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Tag: Fuel Subsidy

  • NNPC Limited reacts as petrol scarcity follows Tinubu’s pronouncement on fuel subsidy

    NNPC Limited reacts as petrol scarcity follows Tinubu’s pronouncement on fuel subsidy

    The Nigerian National Petroleum Corporation Limited (NNPCL) has reacted to the pronouncement of President Bola Tinubu on the payment of fuel subsidy.

    Recall that Tinubu was sworn in as President on Monday and during his inaugural speech, he announced the federal government will no more make payments for fuel subsidy.

    Reacting, the Group Chief Executive Officer (GCEO) of NNPCL, Mallam Mele Kyari noted that the payment of fuel subsidy had been a burden on the corporation’s cash flow.

    Addressing the press, Kyari stressed the removal of subsidy will free up funds to enable optimal operations within the company.

    “NNPC Limited welcomes the decision by the Federal Government to remove subsidies on PMS.

    “The removal of the subsidy, which has been a burden on NNPC Limited’s cash flow, will free up funds to enable optimal operations within the company,” he said.

    Reacting to the scarcity already being experienced, he assured Nigerians of a sufficient supply of the product.

    “NNPC Limited is also monitoring all its distribution networks to ensure compliance,” Kyari added.

  • Fuel subsidy removal: Labour leaders react to Tinubu’s inaugural speech

    Fuel subsidy removal: Labour leaders react to Tinubu’s inaugural speech

    Some labour leaders say there is a need for all stakeholders in the sector, including government, to analyse the issue of fuel subsidy removal mentioned by the new President, Mr Bola Tinubu, in his inaugural speech.

    Tinubu, on taking office on Monday, said that the budget in place before his coming on board made no provision for fuel subsidy, and so it was gone.

    The President commended the decision of the Buhari administration in phasing out the petrol subsidy regime, saying it had increasingly favoured the rich more than the poor.

    “Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions,” he said.

    Labour leaders told NAN on Monday in Lagos that the issue needed a holistic approach.

    The National Deputy President, Trade Union Congress of Nigeria (TUC), Mr Tommy Okon,  said that there had to be stakeholders engagement in which organised labour was one.

    “So, we cannot just comment on it until we are engaged, but we have made our position known in our charter of demand to remove fuel subsidies.

    “So, it will not be a one-off respone because organised labour are partners in progress; they need to sit down and discuss and agree before that is done to avoid industrial unrest, “ Okon said.

    Also, Mr Lumumba Okugbawa, the Secretary-General, Petroleum and Natural Gas Senior Staff Association of Nigeria, said stakeholders would sit to analyse the situation and proffer the way forward for the betterment of the country.

    “We need to analyse the situation,  sit with stakeholders including government, and see the way forward.

    “This is pending when our local refineries, which has bèn our major point, that once we produce locally, all these issues about subsidy removal will not be there.

    “Once we produce locally, not that the price will not be there, but at least, it will be reduced,” Okugbawa said.

    On his part, the Secretary-General, TUC, Mr Nuhu Toho, said the union would issue a statement in reaction to some of the issues raised in the president’s inaugural speech.

  • BREAKING: President Tinubu ends fuel subsidy

    BREAKING: President Tinubu ends fuel subsidy

    President Bola Ahmed Tinubu says his regime has ended subsidy payment on fuel.

    He said the 2023 Budget made no provision for fuel subsidy and more so, subsidy payment is no longer justifiable.

    “The fuel subsidy is gone,” Tinubu declared in his inaugural speech at the Eagles Square on Monday after he was sworn in as Nigeria’s 16th President.

    He noted that the money expended on subsidy would rather be used on other areas that would have a bearing on the lives of Nigerians.

  • How Fuel subsidy is killing Nigeria’s economy – AfDB president

    How Fuel subsidy is killing Nigeria’s economy – AfDB president

    Dr Akinwumi Adesina, the President African Development Bank (AfDB), says Fuel subsidy is killing Nigeria’s economy, costing it 10 billion dollars alone in 2022.

    Adesina, who said this at a lecture in Abuja, said Nigeria’s fuel subsidies benefit the rich not the poor, fueling their government’s endless fleets of cars at the expense of the poor.

