Nationwide chaos, pain as stakeholders seek caution on subsidy removal
• Tinubu backpedals as NNPC claims FG owes it N2.8tr
• Shettima: Nigerians will soon appreciate FG’s position on subsidy removal
• Marketers divided as MOMAN, IPMAN, DAPMAN back move
• Nigeria’s 36.9m MSMEs, 96.7% businesses face collapse
• TUC, NUPENG reject immediate subsidy removal
• NLC: Instead of hope, Tinubu’s inauguration day brought tears, sorrow
All parts of Nigeria – from the East to the West, North to South – were almost grounded to a halt in a jolt reaction to Monday’s President Bola Tinubu’s inaugural address where he declared that ‘petrol subsidy is gone.’ The pronouncement not only threw the country into chaos, but also left the masses and economy on the edge.
However, owing to the bedlam that followed the announcement, which saw pump price of petrol rise to as high as N1,200 per litre in Ebonyi State and about N600 per litre in some states, President Tinubu yesterday, backpedaled over his stand on the removal of fuel subsidy, stating that the decision will not take immediate effect.
The development, which forced the national oil company, Nigerian National Petroleum Company Limited (NNPCL) to hold an emergency press conference at midnight of Monday to align with Tinubu’s plan, saw the Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Marketers Association of Nigeria (DAPMAN) issuing a statement in support of subsidy removal.
NNPCL had said the decision by the Federal Government to remove subsidy on PMS was necessary, as Group Chief Executive Officer of the company, Mele Kyari, said subsidy removal, which has been a burden on NNPC’s cash flow, would free up funds to enable optimal operations in the company.
But the Independent Petroleum Marketers Association of Nigeria (IPMAN), which services over 70 per cent of the country, as well as Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), which boasts of 8,000 fuel stations, opposed the move, stressing that proper planning is needed to remove subsidy.
With petrol queues persisting yesterday in major cities and black marketers having a field day, stakeholders have warned that apart from the immediate rising cost of transportation and looming increase in the cost of goods and services, the nation’s 36.9 million small businesses, which equally account for 96.7 per cent of all businesses in the country, could face collapse if the new government mismanages the fuel subsidy removal.
Already, state governors are threatening to withdraw Certificates of Occupancy (Cs-of-O) of petrol marketers, who may be hoarding PMS.
The Trade Union Congress of Nigeria (TUC) has also rejected subsidy removal, even as the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) insisted that refineries must be in order before the current administration considers subsidy removal.
A statement by the President’s team, said Tinubu’s declaration, “subsidy is gone” was “merely communicating the status quo, considering that the previous administration’s budget for fuel subsidy was planned and approved to last for only the first half of the year.”
According to the statement, the Federal Government will be without funds to continue the subsidy regime, translating to its termination, adding that the panic buying that ensued as a result of the communication was needless. The president said the removal would not take immediate effect.
For years, fuel subsidies, introduced in the 80s as Nigeria started derailing on local refining, gradually established itself and like a parasite, benefited politicians until it became the biggest pest eroding the wealth of the country.
In the last eight years under former President, Muhammadu Buhari, about N17.5 trillion was spent on fuel subsidies, while N10.5 trillion out of the total spending happened in the last 18 months of the administration.
National President of PETROAN, Dr. Billy Gillis-Harry, told The Guardian yesterday that removing subsidy without adequate planning would compound the challenges already faced by the masses.
According to him, NNPC and Dangote Refineries ought to be running before the Federal Government goes ahead with the plan to remove subsidies, adding that without a countrywide and industry-focused stakeholders’ engagement, the removal would backfire.
Gillis-Harry noted that the removal of subsidy would hit Nigerians harder, adding however that the announcement didn’t come to him as a surprise.
Yesterday, most fuel stations along the Kubwa expressway of the Federal Capital Territory (FCT) had no fuel. While NNPC retailers in the Ketampe area of the expressway were dispensing, A.A Rano, Total, ADFIN, Shema, MRS and others were locked .
While the price remained at N195 per litre in most of the outlets visited, there were long queues that could take motorists up to 30 minutes before getting product.
Along the airport road, most stations like Nipco, Shema, Shafa, NNPC retail were dispensing as black marketers defaced the city, selling a litre for about N500.
