Stakeholders in the oil and gas industry have warned the Nigerian government that the issue of subsidy needs urgent resolution if not Nigeria will suffer severe economic dislocation.
A former group executive director of the Nigerian National Petroleum Corporation (NNPC), Godswell Ihetu, said that the country’s present financial position does not favour sustaining subsidy in whatever form.
He said government would do itself a lot of good by discontinuing the malaise called subsidy which only benefits only a few.
“We must continue the campaign to remove petrol subsidy. The benefits are clear.
Kerosene and diesel price subsidy have since been removed and the heavens did not fall. Most low-income households use kerosene.
All heavy-duty trucks use diesel. Corporate bodies and Upper and low-income families use diesel. Why can’t we deregulate petrol.” He said.
According to him, the Nigerian downstream oil and gas industry under the present price control regime is over-regulated and inefficiently regulated, stating that the situation encourages fraud and corruption as well as promotes inefficiency and unsafe business practices.
He said the government has effectively used Nigerian taxpayer funds to subsidize petroleum consumption in West Africa and discourages investment in the downstream sector by responsible investors who are expectant of proper returns on investment.
Talking about subsidy, also another former top officer of NNPC Bello Rabiu said that unless our refineries are working at capacities between 60 to 80 percent after rehabilitation Nigeria would still be importing refined products.
He, therefore, advocated for immediate removal of subsidy and allowing for deregulations of the downstream.
The government should put in place a programme that would facilitate equal access for foreign exchange for oil marketers to import pending full development of local refining capacity and also limiting the importation of petroleum products to Marketers with sizable investments in Nigeria.
The emergence of a single robust regulator for the sector to promote safety and sustainable business practice, as well as encouraging of the Federal Competition and Consumer Protection Commission( FCCPC) to ensure proper competition in the sector.
In his own comment Clement Isong, the executive secretary of the major oil marketers association (MOMAN),he said that amending the Petroleum Industry Act (PIA) would have ramification on the downstream sector of the oil and gas industry.
He said the government needs to create an operating environment that would encourage entrepreneurs to invest in the country.
Following the suspension of the planned fuel subsidy removal, the Nigerian National Petroleum Corporation (NNPC) has requested the sum of three trillion naira (N3,000,000,000,000) as fuel subsidy for 2022.
Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed who disclosed after the Federal Executive Council meeting on Wednesday, January 26, 2022, said, “In 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because NNPC’s assessment is that Nigeria is consuming 65.7 million litres per day, that we would end up with an incremental cost of N3 trillion in 2022.
According to the minister, the Federal Government currently spends about N270 billion per month on fuel subsidy, adding that the FG would have to make an incremental provision of N2.557 trillion to meet subsidy requirements for the year.
She further disclosed that only N443 billion is presently available in the 2022 budget meant to accommodate subsidy from January to June.
The minister also explained that the current realities on the ground including lack of structures necessitated the NNPC to make the request.
Ahmed, however, revealed that the NNPC request was considered by the council.
She added that the council has directed her ministry to approach the National Assembly for an amendment to the fiscal framework as well as the budget.
