FG Backtracks, Retains Petrol Subsidy | Dailytrust

FG Backtracks, Retains Petrol Subsidy

Minister of Finance, Budget and National Planning, Mrs. Zainab Shamshuna  Ahmed.
Minister of Finance, Budget and National Planning, Mrs. Zainab Shamshuna Ahmed.

The federal government on Monday backpedalled on the planned total subsidy withdrawal effective June. 

This was after much pressure with just three days to the planned protest by the organised labour on the proposed petrol subsidy removal four months ahead of the dateline. 

The federal government said it was going back to the National Assembly to seek for the amendment of the 2022 budget to cover petrol subsidy payment beyond June this year when it should end. 

Daily Trust reports that for many years, the contentious subsidy issue had pitched Nigerians against the government. The organised labour believed subsidy was the only succour the masses got from the government and its removal would have adverse effects on everything. 

Ealier in the week, former Head of State General Abdulsalami Abubakar warned the government against increasing petrol price.

How FG backpedalled 

The Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the decision to shelve subsidy removal during a meeting with Senate President Ahmad Lawan.  

Others at the meeting were the Minister of State for Petroleum Resources, Timipre Sylva and other heads of agencies in the petroleum sector. 

The minister had before yesterday said the current subsidy regime on petrol price would end by June citing the Petroleum Industry Act (PIA), which provided for full deregulation of the petroleum sector and without a provision in the 2022 budget beyond June.    

The removal of the subsidy may see fuel price rise from the N162 or N165 official price band to over N300, according to speculations.  

However, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) had opposed the planned removal of the subsidy saying it would cause more hardships for Nigerians.  

They also fixed January 27 February 1 for nationwide protests. 

But the minister in a statement from the Senate president’s office on Monday said the government was earlier seeking an alternative to petrol while working on raising refining capacity as part of the options to ease the country from spending much on subsidy. 

She said, “Let me start by stating the fact that we did make provision in the 2022 budget for fuel subsidy from January to June. And that suggests that from July there would be no fuel subsidy.” 

The minister said after consultations with stakeholders, it became clear that it was not the right time to remove the subsidy.  

“It became clear that the timing is problematic, that practically there is still heightened inflation and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr President clearly does not want to do that.  

“What we have to do now is to continue with the discussions we are making, in terms of putting in place a number of measures, one of which is the deployment of an alternative to the Premium Motor Spirit (PMS) and also the rollout of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day,” she explained. 

“The increased refining capacity in the country means we will need to import fewer products. But also, we are discussing right now within the executive the possibility of amending the budget, we may need to come back to the National Assembly by way of amendment to make additional provision for fuel subsidy from July 2022, going forward, or to whatever period that is agreed as the right time. 

“So, we will come back to make further amendments on the fiscal framework as well as in the 2022 budget,” said Zainab. 

The Senate president, in his remarks at the meeting, faulted the timing for the planned removal of subsidy on petroleum products as he called on labour unions such as the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) to shelve the planned protest rallies, adding that the federal government has no plan of removing the petroleum subsidy now.  He said, “The position of everyone in government today is that admittedly, subsidy administration and management are flawed because of so many reasons. 

“I am taking this opportunity to appeal to the TUC and NLC to shelve this plan to go on strike or demonstration, it is totally unnecessary. There is not going to be the removal of subsidy, so there is no need for this. Please, let’s not create unnecessary tension where there should be none. 

“I appeal to them using this medium, to please forget about this January 27, 2022, deadline because there is no need for any deadline,” Lawan said.

Also, the Minister of State for Petroleum Resources, Timipre Sylva, said the federal government has no immediate plan to completely remove the subsidy on petrol. 

Sylva who spoke on Channels Television’s Newsnight programme, said the removal of the subsidy would have an impact on Nigerians. 

He said, “I will tell you categorically that at this moment, the complete removal of subsidy is not on our plate at all. The President of the Federal Republic of Nigeria is not in support of removing the subsidy at this time.”

Daily Trust reports that the current statement of the minister contradicted what he said in October 2021 at a Seplat Energy conference in Abuja. At the event, Sylva in his speech said: “The government is in the process of fully deregulating the downstream petroleum sector, which will end subsidies and free up funds for national development, including investment in renewables which will be part of the energy mix that ultimately powers our economy.” 

NURTW to join labour as group oppose protest

The National Union of Road Transport Workers (NURTW) has also rejected the planned fuel subsidy removal saying it was ill-timed, insensitive and will impoverish more Nigerians. 

Rising from the National Administrative Council’s (NAC) extraordinary emergency meeting in Abuja on Monday, the union said the fuel price increase will impoverish more Nigerians.

President of NURTW, Alhaji Tajudeen Ibikunle Baruwa, said the communiqué they issued captured their position. 

The communiqué said: “The drivers who constitute our membership will be at the worst receiving end of such increase/subsidy removal, and without any monthly remunerations to fall back on, will be entirely left on their own to bear the brunt of such action.” 

APC praises FG

Meanwhile, the All Progressives Congress (APC) has welcomed the federal government’s suspension of the planned removal of subsidy on petroleum products. 

