NEC: Fuel Subsidy Stays for Now, But May Be Removed Before Year End

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*Says petrol costs 100% more in neighbouring countries
*Reveals that N2trn spent on subsidy in 2021
*Accuses NNPC of failing to fund FAAC to the tune of N200bn monthly in 2021

Deji Elumoye, Onyebuchi Ezigbo and Emmanuel Addeh in Abuja

The National Economic Council (NEC) yesterday allayed fears of Nigerians about the possible removal of fuel subsidy early in 2022, saying the policy would remain for now.
It, however, did not rule out the possibility of the subsidy being removed before the end of this year.

These formed part of the resolutions of NEC at its maiden meeting in 2022 held at the Conference Hall of the State House, Abuja, with Vice President Yemi Osinbajo presiding.
NEC which meets monthly is constitutionally empowered to advise the president on nation’s economic matters.

The federal government had disclosed plan to phase out the fuel subsidy regime by the second half of this year.

The World Bank had also last November sounded the alarm bells to Nigeria, saying further delay in removing the fuel subsidy which had been described as a major drain and waste on the economy could see the federal and state governments unable to pay salaries this year.

But a member of President Muhammadu Buhari’s Economic Advisory Council, Mr. Bismarck Rewane, recently warned that some of the economic reforms outlined by the federal government in 2022, especially the fuel subsidy removal, may be hampered by political considerations and labour union activities.

However, Governor Abdullahi Sule of Nasarawa state and his Edo state counterpart, Godwin Obaseki, were on hand to brief newsmen at the end of the meeting that lasted for four hours.

When asked if fuel subsidy removal was discussed at the meeting, Obaseki said though Council discussed the issue, no decision was taken on the matter.

He added that statistics had shown that over N2 trillion was spent on fuel subsidy in 2021, while reports had also shown that prices of petroleum products were 100 percent higher in neighboring countries than what is obtainable in Nigeria.

According to him: “The issue of subsidy has been one matter that NEC has deliberated on, for more than a year now. There was an Adhoc Committee which was set up by NEC headed by Governor El-Rufai of Kaduna state that included members of the executive arm of government that worked on recommendations as to what we should do about the costs of Premium Motor Spirit (PMS) locally because as you realise, as has been told us, the cost of PMS in Nigeria today is about N162 per liter. Whereas every other country surrounding Nigeria is selling the same product at more than 100 per cent of the cost in Nigeria.

“And the country as at last year, spent in excess of almost, I mean, we need to have the exact figures, but we must have spent almost N2 trillion subsidising petroleum products. That is money that could have gone into building roads, money that could have gone into healthcare and education.

“So, for NEC, the arguments have been put out, should we continue this regime of spending money we do not have to subsidise the living standards of only mostly those who have vehicles? And when NEC looked at some of the analysis last year, we then realised that less than one-third of the states of this country consume two thirds of the subsidy. So, the issue of equity also came up.
“All of these findings were presented to NEC and NEC has had several deliberations. And the deliberations are still ongoing.

“So, NEC hasn’t come up with any decision yet. I think recommendations have also been made to the President. That is what I am aware of that transpired so far.”

Speaking in the same vein, Nasarawa state governor emphasised that no decision had been taken on the issue of fuel subsidy.

He added that with the NNPC now becoming a limited liability company, it would now have to run differently in the area of fuel pricing regime.

“You have to understand that we didn’t make any presentations on the fuel subsidy because there has not been a decision. But in reality, all of us Nigerians know that there is now the Petroleum Industry Act. And NNPC has now become, you know, a limited liability company. So NNPC will run differently.

“So, if the Minister of Finance, you know, provides for six months, you probably can understand part of the reason for provision of six months before NNPC fully takes off and at that moment, that’s when decisions will be made.

“But I want to make the correction that it is not governors who are making recommendations. It is actually a NEC committee, you know, which comprises of all the other people that are looking at this and no decision has been made.

“Probably at the appropriate time, a decision will be made. You know, the Petroleum Industry Act has fully taken charge, and it will not require any recommendation from anybody”.

Asked if NEC took any decision on the complaints of governors about unconstitutional deductions, Sule stated that what was presented to NEC was a document on the decision that was reached by the Federal Revenue Allocation Committee (FAAC)

He explained that FAAC brought up the constitutional issue about deductions of 13 per cent derivation, which should have occurred before any expenditures.

The governor stressed that this was a constitutional issue, which had been dealt with.
He said: “And it was realised that refunds had to be made as a result of those unconstitutional deductions and it was agreed how those refunds should be paid back whether it was to be paid in three years or in four years or in five years.”

On his part, Edo state governor put it succinctly that the deductions had really affected the states financially.

According to him: “As at last year, NNPC was supposed to contribute N200 billion a month to FAAC for distribution to the States. Because of payment of subsidy, NNPC was unable to put that money into FAAC for distribution, which means less money going to the states and less money going to the federal government.”

FG Cannot Push Consequences of its Inefficiency to Nigerians, Says NLC President

Meanwhile, the Nigeria Labour Congress (NLC) yesterday insisted that the planned removal of petrol subsidy by the federal government was tantamount to leaving Nigerians to bear the consequence of in-built inefficiency in the product supply value chain.

