By Suleiman Umaru and Lateef Adegbite
The last may not have been heard about the removal of subsidy on Premium Motor Spirit, PMS, porpuar, petrol, importation into the country by President Bola Ahmed Tinubu, who incidentally was a former governor of Lagos state, the nation’s Commercial nerve centre.
Recall that former President Muhammadu Buhari, had made a budgetary allocation of N3.6 trillion for the first half of 2023 which was confirmed by Hajia Zainab Ahmed, the immediate past minister of Finance , Budget and National planning. The former minister had said that the government was spending N250 billion a monthly basis on the petrol subsidy, which could no longer be sustained.
This may have informed why the Nigerian National Petroleum Corportation, NNPC, now baptized Nigerian National Petroleum Company Limited, NNPCL, with the passage of the Petroleum Industry Bill, PIB, which had been signed by the erstwhile Katsina state born Nigerian President in August 2021, had championed the course for the removal of the petrol subsidy between 2022 and now.
Recall that Mele Kolo Kyari,Group Managing of Nigerian, NNPCL, had said that about N4.4 trillion or $10 billion was spent on subsidy in 2022, which may have shocked Nigerians when he said recently that ‘’Nigeria’s subsidy regime ended six months after the PIB, was signed into Law by the Katsina state born Nigerian President.
President Tinubu, may have been taken aback at the resurgence of long queues at the Abuja retail fillings stations and its environs as well as other major cities in the country that he had invited Kyari, the NNPCL, GMD, to the Villa . for explanation.
He was said to have also extended the invitation to Abdulaziz Bawa, the Chairman, Economic and Financial Crimes Commission, EFCC, Chairman. The EFCC, Chairman, invitation may not be unconnected to the invasion of its Lagos office by the Department of state Security, DSS, under the closewatch of Yusuf Magaji Bichi.
Emerging from the all –important meeting, the EFCC, Chairman was said to have refused to speak to Journalists who had laid ambush for him at the State House but Kyari, the NNPCL, GMD, who was pestered by the Journalists had no option but to volunteer information on why he came to the Villa”to see the Nigerian President”.
He has told the Journalists who had accosted him at the State House that he was at the Presidential villa to brief the President’’, and which many believe may not be unconnected ”to the resurgence of long queues at the retail outlets and the fuel supply situation across the country”.
The boss, who could not hide his feelings had persistently said over the last one week, that ‘’the masses would benefit a lot from the decision by the Tinubu’s Administration to remove the subsidy on pPMS’’, insisting that the Company at present have enough supply in depots and tanks and retail outlets that could serve the country for the next one month.
The meeting with the President on Wednesday, May, 31, 2023, may have encouraged the NNPCL, GMD, to appear on Channels Television, on Thursday, June 1, 2023, to shed more light on the removal of subsidy on petrol. Kyari, the GMD, NNPCL, may have made Nigerians to understand that subsidy payment ended in 20222 based on the provisions of the PIA.
Given an insider information of the provisions of the PIA, the NNPCL, Chief Executive Officer, CEO, had revealed that subsidy regime vanished on the 17th of February 2022. The NNPCL, CEO, had said that the Law states that six months after the promulgation of the PIA, Petroleum products, particular, ‘’PMS, must be priced at ‘the market rates’’. He was emphatic that the subsidy regime had vanished since January 17, 2022, going by the provisions of the PIA.
Indeed, putting on the garb of a politician, he had justified why the iformer Buhari’s Administration had budgeted N3.6 trillion for fuel subsidy between January and June, 2023, stressing that the government can always decide ‘’to spend on its citizens’ in the manner that it wants’’.
He has alluded to the fact that ‘’there are subsidies on bread, fertilizer and all kinds of other items in the world ‘’, noting that this may have informed why the then Buhari’s Administration decided that ‘’there would be an appropriation of subsidy the second half of 2023’’, meaning that provision was made for payment of subsidy . He averred that since January, 10123 and now, NNPCL, has been paying the subsidy on fuel in the country, a’’ development, he had said is no longer sustainable’’.
According to him, the subsidy bills have been piling up, lamenting that ‘’the country has not been able to settle the NNPCL, for the money it is spending on a monthly basis on the subsidy. This may have forced him to speak out that the ‘’pricing of the PMS, would now be calculated at the market rate at this time since subsidy payment have been stopped by the Tinubu’s Administration.
He may have gladdened the heart of Nigerians when he said that ‘’there is a gradual process now of making a flexible and single effect foreign exchange regime’’ , where the PMS, marketers will be able to have access to forex to import that would eventually break the monopoly of the NNPCL, from being the sole importer, and also fixes the price for the oil marketers across the country.
Ahmed Adamu, a Petroleum Ecomist , may have agreed with the NNPCL, GMD, that the removal of fuel subsidy, and making forex available to those who are interested in going into the business of PMS, importation, will encourage many companies to participate in the importation of the product at a price they would want to recover their costs and make profit.
The Petroleum Economist had averred that the competition would be so keen this time around as the suppliers will be posting their market prices. Hear him:’’We will see the variations in posted market prices by the products importing companies as there will be no more regulated prices by the government’’.That much was confirmed by Zarma Mustapha, the Deputy President of the Independent Petrol Marketers Association of Nigeria, IPMAN.
Take for instance, following the removal of the fuel subsidy by resident Tinubu’s Administration, there have been an adjustment in pump price of PMS, at the marketers retail outlets across the country based on the prices posted by the NNPCL
. haThe IPMAN, Deputy President had said that the new price regime would come into effect on July 1, 2023, but the marketers are already selling at the new pump price of a litre of petrol , put at between N 488.00 and N537.00 depending on the area , which according to financial analyst was more than a 100 increment.
Ahmed, the Petroleum Economist, had said that it may look painful at this early stage, but that the petrol price will fluctuate periodically as crude oil prices and dollar exchange rates change. There is no gain saying the fact that NNPCL, posted prices on products would still be the benchmark for the petrol market in Nigeria because it is a fairer and stronger player compared to Y.M. Shafa Limited, A.A. Rano Nigeria Limited, NIPCO plc, Rainoil Limited, Matrix Energy, North west Petroleum & Gas Limimited,Nepal Oil &Gas Limited, Mainland Oil & Gas Limited and Emadeb Energy and other members of the IPMAN.
Even OVH Energy, popular, Oando PLC, Conoi PLCl, MRS, Total Energies, Ardova plc, II plc, AP plc and other major oil marketers in the country are still no match to the NNPC, which remain the sole importer of the product in the Nigeian market for now.
Kyari, the NNPCL, helmsman is optimistic that market price of the PMS, would stabilise. He may have based his optimism on the ongoing process of rehabilitation of the one of the four refineries, in the country which are currently working in bits and fits, expected to come on stream this 2023, while the second and the third of the moribund refineries will come on stream in 025.
He may have also been encouraged to beat his chest that the market price of PMS , will stabilize because the 650,000 bpd, Dangote refinery and Petrochemical plant will resume full production in August , 2023, while the BUA 200,000bpd, plant, located in Akwa Ibom state, expected completion date and resumption of refining of products has been slated between 2024 and 2025.
There are indications that much of the Companies’ products: PMS, Automotive Gas Oil, AGO, popular, diesel, Dual Purpose Kerosene, DPK and Aviation fuel, would be sold at the domestic market before exporting to the West Coast and Central African sub-regional markets.