Confusion in Buhari’s govt over fuel subsidy

With exactly one month to the end of its tenure, the President Muhammadu Buhari-led federal government appears confused over whether to end or continue the provision of subsidy for Premium Motor Spirit (PMS) otherwise known as petrol, as the administration is currently speaking from both sides of the mouth.

Last Thursday, the National Executive Council (NEC) presided over by Vice President Yemi Osinbajo, at the end of its meeting, announced the suspension of the initial plan to remove the subsidy in June, stressing that the timing was wrong and that the incoming government would be left to implement it, reports The Guardian.

Minister of Finance, Budget and National Planning, Zainab Ahmed, who briefed reporters after the meeting, said: “Today (Thursday), I was in the NEC, where we discussed the issue of post-subsidy removal. Council agreed that the timing for the removal of subsidy should not be now, but that we should continue with all of the preparation works that needs to be done and that this preparation work has to be done in consultation with the states and other key stakeholders, including representatives of the incoming administration.”

However, in a counter statement yesterday, the Minister said there was “no change in the overall policy direction regarding the petrol subsidy envisaged by June 2023.”

The statement, which was signed by her Special Adviser, Media and Communications, Yunusa Tanko Abdullahi, noted that, “by the principles and letters of the 2023 Appropriation Act and the PIA laws, there is no provision for subsidy after June 2023.”

He noted that some members of the incoming government were “brought into the National Economic Council (NEC) meeting so as to consolidate on that decision of fuel subsidy removal.”

Abdullahi insisted that the government “has not suspended the removal of fuel subsidy, but has rather expanded the subsidy removal committee to include teams from the incoming administration and the state governors.”

The Subsidy Removal Committee currently comprises the Ministry of Finance, Budget and National Planning, Ministry of Petroleum Resources, Nigerian National Petroleum Company (NNPC) Limited, the downstream and upstream regulators, Central Bank of Nigeria (CBN) and the Chief Economic Adviser to the President.

He added: “We agreed to form an expanded committee that will be looking at the process for the removal of the subsidy, including determining the exact time as well as the measures that need to be taken to provide support to the poor and the vulnerable. There is also the need to agree on alternative measures that will be put in place to ensure that there is sufficient supply of petroleum products in the country.”

This came as fuel marketers expressed fears that the government had no clarity over the June 2023 deadline, warning that without a proper plan, there could be a crisis that may worsen existing challenges in the country.

Stakeholders, who spoke with this paper yesterday in separate interviews, questioned the sincerity of the Buhari administration regarding the removal of subsidy as they observed that only an unserious government would announce a policy without proper implementation plan.

They insisted that the federal government, which had opted for a loan of $800 million as palliative, ought to have designed a proper plan to every contentious area of the removal instead of merely transferring the burden to the incoming government.

It was earlier reported that, if the government decides to go ahead with the suspension, the country may require another N3.5 trillion to finance the PMS subsidy scheme.

While the government had been silent on the development until stakeholders started raising the alarm, this paper reported that as much as $15 billion would be required to import the white product as alternatives that would cushion the removal are not in place.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) yesterday said the country could be thrown into crisis if the government goes ahead to enforce the June date for subsidy removal.

A top management member of the association, Abubakar Shettima, said the country’s refineries were operating at zero capacity and that the country did not put in place alternatives that would address the fallout of the removal.

Shettima said the president was yet to fulfill initial promises made to the marketers in the areas of funding that would expand auto gas infrastructure in the country to serve as alternatives to subsidies.

“We have not received an official memo from the government over the situation. We are only reading things in the media about the two positions. We are still waiting to hear from them officially.

“Our position has been that it is the wrong time. As a country, our refineries are not functioning; there is no palliative for marketers. We don’t think any wise government will go ahead and remove subsidies in June,” Shettma said.

Executive Secretary of the Major Oil Marketers of Nigeria (MOMAN), Clement Isong, stated that the incoming government, which had promised to remove subsidies, remains in the best position to plan and implement the policy.

“It is a reasonable thing to do. We know that the incoming government has said they will remove subsidies. The removal has to be done properly and the new government is in the best position to plan it for accountability and transparency,” Isong said.

He urged the incoming administration to embark on proper consultation to avoid a flop in the implementation.

Former chairman of MOMAN, Tunji Oyebanji, said marketers were in the dark as to how the federal government intends to manage the imminent deregulated market and feisty Forex crisis.

“We are saying that there has to be a very clear roadmap so that all stakeholders can be carried along. For me, this is very critical.

“For example, at the point we will remove subsidies, will other products be imported? We can’t wait until the day subsidy will be removed before we know. If they are importing we need to have placed an order. If NNPC will be importing, we need to know. Everyone needs to be on the same page,” Oyebanji said.

National President of Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr. Billy Gillis-Harry, said the government must find a way to reach consensus on the matter to avoid uncertainty.

“Stakeholders’ meeting has not happened. We need to ensure the refineries are working. We need to increase the stakeholders’ participation.

“I hope that we will reach a consensus. We can’t continue to do things in the same way. The only way to go is deregulation. We wish and hope that they listen to the operators. It is the government’s policy so we have to wait and see what they will arrive at,” Gillis-Harry said.

On his part, renowned professor of Petroleum Economics and Policy Research, Wunmi Iledare, said the prevailing situation was a reflection of lack of a sustainable plan to minimise the initial shock subsidy removal brings with it.

“The solution is to implement PIA wholly and avoid selective implementation as pleasing to politicians,” he said.

Founder of Nextier, a public policy advisory, Patrick Okigbo, said while fuel subsidy is like an addiction to cocaine, the addict knows that ruin lies at the end of the day unless they shed the habit.

“The withdrawal process is painful and usually long. This pain causes many addicts to postpone the start date of their recovery. The postponement does not make the pain go away; they simply kick the can down the road. The addict must face the pain or they will surely face the ruin. Nigeria must deal with the withdrawal pains or we will all die from this addiction,” he noted.

The Executive Director at the Centre for Transparency Advocacy, Faith Nwadishi, said the current confusion was worrisome, stressing that there was need for clarity.

Nwadishi noted there was need to remove subsidy, which she described as thievery, adding however that a concrete plan was necessary for the removal.

She noted that the current government had all the time to put a proper plan in place regarding the removal, stressing that the government must also explain what would be done with the loan that has been collected from the World Bank for palliative purposes.

For an energy expert at the University of Lagos, Prof. Yemi Oke, it was shameful for the country to be faced with the policy inconsistency.

He said there was a need to remove subsidy, adding that the scheme is roped in corruption and an extension meant that the corruption would continue.

“Whether the timing is appropriate, it is not what to debate. It is for the incoming administration to decide whether to continue with the subsidy. The incoming administration has said they will discontinue subsidy. The outgoing administration should not force its way on the matter and they should not incur further financial liability for the incoming government, especially in respect of palliative,” Oke said.



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