    “Estimates show that the poorest 40 per cent of the population consume just three per cent of petrol.”

    According to him, support should be given to the private sector and modular refineries to allow for efficiency and competitiveness to drive down fuel pump prices.

    ” The newly commissioned Dangote Refinery by President Buhari, the largest single train petroleum refinery in the world, and its Petrochemical Complex will revolutionise Nigeria’s economy.

    “Congratulations to Aliko Dangote for his amazing 19 billion dollar investment,” he said.

    Adesina also said there was an urgent need to look at the cost of governance.

    “The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development.

    “Nigeria is spending very little on development.

    “Today, Nigeria is ranked among countries with the lowest human development index in the world.

    “This is with a rank of 167 among 174 countries globally, according to the World Bank 2022 Public Expenditure Review report.”

    Adesina said to meet massive infrastructure needs, according to the report, Nigeria will require three trillion dollars by 2050.

    He said according to the report, it will take Nigeria 300 years to provide its minimum level of infrastructure needed for development at the current rate.

    “Nigeria must rely more on the private sector for infrastructure development to reduce fiscal burdens on the government.

    He further said there was the need to raise tax revenue, diversify the economy, tackle power challenge, revive rural areas, and invest in human capital among others.

    “We must move away from the so-called “youth empowerment programmes as youths do not need handouts, they need investments.

    “The current banking systems do not and will not lend to the youth.

    “Special funds, with palliative in approach are not systemic and are also not sustainable.

    “What’s needed to unleash the entrepreneurship of the youth in Nigeria are brand new financial ecosystems.

    “Ecosystems that understand, value, promote and provide financial instruments and platforms for nurturing business ventures of the youth at scale.”

    On AfDB contribution, Adesina said through its  partnership with  Agence Francaise de Developement and the Islamic Development Bank, 618 million dollars  I-DICE programme was initiated.

    He said it was initated to develop digital and creative enterprises, they will create six million jobs and add 6.3 billion, dollars to Nigeria’s economy.

    “With the support of the African Development Bank, Kenya, under President Kenyatta, was able to expand electricity access from 32:per cent in 2013 to 75 per cent in 2022.

    “Today, 86 per cent of Kenya’s economy is powered by renewable energy.

    “In 2014, Egypt had electricity deficit of 6,000 megawatts, but by 2022 it had 20,000 megawatts of surplus power generation capacity,” he said.

    Adesina commended President Muhammadu Buhari for his stewardship of Nigeria for the past eight years.

    “I Thank you very much for all your strong support for me as President of the African Development Bank Group.

    “I also wish to congratulate the in-coming President, Bola  Tinubu, who will take over the mantle of stewardship of Nigeria on Monday.

  • Analysis: Dangote refinery vs inoperative FG-owned refineries

    Analysis: Dangote refinery vs inoperative FG-owned refineries

    While the Dangote Refinery plays a crucial role in resolving Nigeria’s importation challenges, several challenges pose significant obstacles…

    The Nigerian government’s expenditure on the maintenance and rehabilitation of its refineries, along with fuel subsidies despite financial challenges, has surpassed the cost of constructing new refineries capable of refining significantly higher volumes of crude oil, some stakeholders have argued.

    TheNewsGuru.com (TNG) reports that over the past eight years, more than N12.05 trillion has been spent on repairs and subsidies, yet the existing refineries, with a total refining capacity of 445,000 bpsd, have failed to produce enough refined oil for domestic consumption despite the substantial investment of over a quarter of this amount (N4.15 trillion) on maintaining and rehabilitating the three refineries located in Kaduna, Port Harcourt and Warri.

    In April 2022, the then Minister of State for Petroleum Resources, Timipre Sylva, announced that the rehabilitation of the old Port Harcourt refinery would be completed by the first quarter of this year, but the expected output was only 28 per cent of the 210,000 bpsd capacity.

    Over the years, the refinery has faced issues of corruption, poor management, sabotage, and a lack of mandatory turnaround maintenance (TAM). These factors have contributed to its inefficiency and an operating capacity of only around 40 per cent at best.

