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.
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has raised concerns over alleged monopolistic practices by Dangote Refinery, following a public dispute about fuel pricing in the downstream petroleum sector.
Recall that the refinery, Africa’s largest, recently disclosed its petrol pricing at N990 per litre in trucks and N960 per litre into ships, a move it justifies as being in line with international rates.
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PETROAN, however, sees this as an attempt to suppress competitors and dominate the Nigerian market.
The rift began when Dangote Refinery claimed that complaints from marketers regarding its pricing were fueled by intentions to import cheaper, potentially substandard products.
In response, PETROAN strongly rejected these allegations, suggesting that Dangote’s claims are tactics designed to maintain a monopoly in the sector.
Joseph Obele, PETROAN’s spokesperson, stated that the association remains committed to importing high-quality products at more competitive rates to ensure affordability for Nigerian consumers.
According to PETROAN, competition in the market is essential for achieving fair pricing, and any attempt to stifle it would be detrimental to consumers.
They argue that Dangote Refinery’s pricing should reflect production costs and fair margins rather than international benchmarks, especially given concessions granted by the government for the refinery’s establishment.
PETROAN also announced its plans to partner with foreign refineries and financial backers to import premium-quality petroleum products at prices below current rates.
The association aims to enter the market by December 2024, pending necessary regulatory approvals.
“The allegations that PETROAN will import substandard products are unfounded and aimed at creating an unfair playing field,” the statement read.
PETROAN warned that similar claims in the past had led to significant price hikes when competitors were pushed out, emphasizing that the entry of new players into the market would lead to more competitive pricing and ultimately benefit Nigerian consumers.
PETROAN expressed appreciation for President Bola Tinubu’s commitment to revitalizing Nigeria’s state-owned refineries and urged the government to consider privatizing the Port Harcourt and Warri refineries once rehabilitation is complete.
The association believes a transparent privatization process will help strengthen Nigeria’s downstream sector and counter monopolistic tendencies.
To address the ongoing pricing challenges in the sector, PETROAN called on the government to convene a comprehensive meeting of industry stakeholders, including major associations like IPMAN, DAPPMAN, MEMAN, NUPENG, and PENGASSAN.
PETROAN believes that collaboration among these groups will be instrumental in establishing a sustainable and competitive pricing framework for petroleum products in Nigeria.
Sultan of Sokoto, Sa’ad Mohammad Abubakar II, has called on Nigerians to avoid publicly criticizing their leaders, instead urging citizens to place their trust in God to address leadership concerns as He deems fit.
Speaking at the Regional Conference on Climate Change-Induced Conflicts in Northern Nigeria, organized by the Kaduna State Bureau of Interfaith in collaboration with International Alert, the Sultan emphasized faith and patience in navigating the country’s challenges.
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Acknowledging Nigeria’s current economic and social hardships, the Sultan encouraged continuous prayer, not only for the nation but for its leaders as well.
“Even though many feel times are particularly hard, we believe relief will come. Let’s increase our prayers for our leaders, trusting God to address them in His way,” he said, expressing hope that divine intervention could bring stability and prosperity.
The Sultan reminded political leaders of their ultimate accountability to God, cautioning that they will stand alone on the Day of Resurrection, with only their deeds to support them.
“On that day, every leader will stand alone. Governors, advisers—none will have support except their own deeds. Let us act with a deep sense of responsibility and fear of God,” he stated.
Addressing religious leaders, he warned against misleading their followers for personal gain, underscoring the trust many place in their religious guidance.
“Only God can save any human being,” he said, encouraging Nigerians to remain faithful and discerning in their spiritual beliefs. “Focus on worshiping Allah and leave the rest to Him. Don’t follow those who might lead you astray.”
With leaders from various religious communities, including the President of the Christian Association of Nigeria (CAN), in attendance, the Sultan called for unity, resilience, and communal effort to tackle pressing issues such as climate change, poverty, and insecurity in the northern region.
He praised the North’s history of unity and resilience, warning against divisive narratives that threaten communal harmony. “When we are united, we can face any challenge and build a prosperous community,” he asserted.
The Sultan’s remarks come amid ongoing social and environmental issues in the region, including a recent surge in climate-related challenges that have exacerbated poverty and security threats.
In light of these issues, he called on both Muslims and Christians to intensify their prayers, saying, “Our country faces many challenges, and we must turn to God in prayer. Let us intensify prayers in our mosques and churches.”
In a decisive move, President Bola Tinubu has ordered the immediate release of all minors detained by police during the recent #EndBadGovernance protests.
The directive, announced by Minister of Information and National Orientation, Mohammed Idris on Monday, underscores the government’s commitment to protecting children’s rights and ensuring justice.
Related News: EndBadGovernance Protests: Court Sets N10m Bail Each For 67 Minors
Idris confirmed that President Tinubu’s directive prioritizes the welfare of detained minors, instructing the Ministry of Humanitarian Affairs to facilitate their safe reunification with their families.
A committee led by the Ministry of Humanitarian Affairs will be established to oversee the welfare of the released minors and ensure compliance with the president’s orders.
Additionally, President Tinubu has directed a formal investigation into the actions of law enforcement agencies involved in the arrests.
The president emphasized that any misconduct uncovered during the investigation will result in disciplinary action, affirming his administration’s dedication to accountability within law enforcement.
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