Tag: Fuel Subsidy

Fuel subsidy palliatives yet to be concluded with govs – FG

The Federal Government has said efforts to set up palliative measures, ahead of the June 2023 deadline for the discontinuation of the petrol subsidy, are yet to be concluded with states.

It, however, said concerned committees would soon conclude discussions with key stakeholders as the administration winds down.

The Minister of State for Budget and National Planning, Clem Agba, revealed this on Wednesday to State House Correspondents shortly after this week’s Federal Executive Council meeting, which was presided over by the President, Major General Muhammadu Buhari.

A committee led by the Vice President, Prof. Yemi Osinbajo, and the National Economic Council, composed of state governors, had been working to resolve the issue for over 12 months, he said.

According to him, during the period the committee has yet to harmonize its templates.

“So, the stage that we are in now is how to finalise the suggestions that have come out from both the Federal Government and the governors.

“Like you know, it is something that is going to affect the entire nation. They just have to ensure that everyone is carried along, that is both the federal and sub-national governments,” he added.

The minister argued that while the Osinbajo-led committee has no definite timeline to conclude its assignment, discussions were ongoing.

Agba explained that the delay was necessary because the situation had far-reaching consequences for the nation.

Meanwhile, the Minister of Information and Culture, Lai Mohammed, revealed that the government had postponed the 2023 population and housing census earlier scheduled for March 29.

Mohammed said the postponement became necessary as the Independent National Electoral Commission last Wednesday rescheduled the governorship elections to March 18.

He also revealed that the council approved N2.8bn for the National Population Commission to procure software to be deployed for the census.

“There was a memo presented by the National Population Commission, seeking some software to allow them to conduct the census in May this year.

“I believe because of the rescheduling of the elections, they cannot commence the census as planned.

“They sought council’s approval for a contract to procure software for the census at the sum of N2.8bn,” the minister revealed.

He also disclosed that the FEC approved N15bn for the construction of an access road linking the Benin-Asaba Expressway to the Second Niger Bridge.

The completion of the road will enable the regime to inaugurate the bridge before it Buhari leaves office on May 29.

“The minister of works presented a memo seeking approval for the award of contract for the construction of an access road from the existing Benin-Asaba Expressway to approach the link road to 2nd Niger Bridge in Delta State.

“As you are aware, the government is determined to commission the 2nd Niger Bridge before the expiration of this administration.”

We can tell you that the bridge itself is substantially concluded but the contract that was awarded today, although the work has started before now, is actually to connect the Asaba-Benin end to the new bridge.

“The contract was awarded to Julius Berger at a sum of N15bn. They have started the work but they said it is only proper that they have a contract. We can assure you that the road will be finished in good time for us to commission the 2nd Niger-Bridge,” he said.

Mohammed also disclosed that the council approved the sum of N16bn as augmentation for the dualisation of Suleja-Minna Road in Niger State.

March 16, 2023
Fuel subsidy now above N400bn monthly – NNPCL

The Nigerian National Petroleum Company Ltd. (NNPCL) has disclosed that the amount being spent as subsidy on Premium Motor Spirit (PMS), popularly called petrol, had crossed N400 billion monthly.

Malam Mele Kyari, NNPCL’s Group Chief Executive Officer, disclosed this on Friday in Abuja at the ongoing Final Cutover to NNPC Ltd., from being a corporation.

Kyari explained that NNPCL was spending about N202 as subsidy on every litre of petrol consumed across the country.

He added that about 65 million litres of PMS was pumped daily into the market by the NNPCL to keep the country wet.

Kyari said the oil company would continue to meet its obligations by providing PMS for Nigeria, adding that the over N400 billion monthly subsidy had been a severe strain on NNPCL’s cash flow.

According to him, NNPCL is the sole importer of petrol into Nigeria and has continued to play this role for several years running, bearing the huge cost of fuel subsidy.

He said other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the United States dollars, required for the imports of PMS.

“Today, by law and the provisions of the Appropriation Act, there is subsidy on the supply of petroleum products, particularly PMS into our country. In current data terms, three days ago the landing cost was around N315/litre.