Secretary of the APC Caretaker/ Extraordinary Convention Planning Committee, Senator John James Akpanudoedehe, in a statement on Monday, said the federal government took into consideration the fact that the removal of subsidy at this time would heighten inflation and cause undue hardship on the citizenry. 

The party said, “We commend President Muhammadu Buhari for always putting the welfare and wellbeing of Nigerians first as he has serially displayed in the implementation of programmes and policies of this administration. 

“In line with the new Petroleum Industry Act (PIA), the federal government is already putting in place measures, particularly boosting our local refining capacities to reduce the country’s reliance on expensive import of refined petroleum products.”  

Address issues triggering subsidy – Experts to FG

A Faculty Member at the Lagos Business School (LBS) and Head, Centre for Applied Economics, Pan African University, Dr Austin Nweze, said the government has failed to address the conditionality which triggered subsidy in the first place. Nweze asked what led to the provisions of subsidy in the first place.

 Has that condition changed? If it has not changed, what strategy are you using? Is it a gradual strategy, gradual removal or maybe a timeframe that you need to remove this? What are the alternatives? If the conditions are still there, what are the fundamental things you have done?

 “You have oil, you have not built new refineries, and you have not supported the modular refineries. The ones refining in the rural areas, you call them illegal refineries. Why don’t you utilise them? All those ones you call illegal refineries, utilise them, sell oil to them at the going rate. Another question is why must all oil imports land in Lagos and be discharged in Lagos,” he said. 

Similarly, an economist and Chief Executive Officer (CEO) of Centre for Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, identified the need to creatively manage the transition from the current pricing regime to a fully deregulated arrangement.  

Yusuf, who is the immediate past Director-General of Lagos Chamber of Commerce and Industry (LCCI), said that it was a tricky issue that could pose a serious challenge to the government if not tactically managed.  

 The reality according to him was that the sentiments among the citizenry were not favourable to the deregulation of petroleum product pricing or petroleum subsidy removal.  

“Certainly, the subsidy is not sustainable, which is why there is a need to accelerate engagement with the relevant stakeholders to come up with a policy transition strategy that is sustainable, realistic and pragmatic. The conversation should not only be economic but also social and political,” he said.  

Also commenting on the removal, the Lead Economist and Enterprise Partner at SPM Professionals, Mr Paul Alaje, said successive governments had tried to end subsidies in Nigeria but could not when the price of crude dropped globally.  

 “In the real sense, when global oil prices increase, the government finds it difficult to end the subsidy. Subsidy should be removed when we have one or two producers locally. That is when subsidy removal would make sense,” he said. 

Labour plans suspension of strike – Source 

When contacted last night, the President of Nigeria Labour Congress (NLC), Ayuba Wabba terminated calls put across to his mobile phone by one of our correspondents.

The General-Secretary of the NLC, Emmanuel Ugboaja, also did not answer his calls, and the duo was yet to respond to separate messages sent to them.

But the President of Trade Union Congress (TUC), Quadri Olaleye promised to get back to Daily Trust when contacted but he was yet to do so as at when filing this report.

But a senior labour leader, who does not want his name in print because he was not authoriSed to speak, confided in our correspondent that plans were underway to halt the ongoing mobilization for protest.

According to him, the labour leaders summoned an emergency meeting immediately after the federal government disclosed that there was no plan to remove fuel subsidies.

The source added, “You know that this planned mobiliSation for mass action cuts across 58 affiliate unions of the NLC. They must be properly briefed if there will be any suspension of the planned mass action.

“Neither leadership of NLC nor the TUC can take unilateral decisions on that plan. But I can confirm to you that an emergency meeting is ongoing, and the labour leaders will come out with a position on that before January 27,” he said.  

Timeline of petrol subsidy removal saga

August 2021:                       Although there have been plans to remove the subsidy and fully deregulate the petroleum sector, such plans became more pronounced when the Petroleum Industry Act (PIA) was enacted in August 2021. 

November 2021: At the core of the 2022 budget proposal defence, the finance minister had said the about N1.8 trillion annual subsidy being made by the Nigerian National Petroleum Company (NNPC) Ltd would end in June 2022 as there was no provision in the newly signed 2022 Appropriation Act. 

She, however, said to cushion the effects, the government will consider paying N5, 000 monthly to about 40 million Nigerians who were deemed vulnerable, reaching about N2.4tr annually. The NLC and other players immediately rejected this move.

December 2021: NLC immediately announced nationwide protests on the fuel subsidy removal slated for January 27 and February 1, 2022.

January 18: Senate President Ahmad Lawan said he met with President Muhammadu Buhari over the planned petrol subsidy removal, and that Buhari never gave any directive for the subsidy removal.

January 23:  Minister of State, Petroleum Resources, Timipre Sylva, said on Channels TV that Buhari does not support subsidy removal now, noting that there will be no complete deregulation in foreseeable future.

January 24: Finance minister met Senate President and said the government will amend the signed 2022 appropriation act to provide for petrol subsidy payment by NNPC for another year.

 

By Simon E. Sunday, Sunday M. Ogwu, Chris Agabi, Saawua Terzungwe & Idowu Isamotu

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