By Suleiman Umaru
More facts have emerged why Hajia Zainab Ahmed, minister of Finance Budget and National Planning had said that Petrol subsidy is going to end in 2022. This is because Prseident Muhammadu Buhari, a retired Army General from the onset of the Administration in 2015, declared that Petroleum products pricing would be based on ‘’price modulation template’’: crude oil pricing and exchange rate.
Indeed, the Central Bank of Nigeria, CBN, over the last six years had resorted to rationing the country’s limited forex exchange demand in the determination to keep the price of Premium Motor Spirit, PMS, low. A CBN source disclosed that about 40% of the country’s available Forex was being allocated to fuel importation alone. This meant that the manufacturers were crowded out on the CBN window.
The minister had said that the government spends an average of N250 billion to subsidise fuel importation in the country describing it as one of’’ the sources of revenue leakages in the country that must be stopped’’. This may have encourage the Nigerian National Petroleum Corporation, NNPC, now baptised as the Nigerian Petroleum Company Limited, have not have been making remittance into the Federation account because of the fuel subsidy regime.
Hajia Ahmed, had said while giving the 2022, breakdown that an oil revenue forecast of N3.36 trillion would be paid into the government coffers by NNPC this . The revenue target from the oil sector was higher than the N1.350 trillion target given to the Corporation in 2021, which was never paid due to the oil subsidy Payment.Note that the government had set the crude oil production for the year at 1.47 million barrels per day to 188 million barrels daily and a benchmark price of $57 per barrel at the international oil market.
However, the decision of the Organisation Petroleum Exporting countries, OPEC, member countries to push additional 400,00 barrels daily, to its total production level in February, 2022, according to market sources, is already having a multiplier effect on crude oil sales in the international market as oil price jumped up to $80 for the first time in 2022.
As at Friday, January 2022, Nigeria oil, Brent was said to have hit $87.9 per barrel in the International oil market. Note that the government had put the 2022, foreign Exchange official exchange at N410.15 to a dollar, meaning that that the additional charges, including margins of the retailers and wholesalers, transporters he equalization at around N60.00 per litre would push the current price of N165.00 per litre to about about N350.00 per litre.
Malam Mele Kyari, Managing Director, of NPC, may have hit the nail on the head when he dropped the bombshell that by the end of November 2022, the nation would be out of the ‘’subsidy regime ‘’and Nigerians should be ready to pay between N320.00and N340.00 per litre of petrol.
He has made it clear to those that cares to listen that that the sale of petrol in the Nigerian market must be followed by what is happening at the international market, noting that if it is not removed that 35 out of the 36 states of the Federation may not be able to pay the civil sevants’ salaries in 2022, which may mean a total collapse of the system.
The argument in NNPC, circles why there should be an crease in petrol price per litre in Nigeria may not e unconnected to in landing cost per lite which was said to have risen to around N270.00 due to the rising cost of oil price in the international market. The Nigerian oil octopus, NNPC, currently has the backing of Hajia Ahmed to increase petrol price.
The controversy that have been generated by the proposed petrol price increase in the last two months may have informed why Eng. Abdullahi Sule, governor of Nasarawa state, at the end of the recent National Economic Council meeting, NEC, chaired by Yemi Osinbajo, the Vice President , had urged Nigerians to sheath their sword and be patient.
The governor may have gladdened the heart of Fellow Nigerians when he disclosed that the Osinbajo chaired NEC, has not taken a decision on the fuel price incease for now.
He may not have ruled out the fact that that Nigerians should expect to pay more for a litre of petrol as obtained in the international oil market at the end of June 2022. He has his reason. NNPC, is no longer what it used be a ‘’government owned Corporation but now a limited liability Company’’, going by the Petroleum Industry Act, PIA, passed by the National Assembly and which had been assented into Law by the Nigerian President in 2021.
He noted NNPC, as a limited liability Company would be run differently as’’ it will compete with other Companies in the crude production and oil marketing business to remain afloat. The message was very clear to Nigerians that there will be an increase in petrol price in the next six months.
Recall that Hajia Ahmed had asked Nigerians ‘’to wait for decision to be taken on the proposed petrol price increase ‘’, which is the time for the newly incorporated NNPC to fully take off for decisions to be made by the Board of Directors and the Management Team. The government was said to have made provision for six months petrol subsidy in the country which expires on June 30, 202.
The minister had said that ‘’the complete deregulation of the nation’s oil setor, would save the country enough foreign exchange on a monthly basis and potential earning from the nation’s oil and gas industry’’.
Godwin Obaseki, governor of Edo state, may have spoken the mind of the other 35 states governor who are desperately looking for money from various sources to fund projects in their respective states that N2.1 trillion was spent in 2021, alone on fuel subsidy payments, which could have been diverted to the nation’s health, educational and other development efforts.
According to him, the payment of subsidy, by the old NNPC had prevented it from paying any amount to the Federation account, which had left the Federal Accounts Allocation Commission, FAAC, with little or nothing for distribution to the Federal, states and local governments.
It is obvious that the 36 states governor, who are members of NEC, are tacitly in support of the removal petrol subsidy regime, which had remained a thorny issue since the erstwhile Ibrahim Babangida, a retired Army General and former military president and the present President Muhammadu Buhari, a retired Army General, regimes, Abdulsalami Abubakar, a retired Army General and former Head of State, has kicked against it.
Abubakar, a retired Army General and former Head of State, had said that an ‘’increase in fuel price will push millions of Nigerians into poverty’’. He fears that ‘’insecurity in the country would be worsened by the economic situation in the country’’. His worries are that ‘’over 18 million Nigerians are still caught up in endless poverty’’.
An aggrieved Abubakar, who could not hide his feelings, had said that with the past fuel price increases, ‘’ there had been a continuous rise in the prices of food items which had been beyond the reach of many Nigerians’’.In an emotional outburst, he had said tha ‘’the proposed fuel price prices are expected to rise significantly in the next six months’’ as announced last December by Kyari, the NNPC boss. He was emphatic that ‘if the NNPC ventures to go ahead to remove the fuel subsidy regime, at the istance of Buhari this fiscal yea, ‘’it will push many millions of Nigerians into poverty’’. This is where former military Heads of state and Presidents, may have to take up the matter the matter with the Leadership of the National to bring the situation under control to avoid throwing the country into crisis.