“Our customers are here, we are transferring to each of them at N113 per litre.

“That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400 billion of subsidy every month,” he said.

Kyari said that the continuous funding of petrol subsidy by NNPCL had been ongoing without refunds from the Federal Ministry of Finance, Budget and National Planning, despite the fact that subsidy had been budgeted for in the Appropriation Act.

“There is a budget provision for it. Our country has decided to do this. So, we are happy to deliver this, but it is also a drain on our cash flow, and I must emphasis this.

“For as we continue to support this, you will agree with me that it will be extremely challenging for us to continue to fund this from the cash flow of the company when you do not get refunds from the Ministry of Finance,” he said.

He expressed assurance that it would continue to support the country and deliver energy security.

February 17, 2023
SUBSIDY: How FG mandated reduction of petrol price- Sylva

The Minister of State for Petroleum Resources, Chief Timipre Sylva, has revealed that the current price of Premium Motor Spirit, popularly called petrol, by the Nigerian National Petroleum Company Limited, is based on the mandate from the Federal Government as regards PMS subsidy.

Sylva’s remarks came as oil marketers stated that the supply hitches in the downstream oil sector often lead to fuel scarcity, which might persist till June, based on the government’s plan to end petrol subsidy in that month.

The petroleum minister spoke in Abuja on Monday, at the resumption of the scorecard series (2015-2023) of President Muhammadu Buhari.

Last week, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the Federal Government had budgeted about N3.6tn for fuel subsidy till June 2023.

Sylva, while speaking in Abuja on Monday, insisted that subsidy had been a burden, but stressed that it was a mandate on NNPC which had made the oil firm to continue selling PMS at a loss.

He said, “The management of the supply situation under this subsidy regime is not easy. We must all agree that so much money is being burnt in our cars, but somehow we have to put funds to continue to keep the country wet.

“Sometimes if you really think deeply you begin to wonder what magic we are doing to be able to keep this country wet consistently. Considering that you buy something, let’s say for N10, and you are to sell it at a loss.

“And then you are expected to go back to buy the same thing, and come back again to sell it at a loss. So at every point in time, you are looking for more money to continue to buy it, because you’re mandated to sell it at a loss.”

Sylva added, “So if you are a businessman, look at it from this perspective, that you are now in the business where you are mandated to sell at a loss to the public. That is not an easy job, I must tell you.”

Responding to a question on how he would feel when buying petrol at N300/litre, Sylva said he would not feel bad about it.

“If you ask me how I will feel as a private citizen to buy petrol at N300/litre, sadly, I will say I won’t feel bad, knowing the actual situation. And if you compare Nigeria to other countries, you will understand,” he stated.

The minister added, “When you convert the N300/litre that you are talking about to other currencies, then you will understand. A lot of you travel to the United Kingdom or the United States, how much do you buy petroleum products there? Even in Arab communities that produce crude oil.”

He said the cost of the commodity in Nigeria was not as high as what was obtained in other countries, but stressed that the current national consensus was that subsidy on petrol was no longer sustainable.

“Unfortunately we are still in a subsidised regime, which all of us know. As a country, I think it is a national consensus now that subsidy is not sustainable, but together we will get there,” Sylva stated.

He said until the cost of petroleum products were market-driven, investors would continue to shy away from investing in the downstream oil sector.

“Under a subsidised regime, who is going to invest? If you build a refinery, how is your refinery going to make a profit under a subsidised regime? But if you have a market-driven situation, you’ll see that a lot of investors will come.

“And the more refineries we have, this problem of access to petroleum products will be a thing of the past,” Sylva stated.
The Federal Government on Monday revealed that it had acquired shares in four refineries operating in various locations across the country.

It outlined the refineries to include the 650,000 barrels per day integrated Dangote Refinery in Lagos; 12,000bpd Azikel Modular Refinery in Bayelsa; 5,000bpd Waltersmith Modular Refinery in Imo; and 2,500bpd Duport Modular Refinery in Edo.

