Fuel subsidy removal irreversible, electricity tariff hike necessary – Buhari | Dailytrust

Fuel subsidy removal irreversible, electricity tariff hike necessary – Buhari

President Muhammadu Buhari said on Monday that the removal of subsidy on petrol has come to stay. Buhari also said the recent increase in...

President Buhari
President Buhari

President Muhammadu Buhari said on Monday that the removal of subsidy on petrol has come to stay.

Buhari also said the recent increase in electricity tariff by the Distribution Companies (DisCos) was necessary even though a source of concern for him.

He said his government was doing everything possible to mitigate the impact of the decisions on the citizens and at the same time save the economy from total collapse.

The president said that like many Nigerians, he was not happy with the quality of service being rendered by the DisCos though there were constraints including poor transmission and distribution capacity.

Represented by Vice President Yemi Osinbajo, President Buhari stated these while declaring open a 2-day First Year Ministerial Performance Review Retreat at the State House Conference Centre, Abuja.

With some initial pains, Buhari said the COVID-19 pandemic, which affected economies globally compelled his administration to make some necessary far-reaching adjustments for long-term gains.

The increase in petrol price and electricity tariff had attracted criticisms from Nigerians with many groups calling for mass action.

Our correspondent’s report that the federal government is under pressure from various fronts, including yesterday’s decision by medical doctors to embark on a nationwide strike. Members of the Academic Staff Union of Universities (ASUU) have been on strike for long.

The leading opposition political party PDP, the Afenifere socio-cultural organization and some activists have called on Nigerians to speak out against the decisions of the federal government.

No provision for subsidy in 2020

Buhari, who listed negative consequences if the government should resume the business of fixing or subsidising petrol or fixing prices, said anything short of taking decisive action, would mean a return to the costly subsidy regime with the potential return of fuel queues.

He said: “As you all know when oil prices collapsed at the height of the global lockdown, we deregulated the price of premium motor spirit (PMS) such that the benefit of lower prices was passed to consumers. This was welcomed by all and sundry.

“The effect of regulation though is that PMS prices will change with changes in global oil prices. This means, quite regrettably, that as oil prices recover, we would see some increases in PMS prices. Today we have 60 percent fewer revenues, we just cannot afford the cost.

“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration. Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices. Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now have no choice.

“Nevertheless, I want to assure our compatriots that government will remain alert to its responsibilities. The role of government now is to prevent marketers from raising prices arbitrarily or exploiting citizens. This is the role that government must now play through the Petroleum Products Pricing Regulatory Agency (PPPRA).

“This explains why the PPPRA made the announcement a few days ago setting the range of price that must not be exceeded by marketers. The advantage we now have is that anyone can bring in petroleum products and compete with marketers, that way the price of petrol will be kept coming down,” he said.

Buhari, while speaking specifically on the hike in electricity tariff said that he was not happy with the quality of service being offered by the DISCOs.

As a result, the president said his the administration was pursuing a mass metering programme to provide meters for over 5 million Nigerians.

He said protecting the poor and vulnerable while ensuring improved service in the power sector remained a major priority for his administration.

Buhari, who said many Nigerians were yet to have access to electricity assured that the Economic Sustainability Plan (ESP) will provide Solar home systems to five million Nigerian households in the next 12 months.

“So, as part of the Economic Sustainability Plan, we are providing Solar home systems to 5 million Nigerian households (impacting up to 25 million individual Nigerians) in the next 12 months.

“We have already begun the process of providing financing support through the CBN for manufacturers and retailers of Off-Grid Solar Home Systems and Mini-Grids who are to provide the systems. The Five million systems under the ESP’s Solar Power Strategy will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation This means that more Nigerians will have access to electricity via a reliable and sustainable solar system,” he said.

The president, who said the government would not inflict hardship on people by being insensitive to their condition at this “very difficult economic situation”, directed ministers and senior officials to ensure a “vigorous and prompt” implementation of the ESP programmes to give succour to Nigerians at this difficult time.

Petrol cheapest in Nigeria, gulps 10.413trn in 14 yrs

Buttressing the position of President Buhari on removing fuel subsidy, the Minister of Information and Culture, Alhaji Lai Mohammed said on Monday that fuel subsidy had gulped N10.413 trillion from 2006 to 2019.

He said the figure amounted to N743.8 billion per annum.

He also said the government had so far spent almost N1.7 trillion to supplement electricity tariff shortfalls since the time of privatization.

He said the government no longer have the resources to continue subsidising electricity and petrol prices, noting that the amount was too high and unsustainable.