PricewaterhouseCoopers’s Partner, Energy, Utilities, and Resources, Habeeb Jaiyeola, said while subsidy removal is hard, it is a needed decision.
The move, according to him, would make the downstream sector business friendly and free from regulations that may have held back the sector for years.
“However, this might result in an increase in general product prices due to increased transportation costs.
General Manager, Corporate Communications at NMDPRA, Kimchi Apollo, stated that the removal of subsidy is in line with the Petroleum Industry Act (2021), which provides for total deregulation of the petroleum downstream sector to drive investment and growth.
“We are working closely with NNPC Limited and other key stakeholders to guarantee a smooth transition, avoid any disruptions in supply as well as ensure that consumers are not short-changed in any form,” he said in a statement from the regulator.
GROUP Chief Executive Officer (GCEO) of NNPCL, Mele Kyari, on Tuesday, said the Federal Government owes the company N2.8 trillion of cash flow from the subsidy regime.
Briefing newsmen after he met with President Tinubu at the Presidential Villa, Abuja, Kyari stressed that the federation can no longer pay NNPC for the burden of subsidy that it was carrying, which it intends to recover from the market.
“Our position is, we are a supplier of last resort to the federation; we are a commercial company, supplying to the federation during the subsidy regime. So, NNPC will not do anything because we are a commercial company. It will not come from NNPC. But I’m aware that the government will do something around this. But the reality is that you cannot give what you don’t have. So, today, the country doesn’t have the money to pay for subsidy.”
Making clarification on when subsidy removal will effectively take off, Kyari said: “First of all, the PIA said that six months after the enactment of the Act, PMS will be priced at its commercial value. So there will be no subsidies six months after the enactment of the PIA. That means by February 17, 2022, there should have been no subsidy on PMS.
“Now, the National Assembly and government, in its wisdom, provided for soft landing in 2022, despite the fact that the provision of the PIA terminated it by February 17.
“So, the government can decide to spend its money anywhere it wants and it can bring succour and relief to its citizens. This is very typical. It happens all over the world. However, the government has not funded that provision in 2022 and also 2023.
“Since the provision of the N6 trillion in 2022 and the N3.7 trillion in 2023, we have not received any payment whatsoever from the federation. That means they’re unable to pay and we will continue to support subsidy from the cash flow of NNPC. That has become very difficult and is affecting our other operations.”
CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, explained that to ease the burden on NNPCL being the sole importer of PMS, it is ready to issue licenses to interested persons. He said the criteria for importing fuel will be the same as those who import kerosene and diesel.
“There are a lot of conditions to be met before you are given a license to import petrol. I cannot give you all of them now. But they are the same conditions to import kerosene and diesel.”
THE Nigeria Labour Congress (NLC) has said that rather than bringing hope to Nigerians, President Tinubu’s inauguration day brought tears and sorrow to millions of Nigerians. The NLC said he equally devalued the quality of citizens’ lives by over 300 per cent.
It, therefore, urged President Tinubu to withdraw his ‘subsidy is gone’ pronouncement during his inaugural speech on Monday, noting that subsidy cannot be removed with fiat without due consultations with critical stakeholders.
NLC President, Joe Ajaero, in a statement yesterday, said the labour movement was outraged by the pronouncement of Tinubu removing fuel subsidy without due consultations with critical stakeholders or without putting in place palliative measures to cushion the harsh effects of the subsidy removal.
Stating that the decision was insensitive, he said within hours of his pronouncement on fuel subsidy removal, the nation went into a tailspin due to a combination of service shut downs and product price hike, in some quarters, representing over 300 per cent price adjustment.
He said NLC is staunchly opposed to the decision and is demanding an immediate withdrawal of the policy, stating that the implications of the decision are grave for the nation’s security and wellbeing.
“It is no heroism to commit against the people this level of cruelty at any time, let alone on an inauguration day. If he is expecting a medal for taking this decision, he would certainly be disappointed to receive curses for the people considering this decision not only a slight but a big betrayal.”
The NLC president recalled the words Tinubu penned down on January 8, 2012 when the then President, Goodluck Jonathan, removed the subsidy. Reproducing substantial parts of the statement, Ajaero advised Tinubu to respect his own postulations and economic theories instead of daring the people, adding that it could be a costly gamble early into his administration.