The government also announced that the 60,000bpd component of the Port Harcourt Refining Company in Rivers State, would begin operations in the first quarter of this year, stressing that the facility had been completed.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, and the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari, disclosed this in Abuja at the ministerial scorecard series of the current administration.

Commenting on the equity of the Federal Government in Dangote Refinery, Sylva said it was 20 per cent, adding that the government had also bought shares in three other refineries.

He said, “We have 20 per cent equity in Dangote Refinery and we have also taken 20 per cent equity in Azikel Refinery. We took 30 per cent in Waltersmith, and we also have 30 per cent in Duport Refinery.

“Duport Refinery is already finished. They’ve concluded the construction. It only remains to start operations. I’m sure that within the next month or so, Duport Refinery will also start operations.”

The minister explained that the Dangote Refinery already had an established contract with NNPC, in terms of crude oil supply, but noted that some modular refineries usually accessed crude oil from assets closer to the plants.

“So they (modular refineries) have this (crude oil supply) contract with private sector owners of these assets that are near them,” he stated.

January 10, 2023
#NigeriaDecides2023: Fuel subsidy will go immediately if I’m elected president – Peter Obi

Candidate of the Labour Party for the 2023 presidential election, Mr Peter Obi has said fuel subsidy payments will go immediately if he is elected president of Nigeria.

TheNewsGuru.com (TNG) reports Peter Obi said this on Sunday when he appeared on The People’s Townhall 2023 where he compared fuel consumption in Nigeria with what is consumed in Pakistan.

Recall that fuel subsidy payments gulped N2.565 trillion between January and August 2022.

In the Medium-Term Expenditure Framework, the federal government proposed to spend N3.3 trillion on fuel subsidy between January and June 2023.

However, Peter Obi argued that half of what is being mentioned as fuel subsidy payments is not ought to be, adding that with Nigeri’as debt profile, the money could be used to finance critical social development issue.

Peter Obi said: “I can assure you fuel subsidy will go immediately. Subsidy, I have said it before, is an organized crime and I cannot allow it to stay a day longer.

“What they are telling you is not what it is. Half of subsidy payments that is being mentioned is not subsidy. First is that we consume the quantity that is not supposed to be consumed. We are the same population as Pakistan. They consume below 50% of what we consume.

“So, the first half, I will remove it and give those people who are drinking it water. Because that is what they are supposed to be drinking. So we can save money. Two, we will deal with the other remaining issue.

“With our debt profile, we need the money to be able to invest in critical social development issues. Look at this year’s budget. This year’s budget, education, which is the highest since this government came, is about N2 trillion; health, which is the highest since this government came, is about N1.5 trillion. Then, infrastructure, which is road and everything related, is about N1 trillion.

“So, these three critical development areas, are receiving N4.5 trillion while subsidy is N3.6 trillion for the half year. So, if it is full year, it is about N7 trillion.

“Which country will invest more in subsidy than education, health and even roads put together? It doesn’t make sense.

“The annual budget for education is N2 trillion, annual budget for health is N1.5 trillion, road infrastructure is N1 trillion, and fuel subsidy half year is N3.6 trillion. It will go immediately”.

January 8, 2023
Why Buhari failed to remove fuel subsidy – Femi Adesina

Despite describing it as a fraud, President Muhammadu Buhari has failed to remove fuel subsidy payments as he promised prior to the 2015 general election.

About 8 years down Buhari’s tenure, which will end in May, the fuel subsidy payments persist and the Minister of Finance, Zainab Ahmed has said the payments will gulp N3.36 trillion in the first six months of 2023.

Mr Femi Adesina, Special Adviser to President Buhari on Media and Publicity explained that the President failed to remove fuel subsidy payments due to economic and social factors.

“Each time there is an effort to fight the fraud in the subsidy regime, you have to contend with labour, you have to contend with the people. The government needed to weigh its options because of the social consequences,” Adesina said on Channels TV’s Politics Today on Wednesday.

Recall that during his campaign ahead of the 2015 presidential election, Buhari had questioned the justification behind retaining fuel subsidy and described it as a fraud.

