NEWS
Why Tinubu ‘Sneaked-In’ Subsidy On Petrol
It would appear that an interplay of market forces, business interests, political pressure and harsh economic realities have forced the hand of the Nigerian Government to reintroduce subsidy on Premium Motor Spirit, known along the streets as petrol, albeit secretly.
Reliable media sources, reported that the President Bola Ahmed Tinubu administration paid N169.4bn subsidy in August, 2023.
Citing documents from the Federal Account Allocation Committee (FAAC), the report revealed that the subsidy was funded from dividends paid by the Nigerian Liquefied Natural Gas (NLNG) to the Nigerian National Petroleum Company Limited (NNPCL), which amounted to $275m.
It was gathered that the NNPCL expended $220m (N169.4bn at N770/$) out of the $275m to pay for the PMS subsidy in the month of August.
In addition, The Punch cites the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, thus, “I told you earlier that there is no way that the government will sustain the price of petrol at N617/litre without paying subsidy on it, going by the continued fall of the naira.
“The dollar is almost N990 at the parallel market currently, and you can see the effect of this on the pump price of diesel. Diesel is close to N1,000/litre, so the retail price of PMS should be around N890 to N900/litre.
“Therefore, it is better the government assists the masses by paying subsidy. From our records, in the United States, the super product or petrol is sold around $3.9, which is close to about N3,000/litre.
“The premium product is sold at about $2.89, which is over N2,000/litre. And if you check in other African countries you will find out that the product is being sold at between N1,200 and N1,500. But going by the forex rate in Nigeria, it should be around N900/litre.”
Biztellers gathered that aside market forces (local and global), scarcity of forex, fragile economic underbelly and a ready-to-explode civil society and labour elements sent jitters to government quarters, thereby compelling a reintroduction of the subsidy regime.
According to dealers in the downstream oil sector, the cost of crude oil and the exchange rate of the naira-dollar accounted for over 80 percent of the cost of PMS.
For instance, the global benchmark for oil, Brent crude, rose to about $95/barrel on Thursday.
It had peaked to $97/barrel the preceding day, which was the highest figure in 2023.
Recall that oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $94/barrel in the past week.
It is noteworthy that the naira continued its downward trend after exchanging to the dollar at 980 on the parallel market on Wednesday.
And this is just seven days after the naira was exchanged to the dollar at 950/$.
Oil Marketers maintained that forex crisis and the recent rise in crude price, had made it impossible for petrol price to still remain at N617/litre.
According to them, the FG had quietly reintroduced fuel subsidy.
Biztellers findings show that the subsidised ex-depot price of petrol as sold by NNPCL, was between N585 and N600 depending on area of purchase.
By subtracting the ex-depot cost of N600/litre from the projected unsubsidised rate of N890/litre, that the government may have been spending about N290/litre as subsidy currently.
Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that between June 1 to June 28, 2023, which was described as the post-deregulation period, the total petrol consumption across the country stood at 1.36 billion litres, while the average daily consumption was 48.43 million litres.
With an average daily consumption of 48.43 million litres and an estimated subsidy of N290/litre, the government could be incurring N14.04bn as subsidy daily, while this could rise to N421.3bn monthly.
This has the potential of rising to as high as N1.68tn for the months of September, October, November and December 2023, should the naira continues its fall against the dollar and crude price maintains its upward surge.
Bayelsa State Governor, Douye Diri has embarked on his annual vacation, handing the ship of state to his deputy, Senator Lawrence Ewhrudjakp.
He made the disclosure in a statement on his verified handle on micro-blogging site, X, on Monday morning.
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Diri wrote, “With effect from today, November 25, 2024, I am proceeding on my annual leave.
“It has been a very busy year for me since our inauguration for the 2nd term in February this year.
“My absence will not in anyway affect governance in the State as the Deputy Governor, His Excellency, Senator Lawrence Ewhrudjakpo, @iamElaw has the mandate to take charge of all state functions.
“Also, my absence shall not in anyway cause delay in the execution of all ongoing projects and programmes by various ministries, agencies and departments.
“On the prolonged blackout in the State, I am happy that our intervention in the repairs of the vandalised towers is yielding result with the completion of restringing of the damaged Ahoada-Yenagoa 132kV line.
“In as much as the transmission line does not belong to the Bayelsa State Government, our intervention was purely in the interest of the people.
“I understand the pains and the economic loss our people have been subjected to due to the blackout. The business owners are the worst hit!
“With the comprehensive repair works done so far, I am hopeful power will soon be restored once the recently vandalised conductor at towers 29 to 31 is replaced.