    “The commitment is to deliver 60,000 barrels per day from this refinery by the first quarter of next year, and, of course, we are quite happy,” Sylva said after a facility tour in Eleme, Rivers state.

    About three months later in July, The Nigerian National Petroleum Company (NNPC) became a fully Limited Liability Company in accordance with the provisions of the Petroleum Industry Act (PIA), raising stakeholders’ expectations of the company.

    Yet, NNPC Limited failed to meet its timeline for the rehabilitation and functioning of the Port Harcourt refinery. The company’s Executive Vice President, Danladi Inuwa, later extended the resumption date of the refinery to the second quarter of the year.

    “We are working on revamping our refineries. For instance, the Port-Harcourt refinery will be functioning by the second quarter of 2023, the area five of the refinery will be functioning.

    “Also, Warri and Kaduna refineries have been signed on a quick rehabilitation to refine our petroleum product in the country,” Inuwa said.

    The decision to refurbish the refinery comes amid calls for privatization and concerns over mismanagement and financial losses.

    There is also an ongoing modular refinery program initiated by the federal government, to promote legal and regulated refining activities across the country and curb illegal oil bunkering and criminal activities in the Niger Delta region, which contribute to environmental issues such as the soot pandemic in Port Harcourt.

    The dire state of the country’s refineries has placed a significant burden on Nigeria’s finances, with a considerable portion of its foreign currency reserves being used to import refined oil for domestic consumption, hindering the allocation of funds for social and economic development initiatives.

    However, in contrast to the struggling state-owned refineries, the recently launched Dangote Petroleum Refinery, with a refining capacity of 650,000 bpsd, provides hope for Nigeria’s refining capacity and is expected to curb intermittent scarcity of petrol.

    Speaking at the commission ceremony, Africa’s richest man and the driving force behind the project Aliko Dangote, said the priority was to ramp up production to ensure the refinery could fully satisfy Nigerian demand and eliminate “the tragedy of import dependency”.

    While the Dangote Refinery plays a crucial role in resolving the Nigeria’s importation challenges by bolstering domestic refining capacity, several challenges including declining oil production, supply chain complexities, and controversies surrounding the daily fuel consumption figures, pose significant obstacles to the refinery’s seamless operation and its ability to address Nigeria’s reliance on imported petroleum products.

    Nigeria has experienced a decline in oil production due to persistent issues such as oil theft, pipeline vandalism, and underinvestment. In April, Nigeria’s oil production fell below one million barrels per day (bpd), dropping below Angola’s output.

    Another significant challenge revolves around the controversy surrounding Nigeria’s daily fuel consumption figures. While the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has pegged the country’s daily petrol consumption figure to 66.8 million litres, the Nigeria Customs Service claimed that the NNPC released 98 million litres daily, raising questions about the accuracy and transparency of reported consumption figures.

    Analysts say that while the establishment of the Dangote Refinery holds promise in addressing Nigeria’s importation challenges, several identified hurdles must be addressed to unlock its full potential.

  • How Nigeria spent N13trn on fuel subsidies in 16 years – Boss Mustapha

    How Nigeria spent N13trn on fuel subsidies in 16 years – Boss Mustapha

    Following the confusion surrounding  the removal of Fuel Subsidy the Secretary to the Government of the Federation, Boss Mustapha has said the country spent N13 trillion on subsidies payment between 2005-2021.

    Mustapha made this known on Monday while unveiling the 2022-2026 Strategic Plan of the Nigeria Extractive Industries Transparency Initiative in Abuja.

    He explained that the Federal Government under President Muhammadu Buhari’s administration had managed the petrol subsidy best.

    He added that the outgoing government would leave a robust framework for President-elect Bola Ahmed Tinubu’s incoming administration.

    “From that policy advisory, over N13tn is documented to have been expended on the subsidy payment between 2005 – 2021. The figure is equivalent to Nigeria’s health, education, agriculture, and defence budget in the last five years and almost the capital expenditure for ten years between 2011 and 2020,” he said.

    Recall that the Federal Government suspended subsidy removal until the end of June, proposing that the incoming government acts on it.