However, about eight years after, the Buhari administration announced recently that subsidy removal will come into effect in June 2023 after he must have completed his two terms in office.

Adesina blamed his principal inability to remove subsidy on Premium Motor Spirit, also known as petrol, on economic and social factors.

“In the beginning, his (Buhari’s) position was: what was subsidy really? But over the years it became evident that the country was bleeding, the economy was bleeding, there was a lot of haemorrhage which needed to be stopped and the time came and that time is now,” Adesina said.

The presidential aide also said that petrol subsidy had stayed longer than required. He added that almost every Nigerian has now come to the realisation that it must come to a stop.

Meanwhile, speaking during a public presentation and breakdown of the 2023 Appropriation Act in Abuja, the Minister of Finance confirmed that payment of fuel subsidy will stop by the end of June 2023.

She noted that in the 2023 fiscal period, the government made provisions of N3.36 trillion naira for fuel subsidy payment to cover the first six months of 2023.

This, according to her, is in line with the 18-month extension announced early 2022.

January 4, 2023
Fuel subsidy to go by June 2023 – Finance Minister insists

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed has said the Federal Government will do away with petroleum subsidy by June 2023.

Ahmed said this on Tuesday in Abuja, during a press conference to mark the end of the 28th National Economic Summit (NES).

Fuel subsidy gulped N2.565 trillion between January and August 2022.

Also, in the Medium-Term Expenditure Framework, the Federal Government proposed to spend N3.3 trillion on fuel subsidy between January and June 2023.

According to Ahmed, the removal of fuel subsidy is part of the Federal Government’s medium-term plan in the budget.

She, however, said that the challenge is how to go about removing the subsidy.

“First, we have to engage. We have already engaged with the states and the public before it was approved as part of the medium-term plan.

“We have to do it by systematically informing the citizens about the size and the quantum of the fuel subsidy.

“We also have to educate them about the opportunity cost of what we are unable to do because of the fuel subsidy,” she said.

According to the minister, the fuel subsidy, in addition to budget deficit, is putting enormous pressure on the “fiscals”.

“It is not money that we have; it is money that we have to borrow to maintain the fuel subsidy.

“Some countries introduced subsidy during COVID-19, and because of the Russia-Ukraine conflict, but they are using their money to fund such subsidy.

“In our case, we are borrowing to pay the subsidy; that is double jeopardy. It is something that has to stop

“We are glad that majority of people in decision-making positions, including the political parties, have agreed that subsidy is not sustainable.

”The plan is, by June 2023, we must have completely exited subsidy, and it has to be a gradual process,” she said.

Also speaking, the Minister of State for Budget and National Planning, Mr Clem Agba, said that the National Development Plan (NDP), put together by the Federal Government, will help boost the economy.

Agba said that the NDP is designed to encourage improved private-sector participation.

“It is not a Federal Government plan, it is a national plan put together by the Federal Government, the state governments, the local governments and the private sector.

“Together we identified the constraints that militate against the private sector from driving the economy.

“From the Federal Government side, we have started working on 18 laws. We realised that there are issues of multiplicity of taxes.

“So, rather than encourage businesses to grow, we are stifling them, especially the Micro, Small and Medium Enterprises (MSMEs),” he said.

Agba said that there are three different volumes of the NDP.

According to him, the second volume deals with the prioritised programmes and projects, where about N350 trillion was identified as the requirement for capital investment.

The NES is organised annually by the National Economic Summit Group (NESG).

The NESG was formed in 1993 by a group of concerned private sector leaders representing key economic sectors, to proffer solutions to the country’s economic challenges.

The theme of the 2022 summit was “2023 and beyond: Priorities for Shared Prosperity”.

November 16, 2022
NLC reiterates position on removal of petrol subsidies

The Nigerian Labour Congress (NLC) has reiterated its position on the removal of petrol subsidies, saying that it has not changed.

The NLC President, Mr Ayuba Wabba, said this in a statement signed and made available to newsmen on Saturday in Abuja.

