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FG sets aside PIA, to pay N4.6tr on fuel subsidy

By Collins Olayinka, Kingsley Jeremiah, John Akubo, Adamu Abuh, Joseph Chinueze (Abuja) and Rotimi Agboluaje (Ibadan) 
25 January 2022   |   3:44 am
With all things considered, the Federal Government, yesterday, soft-pedalled on its initial plan to remove subsidy on petrol, setting aside its much-trumpeted Petroleum Industry Act...

Subsidy palava: Minister of Finance, Budget and National Planning, Zainab Ahmed (left) and Minister of State for Petroleum Resources, Timipre Sylva during a meeting with National Assembly leadership in Abuja…yesterday.<br />

Seeks amendment of 2022 budget
• NLC: No going back on January 27 nationwide protests
• Join Labour rallies, Falana urges Nigerians
• Lawan begs Labour to shelve Thursday protest, says it’s no longer necessary
• Why TUC is opting out of protests
• APC lauds suspension, Afenifere faults decision
• NBA: FG’s suspension an election strategy
• Autogas policy on the course, Sylva says

With all things considered, the Federal Government, yesterday, soft-pedalled on its initial plan to remove subsidy on petrol, setting aside its much-trumpeted Petroleum Industry Act (PIA) to continue paying about N4.6 trillion provided crude oil price hovers around $85 per barrel.

The Guardian had exclusively reported last Friday that petrol may sell for N403 per litre, representing the current landing cost of the product, as against its current price of N165 from July 1, this year.

The Nigerian National Petroleum Corporation (NNPC) Limited had revealed that Nigeria consumes about 19.535 billion litres of petrol yearly, averaging 1.6 billion litres monthly. With about N241 now paid on every litre as subsidy, this brings yearly subsidy to about N4.6 trillion.

But in a reversal that may unsettle the petroleum industry, the Federal Government suspended indefinitely its planned fuel subsidy removal and will now amend the 2022 Appropriation Act to accommodate the new change to provide for subsidy payments from July 1, saying it is clear to even the blind and audible to the deaf that the situation of the country does not allow for that at the moment.

This was announced, yesterday, by the Minister of Finance, Budget and National Planning, Ms Zainab Ahmed, in a meeting with lawmakers at the National Assembly. She explained that due to ongoing consultations, it was agreed that the planned removal of fuel subsidy should be shelved till further notice.

This action followed the pressure mounted by the Nigeria Labour Congress (NLC), which threatened to embark on a nationwide protest from January 27.

In the 2022 budget signed into law by President Muhammadu Buhari last month, the provision of petrol subsidy was till June 30, but NLC said fuel subsidy removal at this period of high inflation would be resisted.

In seeking a soft landing based on outcry from Nigerians, Ahmed, the Minister of State for Petroleum Resources, Timipre Sylva, and the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, met with the National Assembly leadership to amend the law to provide for an extension of subsidy provision beyond June 2022.

The Finance Minister said the government had initially planned to remove subsidies on petroleum products from July, a reasonable provision was made in the 2022 national budget for subsidy payment till June.

She said: “Sequel to the passage of the PIA, which indicated that all petroleum products would be deregulated, we amended the fiscal framework to incorporate subsidy removal.

“However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.

“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.

“Mr. President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.

“One of these measures include the roll-out of refining capacities of existing refineries and the new ones, which would reduce the amount of products that would be imported into the country.

“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for a subsidy from July to whatever period that we agreed was suitable for the commencement of the total removal,” she said.

Sylva said: “As far as I am concerned, at this point, it is a legislative duty. The law has been passed but there is no law that is cast in stone.

“It is clear to everyone that operationalising the law is not possible within six months framework that has been provided for and if that time frame provided for in the law is not feasible, then it is a legislative responsibility now to see what can be done in extending that time frame for it to be in the purview of the law.

“It is very clear to the blind and audible to the deaf that it is not feasible at this time to remove subsidy. I know that some naysayers or political pundits want to bring politics into it but it is not within the contemplation of this administration now to remove subsidy.”

President of the Senate, Ahmad Lawan, therefore, urged the organised labour unions in the country to shelve their proposed nationwide protests, as it was no longer necessary.

“There is need at one point to do away with subsidy but the President genuinely feel for Nigerians, particularly the most vulnerable. Significant arrangement for absorbing the shock that will come with the removal should be done and the timing is such that the impacts and consequences will not add to the hardship.”

He said the sympathy for Nigerians is not about NLC. “We are talking about every Nigerian. NLC is just an organised part of the system. Our concern is beyond NLC.

“I am taking this opportunity to speak to TUC and NLC to shelve this their plan to go on strike or demonstration. It is totally unnecessary. There is not going to be the removal of subsidy, so, let us not create unnecessary tension where there should be none. Please forget about the January 27 deadline.”
PRESIDENT Buhari had last year signed the PIA into law with provisions that deregulated the downstream sector. With the current development, the government may be altering its own law. 