    The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had disclosed that fuel subsidy removal by the end of June would save Nigeria N3.36 trillion.

  • FG denies seeking another $800m World Bank loan

    FG denies seeking another $800m World Bank loan

    The federal government has said that it was not seeking another $800 million loan from the World Bank to cushion the impact of the impending removal of petroleum subsidy.

    This was disclosed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, in a statement on Saturday.

    She said, her attention had been drawn to media reports suggesting that the federal government was seeking new loans to cushion the effect of the pending fuel subsidy removal, saying that the report was false.

    Recall that President Muhammadu Buhari had requested “the Senate to kindly approve an ‘additional’ loan facility to the tune of USD800 million to be secured from the World Bank for the National Social Safety Net Programme”.

    This triggered controversy from many Nigerians who interpreted the request to mean a fresh $800 million, different from the one already reportedly secured by the administration.

    The finance minister had at the end of the Federal Executive Council (FEC) meeting on April 5, 2023 announced that Nigeria had already secured $800 million from the World Bank to help provide palliatives to about 50 million poor Nigerians in the aftermath of fuel subsidy removal.

    But in the statement titled “Nigeria Seeks No New World Bank Loan-Ahmed,” and issued by her Special Adviser, Media and Communications, Yunusa Tanko Abdullahi said the $800 million in question was the same one secured from the World Bank recently.”

    According to the statement, “The news story is not correct. This is the same loan that the Honourable Minister had explained on several occasions that the $800 million facility the country recently got from the World Bank for post-petrol subsidy removal palliative was awaiting parliamentary approval for the federal government to commence disbursement.

    “The government is therefore not seeking another loan for the pending fuel subsidy removal. It is one and the same.

    “It will be recalled that the facility would be deployed to provide succor to 10 million households, who are expected to get N5,000 each for a period of six months.

    “The minister had explained that the initial duration of the palliatives meant to cushion the effects of the planned subsidy removal on vulnerable Nigerians was for six months, but would be reviewed upon extensive consultation with stakeholders.”

    The statement also quoted the minister as having recently explained that “The $800 million has been negotiated and approved by the Federal Executive Council (FEC) and we now have a request before the parliament for approval. And once the parliament approves it, the next administration can decide on the utilization.

    “We’ve also been doing preparatory work side by side along the approval process. This includes expanding the committee to include members of the transition team of the President-elect”.

  • El-Rufai, Soludo, Sanusi insist on fuel subsidy removal

    El-Rufai, Soludo, Sanusi insist on fuel subsidy removal

    The Kaduna State Governor Malam Nasir El-Rufai and his Anambra counterpart, Prof. Charles Soludo, have urged the Federal Government to end the fuel subsidy regime which has negatively affected Nigeria’s economy.

    The governors made the call on Tuesday in Abuja during a panel session at the policy conversation on “How Nigeria Can Build a Post-Oil Economic Future”.

    The symposium was jointly hosted by Agora Policy, a Nigerian Think Tank and the Carnegie Endowment for International Peace.

    It also featured the presentation of a recently published book titled “Economic Diversification in Nigeria: The Politics of Building a Post-Oil Economy”– selected as one of the Best Books of 2022 by the Financial Times.

    The book was authored by Dr Zainab Usman, a senior fellow and Director of the Africa Programme at the Carnegie Endowment for International Peace in Washington, D.C.

    Speaking, El-Rufai emphasised on the need to end the subsidy on Premium Motor Spirit (PMS) known as fuel and to be pragmatic about solution to the problems instead of delay.

    He recalled that in 2021, the National Economic Council (NEC) gave a committee he chaired an assignment to work out a framework on what to do with the resources if subsidy was removed including how much to be raised.

    He listed the components of its recommendation to include framework on investments in security, social protection, infrastructure on health and education among others.

    “We worked with experts and World Bank and came out with a report on what to do with the resources which would be transperently explained to Nigerians.

    “In 2021 the Federal Government‘s budget for road was N200 billion and in 2021 we were projecting to spend N1.2 trillion on subsidy and we saw the danger and I called for its removal.