A Southwest socio-political group, Yoruba Ronu Leadership Forum, yesterday, faulted the hurried removal of fuel subsidy. In a statement, President of the forum, Akin Malaolu, said: “Following the hurried stoppage of subsidy on petrol by the newly sworn in President, the spiral effects are beginning to spread clumsily and dangerously at the moment.
“Not only have fuel pump prices been increased by 100 per cent, the influence of President Tinubu’s hurried decision will increase inflation and equally crash the growth of Gross Domestic Products (GDP).”
Giving its advice to the new administration, the forum said, “President Tinubu must provide alternative sources of energy and power before complete removal of subsidy is implemented; secondly a review of all existing projects including roads, refineries on repairs and a critical overhaul of the railway systems.”
The Trade Union Congress of Nigeria (TUC) has said that if there was anything for the Tinubu-led administration to hurriedly address from day one in office, it is the appalling N30,000 minimum wage that has since been eroded by the problematic monetary and fiscal policies of the government.
In a statement yesterday, TUC President, Festus Osifo and Secretary General, Nuhu Toro, said it was taken aback when President Tinubu announced the withdrawal of subsidy on petroleum products, stating that if he meant increases in pump price and the exploitation of the people by unregulated and exploitative deregulated prices, then it was a joke taken too far.
They expressed worry that the president’s speech failed to reveal his plans on how to tackle and address the issue of poor and unchecked deterioration in industrial relations.
They said this was particularly in the education, health and judiciary sectors, which often resulted in prolonged strikes and industrial actions, as well as their attendant adverse effects on society and the economy.
Stating that the former President Buhari’s government pushed this to the new administration, the union said it expected the new government to be wise on such a sensitive issue and be more explicit in its pronouncement to avoid contradictory interpretation when comparing his written statement with what he said and the provision in 2023 Appropriation Act.
TUC demanded that Tinubu should tarry awhile to give room for robust dialogue, consultation and stakeholders’ engagement, to ensure that they are amicably considered and resolved.
IN Lagos, The Guardian survey revealed that about 80 per cent of the filling stations are under lock and key, while the few stations selling fuel had long queues. Also, the pump prices went up to between N350 and N500 per litre depending on the location. This is over 100 per cent increase from about N185-N195 per litre. The situation got many commuters stranded at bus stops due to indiscriminate hike in transport fares.
In Enugu, it was not certain how much PMS will sell because most filling stations in the state that have products remained under lock and key, apparently in observance of the sit-at-home declared by pro-Biafra agitators to commemorate the 56th anniversary of Biafra declaration. Filling stations selling between N220 and N230 per litre had shut their doors against customers on Monday afternoon when news filtered in that subsidy had been removed.
At one of the filling stations on Agbani road, Enugu, one of the stations that opened was seen selling at N350 per litre. Another station was selling at N370 per litre. Chukwuemeka Ugwu said he bought at N600 per litre at a fuel station in Maryland axis of the state, stressing that black marketers sell at N1,000 per litre.
It was reminiscent of the old order as long queues returned at filling stations in Ogun State, with few dispensing the product at between N400 and N700 per litre. Consequently, commercial motorists and motorcyclists capitalised on the situation to hike their fares, leaving many commuters stranded.
In Delta, queues resurfaced across the capital city, leading to chaos in some stations. A large majority of stations were not dispensing or shut, but many of those selling increased the pump prices from N190 to N650.
Asked why they were selling above the stipulated prices, the station managers, who did not want their names in print, could not advance any cogent reasons. “We are only following instructions,” one simply said.
An attendant in one of the stations simply said: “That is what we are told to sell. We don’t fix prices; we sell as we are told.”
While monitoring the situation in Ondo State, The Guardian gathered that most of the filling stations shut their gates against customers while those dispensing petrol, particularly independent marketers, were selling between N300 and N500.
In light of the situation, the Ondo State government blamed the residents for engaging in panic buying, which resulted in the hoarding of the products by marketers.
The government, through the Special Adviser to Governor Akeredolu on Special Duties, Doyin Odebowale, said the state government was awaiting a further statement from the Presidency on the removal of subsidy.
Kwara State governor and Chairman of Nigeria Governors’ Forum, AbdulRahman AbdulRazaq, has warned oil marketers to avoid hoarding PMS. He said the vice by some marketers is imposing needless hardship on citizens, threatening that his government would not fold her hands under such a cruel situation.