This is coming as the Federal Government, yesterday, engaged petrol marketers in Abuja, insisting conversion of cars to run on gas remained a viable alternative to subsidy removal. 

Sylva noted that the government was doing everything possible to provide funding and enable infrastructure that would fast-track the auto-gas policy. 

Sylva said the country would convert one million public transport vehicles and install 1,000 refuelling centres within 36 months. 

An energy expert, Michael Faniran, insisted that the reversal in the plan to remove fuel subsidy remained a step in the wrong direction. 

Faniran, who noted that the national economy is suffering under the burden of fuel subsidy, said corruption opportunities under the fuel subsidy regime has been established by the government itself.

“Policy summersault by government always erodes investors confidence in any economy. Some investors would have been planning to take advantage of deregulation as provided in the PIA.

“Reversing this now means the provisions of the PIA would not be trusted by investors since the government could wake up any day to reverse any of the provisions,” he said.

Faniran noted that upcoming elections played a crucial role in the reversal of the subsidy, stressing that until the government can summon the political will, the country will continue to run around in circles on the subsidy regime.

An oil and gas lawyer, Emeka Okwuosa, noted that there is no best time to take the decision to remove the subsidy, adding that the country has only succeeded in postponing the evil day.

He also believed that the government halted the plan to buy the favour of Nigerians ahead of the upcoming elections.

“The postponement might be political. On one hand, we need complete deregulation for a seamless take-off of the PIA. We cannot keep the subsidy and expect a holistic impact on the positive effects of PIA. The government must have the political will to remove the subsidy,” he said, adding that the Dangote refinery coming on stream could provide succour.

Chairman/Chief Executive Officer, International Energy Services Limited (IESL), Diran Fawibe, said labour unions must be convinced and take the right decision instead of always fighting the removal of subsidies.

According to him, the government shares part of the blame on subsidy for not being able to fix refineries for over 20 years. 

With low crude oil production, Fawibe noted that Nigeria is now facing double jeopardy, adding that the high crude oil price will return smuggling of products, as perpetrators are expected to smile to the bank.

He said: “If the government that has signed the PIA into law fails to implement it, who will take the government to court for violation? Let’s hope that the situation gets better and the government revert to full
implementation of PIA in the downstream sector.” 

THE ruling All Progressives Congress (APC) has applauded the decision to suspend the planned removal of subsidies on petroleum products. APC, in a statement by its secretary caretaker committee, Senator John Akpanudoedehe, stated that the decision was in the best interest of Nigerians.

The party explained that the Federal Government took into consideration the fact that the removal of subsidy at this time would heighten inflation and cause undue hardship on the citizenry.

It noted: “Programmes and policies of government are meant to benefit the people. So, if the timing of the planned subsidy removal would cause hardship on citizens, then a review was necessary.”

The party commended President Buhari for always putting the welfare and wellbeing of Nigerians in the front burner through the implementation of programmes and policies.

The APC also commended the cordial relationship between the executive and the National Assembly, which has ensured good governance.

“Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed and the Senate President, Ahmad Lawan on the suspension of the planned subsidy removal,” it noted.

THE Nigerian Bar Association (NBA) has said the APC-led Federal Government suspended the planned petrol subsidy removal because of the forthcoming 2023 elections. NBA President, Olumide Akpata, made this known yesterday while speaking as a guest on Channels Television’s ‘Politics Today’ programme.

He said: “I would have loved to think that the decision to suspend subsidy is because the government cares so much about the people and it is a government that is listening to the cries of the people.

“However, something tells me that this has more to do with what is in the offing; an election is coming up and they (government) must probably have sat down and thought about it and told themselves that it would be suicidal at this point to take out subsidy going into an election which is around the corner.”

THE NLC has, however, said there is no going back on the January 27 nationwide protest against the proposed fuel price increase. The NLC, in a post on its Twitter handle, said: “The January 27 nationwide protest against the increase of petrol pump price is sacrosanct, no retreat, no surrender… Aluta continua.

“Three days to go, a nationwide protest against the increase in petrol pump price. One day, the poor will have nothing else to eat but the rich. Fuel price on international rate, pay minimum wage on the international rate.”

Also, sources within the NLC told The Guardian in Abuja last night that labour does not buy into the suspension gimmick.

This comes as the NLC has written to the 36 states governors intimating them on why it is embarking on the one-day protest.

NLC stated that the protest is geared at alerting the government on the sufferings that Nigerians are going through and the additional trauma that Nigerians would be subjected to if the government goes ahead with the hike in the price of refined petroleum products.

NLC maintained that the proposed hike if it goes through, would induce and impose an unprecedented degree of hardship on Nigerian workers, their families and the generality of the populace.

It stated that the net and multiplier effects of such socio-economic dislocation especially with regards to a decent standard of living, productivity and national security are better imagined than experienced.

