Fuel Subsidy Vanished In Nigeria,  January 17, 2022 – Kyari

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.

Bawa: Chairman. EFCC

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”.

Kyari, GMD, NNPCL, Bawa, EFCC, Chairman,At The Villa To Brief President Tinubu

 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.

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