that the benefits would ensure smooth functioning of both markets.

READ ALSO: UPDATED: Oil price crash: Privatise refineries, repeal PPPRA, PEF Acts, CSOs tell FG

In a statement by its Chairman, Board of Directors, Mr Asue Ighodalo and NESG CEO, Mr Laoye Jaiyeola, the NESG commended government’s actions at deregulating fuel and electricity prices and urge that proper policies, processes and procedures be put in place, to ensure that all the reforms (beyond price deregulation) necessary to facilitate the smooth functioning of both the fuel and electricity markets are effectively and conclusively implemented.

The group said: “Adequate communication to stakeholders and the general public on the benefits derivable from these actions must also be regularly carried out.”

Speaking further on the reform programme being implemented by the current administration, the NESG acknowledged all efforts, especially in diversifying the economy.

It said: “NESG notes nation’s huge exposure to the vagaries of oil price fluctuations and emphasizes the need for a better structured and effective diversification of the economy. However, NESG is not oblivious to the continuing crucial role of the oil and gas sector in our economy.

“Accordingly, we applaud the work now being done by the Presidency to see to the quick passage of the Petroleum Industry Bill (PIB), and urge further stakeholder consultations so that the resultant law will create the required enabling environment for investment flows, reserves enhancement, technology transfer and utilization efficiency.”

On the Federal Government’s efforts in improving efficiency at the nation’s ports, the group acknowledged government efforts at reopening the eastern port and urged that the rail link between Onne and Port Harcourt be given urgent attention to avoid replicating the Apapa Port experience.

Justify hikes, OPS tasks FG

Also, the Organised Private Sector of Nigeria, OPSN, called for strict application of transparency as the country enters into a new phase of power and oil and gas downstream price regime.

A set of agreement was reached between the group and government after a meeting with the Buhari Administration through the Special Adviser to the President on Infrastructure.

The meeting had extensive discussions on the increase in electricity tariff which took effect on September 1, 2020.

The OPSN, comprising the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), the Manufacturers Association of Nigeria (MAN), the Nigeria Employers’ Consultative Association (NECA) the Nigerian Association of Small and Medium Scale Enterprises (NASME), and the Nigerian Association of Small Scale Industrialists (NASSI), had called on President Buhari’s government to justify the necessity for this tariff increase at a time the economy was facing a potentially deep recession and Nigerians were facing increasing hardships, with unemployment rising to over 27 per cent as many factories are facing total closure.

Also, the OPSN demanded that government prevailed on NERC to be more firm and fair in dealing with stakeholders in the electricity supply market.

 ‘Real price between N200-N215 per litre’

Meanwhile, Ghana’s National Petroleum Corporation (GNPC) Professorial Chair, Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Prof. Omowumi Iledare, has put the real price of petrol in Nigeria at between N200 and N215 per litre.

In an interview with Vanguard yesterday, Iledare, who is a petroleum economist, said: “The N160 per litre price in my opinion is social optimal price. The range to guarantee fair return, looking at forex, is about N200 – N215 per litre.

“It should be noted that 50-55 per cent accounts for crude cost, 15-20 per cent transportation and Value Added Tax, VAT, about eight per cent, while distribution and marketing attract 15 per cent margin.

“I empathize with Nigerians on the seemingly immediate pain but this is going to be temporary compared to not deregulating. Deregulation is necessary and inevitable decision for the government to make now to avert the eminent collapse of the energy sector.

“The President is right, the temporary bitter pill is like a bitter leaf soup that with time has no bitter taste in the mouth. With perseverance, Nigeria will be better off in the long run if this subsidy gorilla is tamed once and for all.

“However, the optics must meet the rhetoric and action. The executive needs to do something with Petroleum Products Pricing Regulatory Agency, PPPRA, and Petroleum Equalisation Fund, PEF, to substantiate the deregulation direction.

“People are still making the mistake of thinking the increase of PMS pump price is a removal of subsidy.

“It is not as long as NNPC continues petroleum product importation via the use of federation assets (crude oil that belongs to Nigeria and not to NNPC) to meet domestic demand and equalization charges are still paid out by PEF to maintain uniform pricing nationwide, then subsidy is very much alive, perhaps indirectly.”

Atiku asks: Why is fuel price falling in US, Europe but rising in Nigeria?

Also reacting yesterday, former Vice-President Atiku Abubakar said the price of petrol should fall with deregulation.

