FG May Remove Fuel Subsidy This Week | Independent Newspapers Limited
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FG May Remove Fuel Subsidy This Week

Posted: May 10, 2016 at 5:02 am   /   by   /   comments (0)


…Labour Vows To Resist ‘Unholy Plan’




Indications emerged on Monday that the Federal Government may this week remove fuel subsidy, albeit surreptitiously, to allow independent marketers resume importation of fuel and sell at profitable margins.

The discreet full deregulation, sources said, is expected to halt the unending fuel shortage across the country that keeps motorists queuing to get petrol.

The Nigerian National Petroleum Corporation (NNPC) has been the sole importer of petrol for months because independent marketers have been unable to buy dollars at the Central Bank of Nigeria’s (CBN) rate following the reduction of the nation’s foreign reserves.

The nation’s four refineries have a collective 445,000 bpd installed capacity. Nigeria produces 2.1 million barrels of crude oil a day, but has to export due to lack of working refineries.

Sources privy to the government policy noted that a minimum of 27.17 percent hike has been canvassed. If it follows through, they said the pump price of petrol may fall to about N110 per litre at NNPC-owned filling stations and higher at independent outlets.

They disclosed that the Federal Government would tactfully allow marketers to gradually adjust their pump prices, signaling take-off of full deregulation in the country.

It would be recalled that in July 2015, President Muhammadu Buhari noted that touching the price of petroleum products would trigger price increases on transportation, food and rent.

He had said it will affect salary earners and many Nigerians who are jobless, assuring that his government would handle the issue of fuel subsidies with care.

“When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rents. That is for those who earn salaries, but there are many who are jobless and will be affected by it”.

Buhari had said insecurity, sabotage, vandalism, corruption and mismanagement, not necessarily subsidies, were the most serious problems of the nation’s oil sector.

“We have to go back to the good old days of transparency and accountability”, he noted.

The administration of former President Goodluck Jonathan had announced the removal of subsidy starting from January 1, 2012. At that time fuel was to sell at N141 per litre. The series of protests that greeted the announcement forced the government to backpedal and introduced what it described as partial subsidy.

Reacting, Comrade Ayuba Wabba, the president of Nigeria Labour Congress (NLC) warned the Federal Government against removing subsidy on petroleum products through the back door, saying organised labour will resist such move.

He said the congress is monitoring recent reports from the media that the government was planning to remove subsidy through the back door, adding that any price fixed for the products now by the minister as a result of planned subsidy removal will be illegal since only the Petroleum Products Pricing Regulatory Agency (PPPRA) has the right to fix prices.

“In the past few days, we have heard discordant tunes from government officials and chieftains of the ruling All Progressives Congress (APC) through the media on what the future portends for the prices of petroleum products and the management of the subsidy scheme. We want to make it clear that the organised labour will resist removal of fuel subsidy through the back door”, said Wabba.

Comrade Bobboi Kaigama, TUC president, who expressed anger at the decision to remove fuel subsidy through the backdoor at a time of economic hardship in the country, accused the Federal Government of not using market forces as parameter for taking market price decisions.

“Organised labour will have no option than to resist whatever unholy plan by government to remove subsidy”, he said.

He, however, advised the government to take a cue from the immediate past administration of President Goodluck Jonathan, which, he said, consulted widely on the use of fuel price savings for infrastructural development under SURE-P where, he stated that all stakeholders are represented in the management of the fund.

However, Mr. Femi Olawore, the Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), in a telephone chat with Independent, said what the members of the association have been clamouring for is full deregulation of the sub-sector.

“We are in support of full deregulation. That is what we have been advocating. Deregulate of the sub-sector and let those who know how to do the business do it.” On the lot of Nigerians if the price of petrol goes up after deregulation, he said he could not understand why people always talk about price going up without considering the benefit the deregulation of the sector would bring.

“I don’t know why people always talk of price going up without thinking of the benefits they will derive from it. About two to three weeks ago that the price of petrol went up and the product is not even available, is that the type of situation people want?

“If price goes up, the forces of demand and supply will meet at a point and will force the price to come down,” he explained.

Muda Yusuf, Director General, Lagos Chamber of Commerce and Industry (LCCI), said government should liberalise the petroleum sector to allow private sector buy and sell petroleum products at the market price.

“We are not in support of government fixing the price of petroleum product but to liberalise the market for the private sector to run the industry. It is only then that we can enjoy the product at market price”, said Yusuf, who noted that price increase is not the answer to the problem of petrol.

Another expert in the oil and gas industry, who craved anonymity, told Independent that if government could allow marketers to import fuel and sell according to the dictate of the market, the industry would be better for it.

He said that would mark the beginning of deregulation and it will affect the industry positively as marketers will no longer have to tie their money down unnecessarily or be waiting for subsidy to be paid.

“That would mark the beginning of deregulation and it will affect the industry positively as marketers will no longer have to tie their money down or wait for subsidy.

“You buy and sell at your own price with government acting as regulatory agency.

“The industry will grow and there will be availability of product,” he said.

On the implication on price and how it will affect Nigerians since there is every likelihood that the price of petrol will go up if marketers are given free hand to import and dictate the price, he said Nigerians would learn how to manage the product to avoid wastage.

“Nigerians will have to learn how to manage the product. Unlike before when a man will take a car and the wife will take another, to minimize cost they will find a way to manage themselves in one car,” he said.

Meanwhile, motorists and consumers in Lagos embarked on panic buying of fuel on Monday as rumours of government’s plan to jerk up the pump price filtered into town.

Independent reports that many major marketers hurriedly closed their shops to customers immediately the news spread across Lagos that government will announce new petrol pump price.

Some dealers said in confidence that they have to close shops to avoid any loss that may arise from the new price or sanction from the regulator if they failed to adjust their metres to comply with the new price.

“We have information that government is going to announce new pump price of fuel and we don’t want to be caught unawares, so we have to stop selling to know the new price from government. It is dangerous to keep on seeing like that when government is set to announce new price because the regulator could penalise dealers that sell above the normal price”, a dealer noted on Monday.

At Fowobi Petrol station in Ota, Ogun State, on Monday petrol was selling at N130 per litre while Mobil Petrol Station at Onipanu, Ogun State, which had always sold fuel at N86.50k regulated price could not sell the product because of the rumoured fuel price increase.