    “We have a framework and the economic council agreed for it to be withdrawn because we had a clear plan on where the money should go which includes federal, state and local government for interventions.

    “Still it is on and currently we are looking at N6 trillion on subsidy but go and check the national budget on infrastructure on health and education, it is not up to that and does not make any sense, so we need to end the subsidy,” he advised

    Soludo on his part also called for a transformational leadership and agenda adding that the new dispensation had a chance for a fresh start.

    “It has to start by getting the team assembled and getting to work immediately with institutional reforms and competitive system.

    According to him, it will be necessary if we begin to mainstream case studies and utilise lessons from those case studies that worked before by replicating them.

    The governor said that productive policies to achieve speed and sustainability prosperity for institutional reforms and change were the key.

    Also speaking, former Central Bank of Nigeria’s Governor, Sanusi Lamido Sanusi, who was a special guest, underscored the need to prepare the minds of Nigerians on bad decisions that have bankrupted the country and close that hole.

    Sanusi said in order to get it right, the incoming government should place competent officials in suitable positions.

    “We are going to have a government sworn in May 29 and I think we have to start stating what is expected of that government.

    “What do we, as Nigerians, classify as a milestone that shows we are heading to the right direction.

    “We also need a government that understands the depth of the crises that we are. We all have a responsibility of conveying the implications of the policies that we recommend.

    “We need to go back to that situation where politicians respect the independence, integrity and autonomy of these institutions and where these institutions are held accountable by the law setting them up to perform duties,” he said.

    Speaking, Aigboje Aig-Imoukhuede, Co-Founder, the Aig-Imoukhuede Foundation and Chairman, Coronation Capital,  explained that the fuel subsidy was not grounded on thinking rather it was purely political.

    According to him, refining crude oil and producing refined petroleum products in Nigeria would actually drop the prices of petroleum.

    He further explained that fiscal consideration, debt restructuring and massive private structure investment should be considered by the incoming government for economic growth.

    The participants, who lamented on fuel subsidy removal, called for effective utilisation of resources after its removal in new dispensation.

  • Labour reacts to suspension of fuel subsidy removal

    Labour reacts to suspension of fuel subsidy removal

    The Organised Labour have described the Federal Government’s decision to suspend the removal of fuel subsidy as the “best option”.

    Mr Benson Upah, Head of Information, Nigeria Labour Congress (NLC) said this to newsmen while reacting to the recent suspension of the subsidy removal by the Federal Government on Thursday in Abuja.

    It would be recalled that earlier, the National Economic Council (NEC) had planned for the removal of subsidy on petroleum product.

    According to Upah, we are glad that they have begun to see the light and decided to do the right thing.

    “Because the path they wanted to toe on the detriment of the ordinary Nigerians would have set the country on fire.

    “There would have been instantaneous reaction. Of course, we would have been glad to coordinate those reactions.

    “But happily, they have beginning to see the light. Our advice would be that they should take a lesson from the document we gave them on the so-called fuel subsidy removal.

    The answer cannot be far from domestic production,’’ he said.

    He said the decision would enable all the corruption building into the system to be minimised.

    Upah, therefore, called on the Federal Government to fix the existing refineries or build new ones, instead of importing refined petroleum products.

    Also, Mr Nuhu Toro, Secretary General, Trade Union Congress (TUC) on his part said that the Federal Government’s decision to suspend fuel subsidy removal was a good move.

    “Though it’s coming late but the Federal government’s decision to suspend the move to remove fuel subsidy has alluded to the fact that such harsh economic policy ought to have been a product of social dialogue which was not done.

    “We told Nigerians earlier on that the policy is ill-timed and is not acceptable. So it is good that the government has done a U-turn because the policy cannot be forced down our throat, ‘’he said.

    Toro said that it was good that the government had to rethink its decision on the removal of fuel subsidy.

    He also added that refurbishing the existing refineries and production of petroleum products in our country is in the best interest of the country because of the huge advantages.

    “First, it would create jobs, make the petroleum products available for consumption and probably reduce the price of the products. It will also guarantee foreign direct investment and make Nigeria a better of place.

    “We are confused that our refineries are not working and we have asked over time, why are the refineries not working.

