FUEL PRICE

*Increase in petrol price’ll push more Nigerians into poverty – Abdulsalami

*We’ll engage NLC on fuel subsidy —Govs

*Deny role in removal of fuel subsidy

*Remove subsidy, subsidise education, health, Ibru tells FG

*Wants govt to make building of refineries criterion for oil licence

By Adesina Wahab, Henry Umoru & Johnbosco Agbakwuru

THE National Economic Council, NEC, said yesterday that its decision on the removal of the subsidy on petroleum would be made in June when provision for its payment in the 2022 budget expires.

NEC’s position came on a day former Head of State, General Abdulsalami Abubakar, retd, advised the Federal Government against withdrawal of fuel subsidy, saying any increase in the pump price of petrol would push more Nigerians into poverty.

Governors, under the aegis of Nigeria Governor’s Forum, NGF, had hours earlier in its meeting in Abuja denied being part of the process to removal fuel subsidy and promised to engage the Nigerian Labour Congress, NLC, and its affiliates on the matter.

Recall that Labour had, less than 24 hours ago, alleged plots by some governors to scuttle the protest planned for next Thursday against  government’s attempt to remove fuel subsidy.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, had announced late last year that the Federal Government would remove subsidy in the second quarter of this year.

But former President of the Lagos Chamber of Commerce and Industry, LCCI, Mr Goodie Ibru, yesterday advised the government to remove  subsidy, saying whatever funds gained could be used to subsidise education and health.

Rising from its first meeting for the year in Abuja yesterday, NEC said though conversations on subsidy removal had been ongoing, it is yet to take a position on it.

The council, chaired by Vice President Yemi Osinbajo, is composed of governors of the 36 states of the federation, the Central Bank Governor and some Federal Government officials and ministers.

Fielding questions from State House correspondents on the outcome of the meeting held at the Conference Hall, Presidential Villa, Abuja, Nasarawa State Governor Abdullahi Sule, said it was understandable that the provision for payment of subsidy was made in the 2022 budget only until June.

‘Decision on subsidy coming in June’

Governor Sule, flanked by his Edo State counterpart, Godwin Obaseki, stated that any decision on the removal of subsidy would be taken after the budget provision runs its full course into June.

Also speaking while responding to questions, Governor Obaseki pointed out that Premium Motor Spirit, PMS, which sells for N162-165 per litre in Nigeria, is sold one hundred per cent higher in other countries. 

He noted that the Federal Government was spending about N2 trillion on petroleum subsidy, an amount, he said could have been used for other purposes.

According to him, the NEC, therefore, wonders whether that should be allowed to continue in a situation where only two thirds of states of the federation consume the subsidy.

Governor Obaseki said:  “As you all know, the issue of subsidy has been one matter that NEC has deliberated upon for more than a year now. There was an ad hoc committee which was set up by NEC, headed by Governor Nasir el-Rufai of Kaduna State that included members of the executive arm of government that worked on recommendations as to what we should do about the costs of PMS locally.

“Because as you realize, as has been told us, the cost of PMS in Nigeria today is about N162 per litre, whereas countries surrounding Nigeria are selling the same product at more than 100% of the cost in Nigeria. The country as at last year, spent in excess of billions, we need to have the exact figures, but we must have spent almost N2 trillion subsidizing petroleum products.

“That is money that could have gone into building roads, money that could have gone into healthcare and education. So, for NEC, the arguments have been put out, should we continue this regime of spending money we do not have to subsidize the living standards of only mostly those who have vehicles?

“When NEC looked at some of the analyses last year, we realized that less than one-third of the states of this country consume two thirds of the subsidy. So the issue of equity also came up. All of these findings were presented to NEC and NEC has had several deliberations. And the deliberations are still ongoing.

“So, NEC hasn’t come up with any decision yet. I think recommendations have also been made to the President. That is what I am aware of has transpired so far.”

Continuing, Governor Sule said:  “I think in addition to that, what you have to understand, we didn’t make any presentations on this because there has not been a decision. But in reality, all of us Nigerians know that there is now the Petroleum Industry Act.

“NNPC is now a limited liability company, so it will run differently. If the Minister of Finance provides for six months, you probably can understand part of the reason for provision of six months before NNPC fully takes off and at that moment, that’s when decisions will be made.

READ ALSO: Fuel price hike not only way to raise fund for govt ― NANS

“But I want to make the correction that it is not governors who are making recommendations. It is actually a NEC committee, which comprises all the other people that are looking at this and no decision has been made and probably by the time a decision will be made, the Petroleum Industry Act has fully taken charge, and it will not require any recommendation from anybody.”

Governors’ complaints

On governor’s complaints about deductions, he said:  “No, no, no no. What was presented to NEC today (yesterday) was a document for us to note the decision reached by the FAAC committee, the Revenue Allocation Committee. They had brought up the constitutional issue about deductions of 13% derivation, which should have occurred before any expenditures.

“This is a constitutional issue, which had been dealt with. And it was realized that refunds had to be made as a result of those unconstitutional deductions and it was agreed how those refunds should be paid back, whether it was to be paid in three years or in four years or in five years. That was what was brought to NEC.”

Further asked how existing deductions were affecting states, Governor Sule said:  “It’s really a very hypothetical question.”

But Governor Obaseki said:  “Well, I’ll put it very succinctly. As at last year, NNPC was supposed to contribute N200 billion a month to FAAC for distribution to states. Because of  payment of subsidy, NNPC was unable to put that money into FAAC for distribution, which means less money going to states and the Federal Government.”

