Nigerians may need to adjust their expectations ahead of possible removal of subsidy as the rising price of crude oil may push Premium Motor Spirit (PMS), otherwise called petrol, to N403 per litre.
As at January 14, 2022, PMS pricing template was N403 per litre, making a subsidy differential of N241 on every litre sold in the country.
According to the estimate, petrol per litre is N349 from country of import but freight and landing cost push the figure to N384, while distribution margin and bridging fund in transport logistics further push the cost to N403.
The Nigeria Governors’ Forum (NGF) had in the early hours of yesterday, rose from a five-hour meeting with a resolution to initiate talks with the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) on the proposed removal of subsidy on petrol.
As NLC, on Wednesday, mandated all states organs to intensify mobilisation for next Thursday’s nationwide protest against the Nigerian government over its proposed increase in the pump price of petrol, the National Economic Council (NEC) rose from its first meeting this year, in Abuja, disclosing that a decision on the removal of petrol subsidy will be made in June when the provision for its payment in the 2022 budget expires.
While crude oil price is currently selling for about $89 per barrel pushing landing cost and retail price to record high, the 36 governors are expected to convince labour and other Nigerians on the need to finally remove petrol subsidy in the next five months after the 2012 move failed.
Recall that in February last year when crude oil price hovered at $67 per barrel, the governors canvassed that the pump price of petrol should be allowed to sell at prevailing market price of N350 per litre to enable government save money.
Speaking ahead of the engagement, some stakeholders, yesterday, insisted that liberalization of the downstream sector, including removal of subsidy, were necessary steps if the country must end its borrowing and revive the downstream segment of the nation’s petroleum industry.
Coming at a time when implementation of the N30,000 minimum wage remains a challenge across many states, stakeholders insisted that there was need for the government to gain the trust of citizens in removing subsidy, adding that most Nigerians no longer believe in their government.
Following the economic challenges that resulted from the COVID-19 pandemic, the Federal Government had opted for deregulation of the downstream, partially removing subsidy from petrol, a development, which almost doubled the price, insisting citizens now have to accept international market forces, especially crude oil price and exchange rate.
The pump price of petrol was initially downward with the near zero crash of oil price at the peak of the pandemic. Afterwards, the pump price rose from N121.50 to N123.50 per litre in June, 2020; N140.80 to N143.80 in July and N148 to N150 in August of same year. In September, pump prices rose further to N158 and N162 per litre.
An attempt to increase the pump price in December 2021 met deadlock, as labour unions tackled government to a standstill. The NLC and TUC were furious over repeated hikes in petrol price, and forced the Federal Government to a dialogue, where the Nigerian National Petroleum Corporation (NNPC) agreed to slash N5 from N167.44, a development which the Minister of Labour and Employment, Dr. Chris Ngige, said would bring down the price of petrol to N162.44.
Contrary to expectations that the signing of the Petroleum Industry Act (PIA) would automatically commence the deregulation of the downstream sector, especially the removal of subsidy, the Federal Government said last year that the retail price petrol would remain at N162 per litre until a feasible framework is developed.
The government, however, disclosed toward the end of last year that N5,000 would be paid to poor Nigerians as grant for the removal of petrol subsidy, adding that the removal has become sacrosanct. Energy expert, Adeola Adenikinju, told The Guardian that governors must do much more than convincing labour by proving to Nigerians why it is critical to remove subsidy and the plans to assuage its impacts on Nigerians.
According to Adenikinju, since the government has already lost trust of the people, there is need to implement the subsidy removal with phased plans that the government will commit to, to ensure trust is regained.
The energy economist noted that the country cannot survive with repeated borrowing to fund payment of salaries, adding that beyond the revenue issues, removing subsidy will unlock needed investment in the downstream sector of the nation’s economy.
Energy expert and former Managing Director at Nigerian Bulk Electricity Trading Company, Rumundaka Wonodi, said the government can only convince citizens on dropping subsidy if public office holders stop wasting the nation’s resources on themselves frivolously.
AT the meeting, yesterday, chaired by Vice President Yemi Osinbajo, NEC affirmed that since NNPC is now a limited liability company, it must be run differently.
Answering questions after the Council meeting, Nasarawa State governor, Abdullahi Sule, said it was understandable that the provision for the payment of subsidy is made in the 2022 budget only until June.
Joined at the post-NEC press briefing by his counterpart, governor of Edo State, Godwin Obaseki, Sule stated that any decision on the removal of subsidy will be taken after the budget provision runs its course in June.
He stated that even though NEC has been having a conversation on the matter, the Council was yet to take a position on it.
Also responding to questions, Obaseki pointed out that PMS, which sells for N162 to 165 per liter in Nigeria, sells a hundred per cent higher in other countries.
He noted that the Federal Government was spending about N2 trillion on petroleum subsidy, an amount, he submitted could have been ploughed for use in other areas.
AT its earlier meeting, the governors’ forum explained that its engagement with the organised labour is to prevent the raging controversy from causing disaffection in the polity.
NGF Chairman and Ekiti State governor, Kayode Fayemi, said: “We shall be engaging NLC as sub national leaders with a view to ensuring that the outcome of our engagement will also be fed into the national discourse.”