    “So there is a strong need for a deliberate effort by the incoming government to ensure that our refineries work.

    “All the monies they claim goes to the process of deregulation can actually be utilised to make our refineries functiona,’’he said.

    He added that the decision to revise that policy had further vindicated Nigerians as this was the right thing.

    He however, charged the incoming government that the instrumentality of social dialogue should be leveraged upon on issues that affect the general project of Nigeria, adding that the voice and interest of Nigerians could be accommodated.

    “Policies should not just be drafted overnight and pushed through people’s throat. Nigeria belongs to all of us.

    “We are all critical stakeholders and must be part decision making and implementation body to ensuring that our country move forward,’’ he said.

  • Why subsidy removal is good for Nigeria – LCCI

    Why subsidy removal is good for Nigeria – LCCI

    The Lagos Chamber of Commerce and Industry (LCCI) says the Federal Government’s planned petrol subsidy removal remains one of the best economic decisions that will reduce Nigeria’s debts and tackle widespread corruption in the oil sector.

    LCCl’s President, Dr Michael Olawale-Cole, said this during the chamber’s second quarter state of the economy conference on Tuesday in Lagos.

    Nigeria secured an $800 million relief package from the World Bank to minimise the effect of subsidy removal on the most vulnerable in the society.

    Recent data by the Debt Management Office (DMO) puts Nigeria’s public debt at N46.25 trillion ($103.11billion) as at end-December 2022, compared to N39.56 trillion ($95.77 billion) in 2021.

    Olawale-Cole, however,  urged government to begin to roll out several cushioning measures ahead of the subsidy removal in the second half of the year to mitigate any likely disruptions to the economy.

    “Removal of fuel subsidies is, amongst others, expected to spur investments in domestic refining and petrochemicals and create a significant value chain for the various stakeholders.

    “Though the planned removal of fuel subsidies may cause further northward movement of inflation in the short term, it is arguably one of the best economic decisions to reduce our unsustainable debts and widespread corruption in that sector.

    “The government must however, take cognisance of its socio-economic implications, especially with unemployment at the unwholesome rate of about 40 per cent,” he said.

    The LCCI’s President frowned at borrowing to fund subsidies or support uneconomic ventures, saying that government’s fixation on debt accumulation was unhealthy.

    According to Olawale-Cole, government must prioritise exploring other avenues, including opening equity opportunities, offloading/selling of its real estate holdings and tackling oil theft to create room for fiscal manipulation.

    He stressed the need to importantly follow the recently launched and restructured Ministry of Finance Incorporated (MOFI) by President Muhammadu Buhari on Feb. 1, to optimise national assets.

    The LCCI’s president advised that copious references should henceforth be made on the growth and returns of the country’s stock of financial assets in corporate equities, real estate and infrastructure spaces.

    This, he said, would provide local and global observers a balanced picture of our financial position.

    “It would also motivate national asset managers, led by MOFI, to grow our assets and the returns on them as well as motivate our national liability managers, led by the DMO, to minimise our liabilities and the costs we incur on them with equal vigour.

    “Indeed, issuance of joint reports by MOFI and DMO would be most ideal going forward.

    “One-sided updates on liabilities with no updates on assets when such updates were adequately available could well be blamed for some of the downgrades of nigeria’s debt issuance risk profile and outlook.

    “The rating outcomes would have been more favourable, had updates on assets been provided side-by-side with updates about liabilities,” he said.

    Addressing inflationary pressure which inched upwards in March to 22.04 per cent, Olawale-Cole noted that hiking monetary policy rate had thus far proven to be ineffective and insufficient in taming inflation.

    He stated that in most economies, amid the cost-of-living crisis, the priorities remained achieving sustained disinflation and reasonable real growth.

    “Therefore, there is a clear need for the government to strengthen its support to critical sectors like agriculture, export infrastructure manufacturing, power, energy and insecurity.

    “Government should also look at ways to improve supply chains as well as cushioning the cost of production by assisting manufacturers with subsidised inputs and foreign exchange allocation.

    “While the Central Bank of Nigeria embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for Micro, Small and Medium Enterprises (MSME),” he said.