Atiku, who had campaigned for the removal of fuel subsidy in the 2019 presidential election, said  he was demonizedfor suggesting it. He had claimed that the price-fixing system was laced with corruption, and stalling investments.

In a tweet yesterday, Atiku said crude oil prices had reduced, compared to what was obtainable in 2019.

He said fuel prices were lower in the US and Europe, wondering why it was higher in Nigeria.

Describing himself as a business man, Atiku said there are questions that needed to be answered regarding the increase in fuel price.

He said: “If we truly deregulated, shouldn’t fuel price have dropped?”  I am a businessman. I look at things from an economic perspective. Questions beg answers.

“The price of crude is down from where it was in 2019. In the US and Europe, fuel prices are far lower than they were in 2019.  If we truly deregulated, shouldn’t fuel price have dropped?”

Students protest fuel, electricity tariff hike in Osogbo, Ondo

Meanwhile, protests rocked Ondo and Osun states yesterday, as students and youths stormed the streets calling on government to reverse the increase in the price of petrol and electricity tariff.

Students in Osun State, under the aegis of the National Association of Nigerian Students, NANS, thronged major streets of Osogbo, protesting against the hikes in the pump price of Premium Motor Spirit (PMS), popularly known as petrol and electricity tariff.

The protest which was organised in conjunction with Joint Campus Committee JCC, South-West axis, condemned the decision of the Federal Government to increase prices of fuel and electricity and further unleashed hardship on the masses.

The students, who were initially stopped by operatives of the Department of State  Service, DSS, from moving through the Oke-Fia area of the town, later resorted to passing through Old-Garage to MDS and terminated their procession at the Correspondents’ Chapel  of Nigeria Union of Journalists at Ola-Iya junction, where they addressed journalists.

Members of #RevolutionNow  movement also joined the protesters with their traditional orange beret, while a combined  team security personnel, including the regular police, DSS and men of the Nigeria Security and Civil Defense Corps , monitored the process.

Addressing the gathering, Barrister Alfred Adegoke called on the Nigeria Labour Congress, NLC, and the Trade Union Congress, TUC, not to disappoint Nigerians, asking them to join the protest to occupy Nigeria as a means of forcing  government to rescind its obnoxious decision.

Also speaking during the protest, Kola Ibrahim of Democratic Socialists Movement said students would always protest against policies capable of jeopardising their future, stressing that government must reverse the hike in electricity tariff and petrol pump price within three weeks.

“Government must ensure that fuel price, electricity tariff, stamp duty and cable television charges are reversed, as well as other obnoxious capitalist policies of the government or we will continue to protest against the government,’’ he said.

The Coordinator of #RevolutionNow  movement in Osun State, Olawale Bakare, said it was obvious government was not concerned about  the plight of Nigerians by increasing the price of the two commodities in the midst of coronavirus pandemic.

He also urged government to reverse the decision before October 1, stressing that failure to do this would engender daily protests.

In Ondo State, youths protested against the increase in petrol price and electricity tariff and called for a reversal

Acting under the aegis of National Association of Nigerian Students, NANS, the youths demanded a reversal of the hike in both the petrol and electricity tariff.

Armed with placards, they trooped to the major streets of the state capital, Akure, chanting solidarity songs to condemned the action and decision of the federal government.

Residents of the town joined the protesters and accused the federal government of not being sensitive to the plight of Nigerians.

The Coordinator of NANS Zone D,  Mr. Kowe Odunayo, said the hike in both the petrol price and electricity tariff were amounted to wickedness on the part of  government.

Odunayo added that the youths, especially the students, would be badly affected by the hike, stressing that government needed to reverse its decision immediately.

“It is no longer news to many of us that the federal government has increased the price of fuel and electricity tariff but we want them reserved immediately.

“We are tired, we can’t continue like this and we are telling the federal government that they can’t continue to take us for fools with their anti-people’s policies.

“If they feel they can shut the voices of some people in Nigeria, they can’t shut the voices of the youths and Nigerian students,’’ he said.

Also speaking, NANS JCC Ondo Axis, Akinteye Babatunde, said Nigerians had suffered enough under the government of President Buhari, noting that the people would no longer keep quiet on the injustice being melted out on them.

“We have started speaking and making our voices known that the increment is unacceptable to us as youths. We shall continue to speak until the federal government knows that we are not happy about the increment of these utilities.

“It is just too unfortunate that at this period of COVID-19, when governments in other countries are bringing succor to their citizens, in Nigeria, our own government is increasing the pains and suffering of its own citizens.”



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