Those who attended the meeting included the governors of Nasarawa, Anambra, Ekiti, Kano, Osun, Oyo, Imo, Edo, Kebbi, Borno, Niger, Kwara, Plateau, Ogun and Bayelsa.
States represented by their deputy governors were Gombe, Enugu, Bauchi, Kogi, Rivers, Yobe, Lagos, Ondo, Benue and Katsina.
Recall that in May 2021, a committee set up by the NGF recommended a petrol price of between N380 and N408 per litre when the forum called for immediate removal of fuel subsidy.
But asked to specifically disclose the position of the NGF yesterday, Fayemi said governors had no statutory role to play.
“For us at the forum, it is a matter that is a going concern. We don’t have a definitive issue because it’s left to the PIA. NNPC is now a private company and the company should decide what it wants to do with the price of its products. It shouldn’t really be the business of governors. It is the responsibility of the FG but we contribute to the debate,” he said.
MOBILISATION of workers is currently ongoing towards the rejection of politicians that are supporting the removal of petrol subsidy ahead of the 2023 general polls.
The National President of the Association of Senior Civil Servants of Nigeria (ASCSN), Dr Tommy Okon, who disclosed this in Abuja, yesterday, said it would be a wrong political move for the ruling All Progressive Congress (APC) to remove subsidy on petrol in a year preceding the general elections.
He said: “The trade union will have a role to play in the 2023 elections by mobilising and educating members on what to look out for in choosing candidates. It, therefore, means that we will mobilize against any candidate that is not labour-friendly nationwide. From the state to the federal level, our members will participate fully.
“The same thing goes for the political parties. As a pressure group, we are at liberty to exert our influence wherever it is necessary. We have the majority of the people nationwide. Workers have the resources and the reach to influence elections. As the head of the home, every worker is like an ambassador, who gives directives and his family members listen to him because he is a breadwinner. Any government we sense is seeking election to impoverish the worker will be rejected through our votes.”
The NLC had insisted that workers would not accept any further increase in the pump price of fuel in the name of subsidy removal, urging workers and citizens to prepare for total war against the move.
NLC President, Ayuba Wabba, in his new year message, had said: “Organised labour has made its position clear on this matter. We have told the government in very clear terms that Nigerians have suffered enough and will not endure more punishment by way of further petrol and electricity price increases.
“Our position in this regard is predicated on four major grounds. First is our concern on the deceit and duplicity associated with the politics of petrol price increase by successive governments. The truth is that the perennial increase by government is actually a transfer of government failure and inability to effectively govern to the satisfaction of the poor masses.
“We are talking of the failure of government to manage Nigeria’s four oil refineries and inability to build new ones more than 30 years after the last petrochemical refinery in Port Harcourt was commissioned; the failure to rein in smuggling; and the failure to determine empirically the quantity of petrol consumed in Nigeria. The shame takes a gory dimension with the fact that Nigeria is the only OPEC country that cannot refine its own crude oil.”
For a former President of the Association of National Accountants of Nigeria (ANAN), Dr Sam Nzekwe, the removal of fuel subsidy is long overdue.
He said: “I don’t know why they keep talking about it. I remember at a time they were no longer paying subsidy. They changed the name to under-recovery. All these thing is sounding like politics to me.”
The National President, Senior Staff Association of Nigeria Universities (SSANU), Comrade Haruna Ibrahim, yesterday, confirmed plans are ongoing to embark on the nationwide protest next week. Ibrahim made this disclosure during SSANU’s 41st Regular National Executive Council meeting hosted by the Obafemi Awolowo University (OAU), Ile-Ife branch.
He added that Nigerians are not finding life easy with the economic downturn, adding that prices of goods are now skyrocketing beyond control to the extent that citizens cannot take their three square meals.
“Civil service leaders cannot fold their hands and allow citizens witness another hardship. All hands must be on deck to fight for our right,” he said.
The SSANU president explained that the union would not hesitate to join NLC in protest should the Federal Government increase fuel price. He added that the organised labour would soon come out with a position on the planned protest across the country.
Some labour leaders have, however, chided the Senate President, Ahmad Lawan, for saying President Muhammadu Buhari was not aware of any plan to withdraw fuel subsidy in the country. The labour veterans who insisted that there was no way President Buhari would claim ignorance of the move, urged the Senate President to desist from creating confusion in the country.
The labour leaders, who made the remarks, yesterday, during the Kano State congress meeting of NLC, declared that labour will not accept any strategy of government to withdraw fuel subsidy and increase pump price of petrol.
Former NLC Deputy President, Comrade Isa Tijani, said except he is not in charge of the country, the president and Minister of Petroleum Resources cannot claim to be unaware of the move to withdraw subsidy on petrol.
“How could the president in a matter as sensitive as removal of fuel subsidy, say he is not aware when the NNPC GMD and Minister of Finance have confirmed the planned removal. Are these senior government officials acting on his behalf or outside his directive? Would they have the right to do something without his knowledge, is that possible?”
On his part, former NLC General Secretary, Comrade Salisu Mohammad, knocked the government for spending billions of naira in maintenance of refineries without result.
Meanwhile, NLC Chairman in Kano, Kabiru Ado Minjibir, declared that there is no going back on the planned protest scheduled for January 27, next week.