Meanwhile, the Trade Union Congress (TUC) has said its decision not to be part of the NLC protests is not a disagreement but choosing a different approach.

Secretary-General of TUC, Musa-Lawal Ozigi, told The Guardian that it chose to put its state councils on standby and that modalities have been put in place to ensure TUC members proceed on mass protests and strike as soon as the subsidy is removed. Additionally, he expressed support for the full implementation of the deregulation policy.

His words: “The NEC of NLC met and decided on the nationwide protest. The TUC was not part of the meeting. We are not an affiliate of the NLC. We are a trade centre on our own. The decisions of the NLC are not binding on us. NLC and TUC are allies and we remain one.

“We have chosen to put our affiliates on standby. On our part, we have said consistently since 2020 that we support deregulation that is backed with domestic refining capacity. That is our position. We believe that domestic refining capacity will provide jobs on a sustainable basis, revive the manufacturing sector and grow the economy.

“Also, the government must provide palliatives that are enduring and not the N5,000 transport allowance to 40 million unnamed poor Nigerians. Whatever palliatives the government wants to implement, it must carry labour on board.”

PROFESSOR Benjamin Osisoma, President of the Association of National Accountants of Nigeria (ANAN) told The Guardian that it is a good thing the government has listened to the voice of the people because of the condemnation of the policy has been unanimous.

“The people can only take as much as they can and you know that the burden of everyday living has not been easy on the average Nigerian. All we have seen is an increase in excise duty, an increase in VAT, an increase in this tax and that tax and now you want to increase the price of fuel. There’s no way these things can work.

“What I would the government rather do is to find a way we can generate an upswing in production by the private sector and ensure that every naira spent on subsidy adds value to the system.”

On his part, the Chairman, Online Hackney Practitioners Association of Nigeria, Mr Emeka Emerole, said the government has taken the right step. According to him, “before removing fuel subsidy, the government is supposed to give a long notice for the people to prepare their minds and come to terms with the new reality.”

THE pan-Yoruba socio-political organisation, Afenifere, also yesterday, faulted the action of the Federal Government to suspend the removal of fuel subsidy. The National Publicity Secretary of Afenifere, Mr. Jare Ajayi, said: “It is unfortunate that we can still be talking of fuel subsidy six years into the administration of President Buhari.”

According to Afenifere spokesman, Buhari and his political party told Nigerians when campaigning to be voted into power that fuel subsidy was a scam. 

“They promised to do away with it if voted into power. Beyond that, the party and its candidates promised to revamp the then comatose petroleum refineries.

“Over six years after the party came to power, the amount being brandied for the subsidy has gone up considerably while none of the four refineries in the country is working,” Afenifere lamented. 

The body maintained that Nigerians are not impressed by the government’s decision to postpone the subsidy removal till further notice.

“It did so not necessarily because it loves Nigerians, but because of the undisguised resolve of the people to resist such unhelpful step,” Ajayi said, submitting that “what President Buhari can do as far as petroleum in the country is concerned, is to get the refineries working. It should also bring the prices of kerosene, petrol, diesel and gas down considerably.”

EARLIER before the announcement by the Federal Government, Femi Falana, a Senior Advocate of Nigeria
(SAN), had warned the administration of President Buhari to drop the plan to remove subsidies on petroleum products.

Falana, who is the Interim Chair, Alliance on Surviving COVID-19 and Beyond, described the planned subsidy removal as anti-people, warning that the Buhari administration should jettison the plan in the public interest or be prepared for a popular uprising.

The senior lawyer made this known in a statement titled, ‘Why Nigerians should join the anti-poverty rallies’.

Falana said it is very disappointing that the Buhari regime has concluded plans to remove subsidies on petroleum products after failing to hasten the implementation of the autogas project.

The statement partly read: “Having failed to fast-track the implementation of the autogas project, the Buhari administration has concluded plans to increase the price of PMS notwithstanding its reverberating effect on the cost of goods and services in the country.

“Another justification for increase is that it will curb the smuggling of fuel from Nigeria to neighbouring countries. The implication is that the people of Nigeria are being punished for the criminal activities of smugglers.

“Since the actions of the Federal Government cannot be justified we are therefore compelled to call on the economically marginalised Nigerian people to participate in the rallies scheduled to hold throughout the country on January 27 and February 1, 2022, at the instance of the NLC as well as the progressive extraction of Civil Society Organisations (CSOs).

“The victims of the neoliberal economic policies of the Federal Government have nothing to lose but their chains.

“Since the rallies are designed to warn the Federal Government to stop further provoking the Nigerian people, it is hoped that all anti people’s economic policies will be jettisoned in the public interest. Otherwise, the regime should be prepared for a popular uprising if it goes ahead to remove the so-called full subsidy or under-recovery in June 2022, or thereafter.”