When the governors were asked whether states could survive with the situation on ground, Governor Sule said “we are surviving now.”

‘More Nigerians heading for poverty with subsidy removal’

Meanwhile, General Abdulsalami Abubakar, former Head of State, yesterday kicked against any increase in the price of petrol, contending that it would push more Nigerians into poverty.

Abdulsalami, who spoke at the 19th Daily Trust Dialogue in Abuja, stated: “The expected fuel price increment will push more Nigerians into poverty.

“Over 80 million Nigerians are still wallowing in poverty. Nigeria faces a food crisis worsened by the global COVID-19 pandemic.”

On the 2023 presidential election, the former head of state said regardless of the demands for zoning and challenges, Nigerians should unite and work together.

“Note that for the first time, southern governors are taking on their northern counterparts, each seeking the presidency to their regions.

“This election year calls for statesmanship and partnership to pull Nigeria out of the woods. Let us all remember that despite all the challenges and threats, Nigeria remains one. Our unity and large population are assets and strength,’’ he said.

According to the National Bureau of Statistics (NBS) 2019 Poverty & Inequality in Nigeria, 82.9 million Nigerians are living in poverty.

Also, in 2021, the World Bank said an estimated 7 million Nigerians might have been pushed into poverty in 2020 due to high inflation rate.

Subsidy: Govs resolve to engage NLC

In a similar development, the Nigeria Governors’ Forum, NGF, in the early hours of yesterday, resolved to engage the Nigeria Labour Congress, NLC, and its affiliates on the proposed removal of fuel subsidy.

According to the governors, the meeting with the NLC on the issue has become imperative because as stakeholders, Labour must be involved in order to arrive at a conclusion of ensuring that Nigerians at the end of the day would not be at the receiving end.

They also denied playing any role in the planned removal of subsidy, even as they argued that the Nigeria National Petroleum Corporation, NNPC, was now a private company that could not be dictated to on how to run its activities.

Addressing journalists at the end of NGF first meeting of the year, Chairman of the group and Ekiti State Governor, Dr. Kayode Fayemi, said: “ We will engage with Nigeria Labour Congress, NLC on how best to address this issue of removal of fuel subsidy without causing any disaffection.”

Recall that Labour had alleged on Wednesday that some governors were working to scuttle its planned protest against government’s plan to remove subsidy and increase the price of petrol this year.

Let subsidy go  — Ibru

Meanwhile, former President of Lagos Chamber of Commerce and Industry, LCCI, Mr Goodie Ibru, has thrown his weight behind calls for the removal of subsidy on fuel, suggesting that whatever funds was gained from the process could be used to subsidise education and health.

According to him, subsidising education and health on a larger scale will make every Nigerian to be adequately equipped to compete better in the global market place of opportunities.

Ibru, who was also a former President of the Nigerian Stock Exchange, said this yesterday while delivering the 2022 Distinguished Personality Lecture Series of Lagos State University, LASU, Ojo, Lagos.

The lecture was titled, “Imperatives of a 21st Century Nigerian Economy: An Entrepreneur’s Perspective.”

He also suggested that the Federal Government makes it mandatory for International Oil Companies, IOCs, to set up refineries in the country before granting them operation licences, adding that it would help the country conserve scarce foreign exchange being spent on importing refined products.

“The cost of petrol subsidy is enormous and incalculable. The Federal Government in November last year estimated that it will cost N1.8 trillion in 2021 (about $4.32 billion). At an average of N150 billion, that roughly approximates the annual budgets of 12 state governments combined.

“To buttress this point, the total sum of the 2022 budgets of the six North Central states of Niger, Kwara, Kogi, Benue, Plateau, and Nasarawa is N908.7 billion, while the average for the six states is N151.45 billion.

‘’The total FG budget for the health sector in 2019 was N1.191 trillion and the total budget proposed for road and housing in the 2022 Appropriation Bill was N481.96 billion

“In 2022, FG plans to spend about N3,000 ($7) per person for health, while the cost of petrol subsidy for next year could reach N13,000 ($32) per person. Not only is the petrol subsidy costly, but also mainly benefits richer households,” he said.

Quoting a report by  globalpetrolprice.com, Ibru said Nigeria had the seventh lowest price of petrol in the world.

“As at January 3, 2022 in Nigeria, the price of Octane-95 gasoline is N167.6 per litre. For comparison, the average price of gasoline in the world for this period is N503.05, Nigeria has the seventh lowest pump price of petrol in the world. The prices range from N10.319 in Venezuela to N1,079.273 in Hong Kong,” he said.

Ibru, who highlighted the major problems facing the economy to include over-dependence on oil earnings, foreign exchange scarcity, among others, called on youths to embrace entrepreneurship and technology that could help them become self-employed.

He charged tertiary institutions in the country to focus on producing graduates that would be self-reliant, saying the time had changed from chasing white collar jobs to being an employer of labour.

The Vice Chancellor, Prof. Ibiyemi Olatunji-Bello, described entrepreneurs as the engine room of a nation’s economy.

“Entrepreneurs add to national income. Entrepreneurial ventures help generate new wealth. Existing businesses may remain confined to existing markets and may hit a limit in terms of income.

‘’New and improved products, services or technology from entrepreneurs enable new markets to be developed and new wealth created. It is a crucial developmental cycle,” she said.

Chairman of the occasion, Prof. Gbolahan Elias, SAN, said the choice of Ibru as the lecturer was apt, given his immense contributions and knowledge about industry, law and commerce.

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