It would be recalled that Mr Festus Keyamo,(SAN) Minister of State for Labour and Employment had tasked the NLC to come out clean on its stand on the Labour Party (LP) presidential candidate, Peter Obi’s decision to remove fuel subsidy, if elected.

Keyamo is also the Campaign Spokesperson of the presidential campaign of All Progressives Congress (APC).

Wabba said that the NLC had painstaking processes and articulated a Nigerian Workers’ Charter of Demands which the organised labour would be using to engage the political process.

According to him, the move was in furtherance of the avowed position of the NLC on issues-based campaign in the run up to the 2023 General Elections.

“A major demand in the Nigerian Workers Charter of Demands is that our local public refineries must work. We have also demanded that we must stop 100 per cent importation of refined petroleum products.

“The NLC and indeed the labour movement in Nigeria had over many decades been vehemently consistent that the only way to address the issue of the so-called petrol subsidies is to get our refineries to work.

“The logic is very simple: it is not economical to buy from abroad at very expensive prices a product that a country like ours can easily produce at home,” he said.

Wabba added that, at the heart of their demand on the management of Nigeria’s mineral resources, especially the downstream petroleum sub-sector was the issue of Production Economy.

He said that the congress believed that the rescue of Nigeria from the current path of Consumption Economy to Production Economy was the only way to resolve Nigeria’s economic nightmares of massive depletion of scarce foreign exchange reserve.

Wabba said this would resolve the continuous devaluation of the Naira; significant jobs reduction, poverty and downturn in the living standards of the people.

“In a determined effort to popularise the positions in the Nigerian Workers Charter of Demands, the NLC and TUC at the behest of the Labour Party on Monday and Tuesday hosted a National Retreat of the leadership cadres in our movement.

“At the retreat, the Labour Party and Organised Labour in Nigeria adopted and mainstreamed the Workers Charter of Demands into the Manifesto of the Labour Party.

“This is in line with our persuasion that issue-based campaign anchored on the manifesto of political parties should drive Nigeria’s political process.

“If any political party goes around saying that they plan to sell our refineries, remove subsidies, they should be ready to defend such stance to Nigerians at the campaigns, ’’he added.

He said that, the NLC, Organised Labour, and Labour Party position had not changed. “It only got amplified,” he said.

September 18, 2022
Petrol Subsidy Costs N18.39bn Daily – Finance Minister

The Minister of Finance, Zainab Ahmed, has put the projected daily payment for fuel subsidy at N18.39 billion.

She stated this during an investigative hearing of the House ad hoc committee which is investigating the petroleum subsidy regime between 2017 to 2021.

“The total amount of subsidy per day is 18.397 billion per day.

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Ending petrol subsidy extremely difficult but inevitable – MOMAN

“So if you are projecting for the full year, it would be N6.715 trillion. If you are projecting for half year, it would be 50 percent of that,” She said.

According to the Minister, this was calculated using the information provided by the Nigerian National Petroleum Company (NNPC) and the regulator.

She said the information showed that 64.96 million litres of fuel is the projected average daily truck out.

She also said N1.774 trillion was paid to independent oil marketers as subsidy in four years.

August 27, 2022
Ending petrol subsidy extremely difficult but inevitable – MOMAN

The Major Oil Marketers Association of Nigeria (MOMAN) says ending subsidy on Premium Motor Spirit (PMS) is extremely difficult but the Federal Government has no other option in light of current economic realities.

MOMAN also called for massive investment by the government in various sectors such as mass transportation, healthcare and education to successfully wean off Nigerians from petrol subsidy.

A statement posted on MOMAN’s website on Friday said its Chairman, Mr Olumide Adeosun, MOMAN, made this known at the just concluded Association of Energy Correspondents of Nigeria (NAEC) Strategic International Conference in Lagos.

Adeosun spoke on the topic: “Energy Transition, PIA, Petroleum Pricing and the Way Forward for the Downstream Sector.”

Represented by Mr Clement Isong, the Chief Executive Officer, MOMAN, Adeosun said it would remain extremely difficult to wean Nigerians off cheap PMS, also known as petrol.

He said: “It is something that must be done as there are no more viable options.