Speaking on a national television yesterday, the National President of the NLC, Mr Ayuba Waba, reiterated the body’s earlier decision to embark on a warning protest on January 27, over the matter.

Wabba maintained that the removal of subsidy would cause more pains to Nigerians and push millions into poverty, arguing that as it is, inflation has also already rendered wages and salaries valueless.

The NLC helmsman noted that the federal government cannot be talking about subsidy removal when it imports all its products, explaining that the first point to start is to begin local refining.
He posited that the refineries have not worked for years because there are certain highly placed individuals who benefit from the importation of products.

He pointed out that labour had engaged government for the past 20 years over the matter and proffered solutions, including building the country’s refining capacity.

“We must be able to refine product for domestic use, and that is what most OPEC countries are doing. We should not rely 100 per cent on importation of petrol and other petroleum products.
“One, we’re exporting our jobs, not only exporting jobs, we are also imposing a burden on many Nigerians. In fact, we can take over the entire West Africa markets if we’re able to refine products for domestic use,” he noted.

Wabba explained that while the government may have started work on the Port Harcourt refinery, all the refineries are still moribund, adding that government has broken its promises several times in the past to revamp the facilities.

According to him, modular refineries can actually address the perennial issue of shortage of gas and diesel and also bring down the price which has continued to rise as well as pushing the prices of foodstuff beyond ordinary Nigerians.

“Diesel is almost going for between N340 per litre and N360, depending on where you’re buying. And then it will make transportation so expensive, and therefore costs of goods and services that will also depend on transportation. Those costs will be built into it. So, those are the issues.
“There is confusion. How much of petrol do we consume? Do we know? And that is why we have said that the inefficiency that is in the system should not actually be transferred to consumers to continue to carry,” he explained.

Wabba opined that government’s position that the high volume of consumption is due to products that are being smuggled across the borders does not hold water, stating that it will take hundreds of tankers to take that volume out of the country.

“If you are to look at the gap between 38 million litres and 102 million litres, it means that on a daily basis, 200 trucks will be smuggling products across the country. And this is an issue we have interrogated in the past.

“We have given recommendation, the first is that they must build refineries around those borders, so that we can also take a comparative advantage of all the neighbouring countries, but today, nothing has happened.

“So basically, clearly there is no transparency and therefore the issue of how much we consume per day is still a mystery. And this is not rocket science,” he explained.

According to him, the use of an alternative fuel like compressed natural gas to reduce the number of vehicles that use petrol has also been left hanging.

“To use natural gas, I remember that about N260 billion was actually committed to the issue of conversion of vehicles. But there’s nothing on the table. So that’s why everybody’s concerned that promises have been made and we have documentation, we have reports, but none of those promises are being kept. So it’s a vicious cycle,” he posited.

Also, ahead of the January 27 nationwide protest against the purported plan to remove fuel subsidy, the Senior Staff Association of Nigerian Universities (SSANU) said that its branches all over the country had adequately mobilised in line with the directive of the NLC for the protest.

Speaking at its 41st Regular National Executive Council (NEC) meeting at the Obafemi Awolowo University, Ile Ife, Osun State yesterday, SSANU President, Mr. Mohammed Haruna Ibrahim, accused the federal government of not being sensitive to the pains the citizens were going through while taking its decisions.

Ibrahim said as an affiliate of the NLC, SSANU would participate actively in the proposed protest.
According to him, “In the next few days, the Nigeria Labour Congress is mobilising all Nigerian workers both formal and informal to protest this evil and very unpatriotic thought of removing fuel subsidy in Nigeria.

“We have it in good authority that about N200 will be added to the N162 or N170 depending on where you are buying as fuel price in Nigeria. This, the NLC in which SSANU is an affiliate, totally rejects and will participate fully in this protest across Nigeria on the 27th of this month.

“The present federal government of Nigeria is not doing any better in its relationship with our labour unions. SSANU in particular is facing the most difficult period of its existence because our members are going through a lot in terms of hardship, in terms of denial.

“We have had a 2009 agreement which is about 12 years down the line, just less than 40 per cent of that agreement has seen the light of the day. Even those that have seen the light of the day, they are coming in different forms and sizes that are not encouraging and not also friendly to our membership.

“Today what our members go through is mutilation of salaries, none payment of promises made such as that of the new minimum wage arrears, none implementation or partial or lopsided payment of the hazard and responsibility allowance, issues of staff schools that have become an issue of concern to all our membership.

“Funding of state universities has become so terrible, some universities in Nigeria of state extraction suffer 12 months or two, three years of none payment of salaries and allowances. Inter university centers that are supposed to be part of our struggle have been denied of their legitimate rights and privileges of accessing allowances that have been approved and agreed upon with the federal government of Nigeria.

“The renegotiation of the 2009 Agreement is still wobbling and dancing. We also see today in our Nigerian universities this dangerous and reckless usurpation of our duties of our members by some Vice Chancellors who give out our duties as specified in our callings to other people who do not know better than we do.”