AbdulRazaq, in a statement by his Chief Press Secretary, Rafiu Ajakaye, said the present situation of not selling fuel to motorists without the government increasing the price was totally uncalled for. He urged marketers to promptly dispense fuel to the public under the normal pricing system since they had bought what they currently had at subsidised rates.
“Creating artificial scarcity amounts to an intentional misrepresentation of the statement of President Tinubu on the question of fuel subsidy. The people should not be made to undergo any hardship.
“The Deputy Governor, Mr. Kayode Alabi, will be leading a task force to ensure that no fuel marketer causes undue hardship to the citizens in Kwara. Any station found to be hoarding fuel will have their Certificate of Occupancy revoked, among other penalties.”
Also, governor of Ekiti State, Biodun Oyebanji, has warned petroleum marketers against hoarding fuel, threatening to sanctions any erring marketers. The governor urged the marketers to await further directives on the implementation of the planned subsidy removal by the Federal Government and avoid actions that are capable of inflicting hardship on the citizens.
According to the governor, heavy sanctions await any filing station or marketer found hoarding petroleum product or involved in arbitrary increase in prices of petroleum product in the state.
Despite backlash from Nigerians and Labour leaders, the House of Representatives on Tuesday expressed support for the removal of oil subsidy. The lawmakers, who commended the President for his courage, however, appealed to Nigerians to be patient with the new administration.
The resolution of the House followed a motion under matters of urgent public importance moved at the plenary by Jimoh Ibrahim Olajide (Lagos mainland Federal Constituency).
Following the motion, the lawmakers, therefore, resolved “to salute his courage and boldness to serve our country Nigeria with honesty and integrity. To congratulate him for his readiness for national task ahead and service to humanity and appealed to Nigerians to remain patient, resilient and prayerful so that the President can deliver on his promises.”
Vice President Kashim Shettima on Tuesday declared that the new administration led by President Tinubu, is poised to redefine the meaning and concept of modern governance in the country to facilitate development.
“He is going to provide the leadership and we will rally round him, give him our unequivocally support and loyalty to see to the realization of the Nigerian dream—a Nigeria where every black man in the world should be proud of,” Shettima said when he resumed office at the Presidential Villa, Abuja, Tuesday.
On the controversy trailing the government’s position concerning the issue of fuel subsidy removal, the Vice President retorted: “The president has already made pronouncements on the issue. Truth of the matter is that it is either we get rid of subsidy or the fuel subsidy gets rid of the nation.
“In 2022, we spent $10 billion subsidising the ostentatious lifestyle of the upper class of the society because you and I benefit 90 per cent from the oil subsidy. The poor 40 per cent of Nigerians benefit very little. And we know the consequences of unveiling a masquerade. We will get fierce opposition from those benefitting from the oil subsidy scam.
“But where there is a will, there is a way. Be rest assured that our president is a man of strong will and conviction. In the fullness of time you will appreciate his noble intentions for the nation. The issue of fuel subsidy will be frontally addressed. The earlier we do so, the better.”
Bayelsa State governor, Douye Diri, on Tuesday directed oil marketers in the state against hoarding and raising the price of PMS. This is as residents, commuters, students, civil servants and many Bayelsans were left stranded yesterday morning as they woke up to the sudden changes in the pump price of petrol and subsequent increase in transport cost.
The price of petrol, which was sold at between N195 to N210 in the morning of May 29 suddenly skyrocket to between N400 and N500 in evening and yesterday morning, it went up to between N500 and N700, depending on the marketers.
Diri, in a statement by his Chief Press Secretary, Mr. Daniel Alabrah, warned that his administration will take stern measures against any filling station that flouted the directive.
He said the government had received reports that filling stations in the state capital had hiked the pump price of petrol above the usual price of between N193 and N250 per litre and now being sold at N500 per litre and above.
The Bayelsa governor said it was wicked for oil marketers to swiftly seek to profiteer at the detriment of the people following a mere pronouncement that had not taken effect.
He noted that the pump price of petrol is a significant determinant of the cost of goods and services in the country and that his administration would not allow the people of Bayelsa to suffer undue hardship from the profiteering activities of greedy businessmen.