Quoting figures by the Nigerian National Petroleum Corporation (NNPC), Mohammed said N257bn was spent on subsidy in 2006; N272bn in 2007; N631bn in 2008 and N469bn in 2009.

According to the minister, in 2010, fuel subsidy guzzled N667bn; while in 2011, 2012 and 2013, the federal government spent N2.105trn, N1.355trn and N1.316trn respectively.

He said subsidy gulped N1.217trn in 2014; N654bn in 2015; N144.3bn in 2017; while N730.86bn and N595bn were spent in 2018 and 2019 respectively. The figure for 2016 was not provided.

The information minister also provided a comparative analysis of petrol prices in the West African sub-regions (Naira equivalent per litre).

Nigeria, N162 per litre; Ghana, N332 per litre; Benin, N359 per litre; Togo, N300 per litre; Niger,  N346 per litre; Chad,  N366 per litre; Cameroon, N449 per litre; Burkina Faso, N433 per litre; Mali, N476 per litre; Liberia N257 per litre; Sierra Leone, N 281 per litre among others.

The minister, therefore, said the angry reactions that have greeted the latest prices of Premium Motor Spirit (PMS) were unnecessary and totally mischievous. According to Mohammed, the federal government was not unmindful of the pains associated with higher fuel prices.

“That is why we will continue to seek ways to cushion the pains, especially for the most vulnerable Nigerians,” he said.

FG’s decisions unfortunate – CSOs, others

Reacting, the Executive Director of the Centre for Social Justice (CSJ), Eze Onyekpere, said those in government were bluffing their way through because the country has become insolvent and there was really nothing to tell Nigerians.

“The increase in fuel price is just the manifestation of a deeper challenge that the economy has been hopelessly mismanaged and the people running the economy are incompetent and don’t know their left from their right,” he said.

Speaking with Daily Trust on phone, Deolu Ogunbanjo, who is the President of the National Association of Telecom Subscribers said an increase in the pump price of fuel and electricity tariff at a time when the country’s economic situation was bad would make many Nigerians poorer.

“The federal government should have been more sensitive to the plight of Nigerians. Increasing fuel price and electricity tariff during the COVID-19 period when many Nigerians have been thrown out of jobs is the height of insensitivity”, he said.

Also speaking, the Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), Awwal Musa Rafsanjani, said Nigerians were shocked at the outburst of the presidency on the non-negotiable the stance of electricity and fuel price increase.

He said that hike coming at a time of job losses and pay cut without mitigating programmes showed that the government is insensitive. But the chairman of Muslim Rights Concern (MURIC), Professor Ishaq Akintola, expressed support for the increase “because it is a necessary thing to do at this particular time.’’

Akintola who is one of the prominent Nigerians, who protested against subsidy removal during the administration of former President Good Jonathan said Buhari’s government removed fuel subsidy for the benefit of all Nigerians.

“Nigerians should rather look at long time gains of this increase that was occasioned by subsidy removal. Let not be sentimental. Fuel price and electricity tariff hike is necessary at this time so that our country can move forward so that more key infrastructure can be put in place”, he said.

Also, the Organised Private Sector of Nigeria (OPSN) has described the subsidy regime as unsustainable, saying if allowed to continue, the electricity industry will collapse.

According to a statement issued at the end of the meeting from the OPSN secretariat, it said the government no longer had the fiscal capacity to sustain the increasing subsidy level and at the same time finance the capital investment necessary to extend electricity supply to the over 90 million Nigerians who lack access to electricity.

The OPSN comprises of the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), the Manufacturers Association of Nigeria (MAN), the Nigeria Employers’ Consultative Association (NECA) the Nigerian Association of Small and Medium Scale Enterprises (NASME), and the Nigerian Association of Small Scale Industrialists (NASSI).

It, however, called on President Buhari’s government to justify the necessity for the tariff increase at a time when the economy was facing a potentially deep recession and Nigerians were facing increasing hardships with unemployment rising to over 27 percent as many factories were closed.

Also, the apex Yoruba socio-cultural group, Afenifere, described the recent increases in the prices of petroleum and electricity tariffs, as insensitive.

The group stated this during its virtual meeting where it considered, among other issues, the recent increases in the prices of petroleum products and electricity, describing the development as “the most insensitive policies against a people being ravaged by a national pandemic without adequate support from their government,” adding, “To ask Nigerians to pay more for these facilities is wicked and inhumane.”

The group in a communiqué by its spokesman, Yinka Odumakin urged the people to use all constitutional and peaceful means to resist and reject the hikes.

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