“I have also been reliably informed that both conventional and local security have been engaged at Ula Ikata and Ihuike communities in Ahoada-East LGA of Rivers State to secure the site until other repair works are completed.
“While we battle to restore public power, our government has commenced a process to develop our own Independent Power Plant through the procurement and installation of new Gas Turbines.
“We are committed to ensuring steady electricity supply in the State in line with our ASSURED Prosperity Agenda.
“Happy New Week all as I officially proceed on my leave. Nua!”
The Socio-Economic Rights and Accountability Project (SERAP) has urged President Bola Ahmed Tinubu “to direct the Attorney General of the Federation and Minister of Justice Mr Lateef Fagbemi, SAN, and appropriate anti-corruption agencies to promptly probe allegations that over N57 billion of public funds are missing, diverted or stolen from the Federal Ministry of Humanitarian Affairs and Poverty Alleviation in 2021 alone.”
The SERAP alleged that, “hundreds of billions of naira are also reportedly missing in other ministries, departments and agencies [MDAs].”
It maintained that the damning revelations are documented in the 2021 audited report released last week by the Office of the Auditor-General of the Federation.
The SERAP said, “Anyone suspected to be responsible should face prosecution as appropriate, if there is sufficient admissible evidence, and any missing public funds should be fully recovered and remitted to the treasury.”
Consequently, the SERAP urged him to “use any recovered stolen funds to fund the deficit in the 2025 budget, and to issue an immediate moratorium on borrowing by the Federal Government to ease Nigeria’s crippling debt crisis.”
In the letter dated 23 November 2024 and signed by its deputy director Kolawole Oluwadare, the SERAP stated, “The allegations amount to stealing from the poor. There is a legitimate public interest in ensuring justice and accountability for these grave allegations.”
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According to the SERAP, “The allegations also suggest a grave violation of the public trust, the Nigerian Constitution 1999 (as amended), the country’s anticorruption legislation and international anticorruption obligations.”
The letter, read in part: “Poor Nigerians have continued to pay the price for the widespread and grand corruption in the Federal Ministry of Humanitarian Affairs and Poverty Alleviations and other ministries, departments and agencies [MDAs].”
“According to the 2021 annual audited report by the Office of the Auditor-General of the Federation, the Federal Ministry of Humanitarian Affairs and Poverty Alleviation, [the Ministry] in 2021 failed to account for over N54 billion [N54,630,000,000.00] meant to pay monthly stipends to Batch C1 N-Power volunteers and non-graduate trainees between August and December 2021.”
“The money was ‘not directly paid to the beneficiaries.’”
“The Auditor-General is concerned that the money ‘may have been diverted.’ He wants the money recovered and remitted to the treasury. He also wants suspected perpetrators of the diversion to be sanctioned in line with the Financial Regulations.”
“The Ministry also reportedly failed to account for over N2.6 billion [N2,617,090,786.00] of public funds meant for the ‘home grown school feeding programme during Covid-19’, as ‘the programme was never executed.’”
“The money was allegedly paid to five contractors to ‘procure, package and distribute Covid-19 palliatives to Kano, Zamfara and Abia states,’” but without any trace.
“The Auditor-General fears the money ‘may have been diverted.’ He wants the money recovered and remitted to the treasury.”
“The Ministry also reportedly spent over N78 million [N78,373,909.74] to ‘carry out a survey on the Ministry’s Covid-19 response to states and vulnerable groups’ but without any approval or document.”
“The Auditor-General fears the money may be missing or have ended up in the pockets of ‘incompetent contractors’. He wants the money recovered and remitted to the treasury.”
“The Ministry also reportedly failed to account for N39.5 million [M39,500,000.00] ‘personal donations to different personalities’. The money ‘was paid directly to the minister as reimbursement’.”
“The Auditor-General fears the ‘money may have been diverted’, resulting in ‘the loss of public funds.’ He wants the money recovered and remitted to the treasury.”
“The Ministry also reportedly failed to account for N400 million [N400,000,000.00] meant to pay ‘stipends to 4450 independent monitors for October, November and December 2021.’”
“The Auditor-General fears the money ‘may have been diverted’. He wants the money recovered and remitted to the treasury.”
“The Ministry also reportedly paid over N287 million [287,628,300.00] contractors ‘without any document and justification.’ The Auditor-General fears the money ‘may have been diverted’ and wants the money recovered and remitted to the treasury.”
“These allegations by the Auditor-General are different from the allegedly missing or unaccounted for N729 billion which is the subject-matter of the judgment by Justice Deinde Dipeolu.”