“We are told that this year the subsidy bill to the Federal Government may be between N5 trillion and N6 trillion. Clearly, Nigeria cannot afford this.

“To wean Nigeria off this subsidy, a lot of investment must be done to sensitise Nigerians in convincing them and finding alternatives.

“We need to begin to remove the subsidy and mitigate the pains Nigerians will feel when petroleum prices begin to manifest their true value.”

Adeosun said marketers were optimistic that the industry was headed in the right direction with the enactment of the Petroleum Industry Act (PIA) 2021 which was an excellent piece of legislation.

“We are now at the point of implementation, which is taking a bit longer than hoped but this is not necessarily a bad thing.

“The President postponed the implementation of free market pricing, which has caused a slowdown with respect to benefits expected from free competitive open market pricing, such as new investments and subsidy removal, ” he said.

Adeosun said the marketers were also convinced that (the decade of gas declared by the Federal Government in January 2021) was clearly the way forward.

He said, however, the increase in gas prices worldwide and the unavailability of the product had made it a little more difficult in the roll out.

Adeosun said: “The ordinary Nigerian who was meant to transit to gas not just for cooking but also for powering automobiles and power generation is struggling and because PMS pricing is yet to be fully deregulated.

“It creates an aberration and additional challenge for the adoption of gas, as most people are still dependent on cheap PMS for their cars and generators.”

According to him, while the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has an important role to play in guiding our future, the best regulator ultimately is the market.

“The market regulates prices if you are too expensive people would not buy from you. The market regulates quality as well as customer service. The market also rewards the best in class.

“We need to move to an era of transparency and information dissemination.

“Energy correspondents need to share as much information as possible with the market and public with respect to cost prices, quality, product specifications, customer service and pump prices.

“That is the best regulation you can ask for,” Adeosun said.

August 26, 2022
What FG should do to remove fuel subsidy – TUC president

Mr Festus Osifo, president, Trade Union Congress (TUC), says Nigerians are not averse to the removal of subsidy on Premium Motor Spirit (PMS) but waiting for the government to win their trust over the issue.

Osifo spoke during a panel session at the Association of Energy Correspondents of Nigeria (NAEC) Strategic International Conference on Thursday in Lagos.

The topic of the session was “Energy Transition, PIA, Petroleum Pricing and the Way Forward for the Downstream Sector.”

He noted that majority of Nigerians were not really interested in energy transition but were only concerned about affordable and reliable energy.

Osifo, who is also the president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), noted that the downstream sector had not achieved its potential due to the thorny issue of PMS subsidy.

He said apart from communicating with the people to create an attitudinal change, the government must lead by example by cutting out wastage and making sacrifices that would help Nigeria overcome its economic challenges.

“The Presidency should come out and say that they are reducing their budget. The National Assembly also needs to do so. That is leading by example.

“Nigerians are not really averse to the subsidy removal but the government must be ready to demonstrate not just by talking but by doing and by acting.

“The government must demonstrate that if subsidy must go, this must reflect in our education, it must reflect in our healthcare and also our level of infrastructure.

“So, the trust deficit that Nigerians have must be addressed before we can make any progress,” Osifo said.

However, Mr Olumide Adeosun, Chairman, Major Oil Marketers Association of Nigeria (MOMAN), called for a phased removal of PMS subsidy to mitigate its impact on ordinary Nigerians.

Adeosun, who was represented by Mr Clement Isong, Executive Secretary, MOMAN, said the N5 trillion subsidy payment by the government was unsustainable and putting a huge strain on the nation’s forex reserves.

He said the best option was to fully deregulate the sector and allow market forces to determine the price while also investing the subsidy gains in other critical areas such as mass transportation, healthcare and education.

Similarly, Dr Gabriel Ogbechie, Group Managing Director, Rainoil Ltd., said the global average price currently for PMS was N516 per litre, which was way higher than the N175 per litre it was being sold in Nigeria.

Ogbechie said the government should not only deregulate but also initiate a petrol tax to fund maintenance and construction of critical infrastructure across the country.

August 26, 2022