“We would be grateful if the recommended measures are taken within 7 days of the receipt and/or publication of this letter. If we have not heard from you by then, SERAP shall consider appropriate legal actions to compel your government to comply with our request in the public interest.”
“The country’s wealth ought to be used solely for the benefit of the Nigerian people, and for the sake of the present and future generations.”
“These allegations can promptly be investigated and suspected perpetrators named and shamed. Taking these steps would advance the right of Nigerians to restitution, compensation and guarantee of non-repetition.”
“Prosecuting the allegations, and recovering any missing public funds would improve the chances of success of your government’s oft-repeated commitment to fight corruption and end the impunity of perpetrators.”
“SERAP urges you to address the widespread and systemic corruption in ministries, departments and agencies [MDAs], as documented by the Office of the Auditor-General of the Federation, including in the 2021 audited report and previous reports.”
“Tackling corruption in MDAs would go a long way in addressing the budget deficit and debt problems.”
“SERAP urges you to immediately enforce the judgment by Hon. Justice Deinde Isaac Dipeolu of the Federal High Court, Lagos, ordering your government to release the spending details of N729 billion by Mrs Sadia Umar-Farouk, the former Minister of Humanitarian Affairs, Disasters Management and Social Development.”
“Investigating the allegations and naming and shaming and prosecuting those suspected to be responsible for the missing public funds and recovering the funds would end the impunity of perpetrators.”
“SERAP notes that the consequences of corruption are felt by citizens on a daily basis. Corruption exposes them to additional costs to pay for health, education and administrative services.”
“SERAP notes that the Senate and the House of Representatives recently approved a $2.2 billion loan request from your government. The loan, equivalent to N1.767 trillion, would be part of the funds used to finance the N28.7 trillion 2024 budget.”
“According to the Debt Management Office (DMO), the national debt increased from ₦97.34 trillion in December 2023 to ₦121.67 trillion in March, partly due to exchange rate fluctuations.”
“The total domestic debt stands at ₦65.65 trillion (46.29 billion dollars), while the total external debt is ₦56.02 trillion (42.12 billion dollars) as at June 2024.”
“A moratorium on borrowing would create a temporary debt standstill, and free up fiscal space for investment in Nigerians’ needs.”
“Section 13 of the Nigerian Constitution imposes clear responsibility on your government to conform to, observe and apply the provisions of Chapter 2 of the constitution.”
“Section 15(5) imposes the responsibility on your government to abolish all corrupt practices and abuse of power.”
“Under Section 16(1) of the Constitution, your government has a responsibility to ‘secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity.’
“Section 16(2) further provides that, ‘the material resources of the nation are harnessed and distributed as best as possible to serve the common good.’”
“The UN Convention against Corruption and the African Union Convention on Preventing and Combating Corruption to which Nigeria is a state party obligate your government to effectively prevent and investigate the plundering of the country’s wealth and hold public officials to account for any violations.”
“Specifically, article 26 of the UN convention requires your government to ensure ‘effective, proportionate and dissuasive sanctions’ including criminal and non-criminal sanctions, in cases of grand corruption.”
“Article 26 complements the more general requirement of article 30, paragraph 1, that sanctions must take into account the gravity of the corruption allegations.”
The Dangote Petroleum Refinery has announced a reduction in the price of Premium Motor Spirit (PMS), also known as petrol, to ₦970 per litre for oil marketers.
This new price, effective immediately, marks a ₦20 decrease from the refinery’s previous ex-depot price of ₦990 per litre, which was set earlier this month.
In a statement released on Sunday, Anthony Chiejina, the refinery’s Chief Branding and Communications Officer, explained that the price reduction is a way for the company to express its appreciation to Nigerians for their unwavering support in making the refinery a reality.
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“This decision is our way of thanking Nigerians for their unwavering support in making the refinery a dream come true,” Chiejina said.
The statement also highlighted the refinery’s gratitude towards the Nigerian government, acknowledging the role of government measures in supporting domestic businesses.
“In addition, this is to thank the government for their support, as this will complement the measures put in place to encourage domestic enterprise for our collective well-being,” the statement read.
Despite the price cut, the refinery reassured consumers that there would be no compromise on the quality of its products. “While the refinery would not compromise on the quality of its petroleum products, we assure you of best quality products that are environmentally friendly and sustainable,” the statement added.
The company also committed to ramping up production to meet domestic fuel consumption and alleviate concerns over potential supply shortages.
“We are determined to keep ramping up production to meet and surpass our domestic fuel consumption; thus, dispelling any fear of a shortfall in supply,” the statement concluded.
The price reduction is expected to save marketers approximately ₦20 per litre on purchases from the refinery’s Lekki-based plant.
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