Subsidy Regime Corruption-Ridden, NNPC Insists

The Nigerian National Petroleum Corporation (NNPC) yesterday defended
the federal government’s decision to remove the subsidy on petrol,
insisting that allowing market forces determine practices was in the
overall interest of the poor.

Group Managing Director of the corporation, Malam Mele Kyari, who
spoke when he appeared on a live TV programme last night, posited that
petrol subsidy was corruption-ridden and only served the interest of
the elite.

Kyari said the move to deregulate the market took a long while because
it was difficult convincing President Muhammadu Buhari to sign off on
the move because he (Buhari) was worried that the poor would be
negatively affected by higher prices.

He said: “Petroleum subsidy has been a big issue for over 20 years.
Every corruption you are aware of in the downstream sector of the
industry is in one way or the other connected to fuel subsidy.

“Several licences were given to people to build refineries across the
country and none could deliver, maybe only just a few. The reason is
very simple because people are not sure when you produce petroleum
product what price they are going to sell.

“Because we know that those prices are not market-determined and there
will be a subsidy element in it, everybody failed to deliver on it.
The end result is that this burden is left to the NNPC and the
government as a whole.”

The NNPC boss argued that the anger being expressed by the people due
to the growing prices of the product may be justified but noted that
it was grossly misplaced.

“Government has to provide for that gap that exists. It’s easy for
people to get angry that prices have gone up. Just like other
commodities because there can be challenges that people will naturally
face,” he said.

According to him, the brunt of the sleaze in the subsidy system was
borne by the poor who he said are being misguided by the elite who are
gaining from it.

Kyari said: “Only a Buhari regime can make this decision. People will
not appreciate the fact of the lost opportunity because you are
spending an enormous amount of resources, over N10 trillion spent in
the last eight to nine years, all trying to service that. That also
includes the element of forex lost to it.

“Subsidy is an elitist thing. Only the elite have three, four, five
cars. They have many cars in their houses and fill their tanks. The
ordinary man loses in infrastructure, hospitals are not built, and
schools are not built. Ultimately, the brunt of corruption is borne by
the ordinary man.

“Overall they lose everything and get nothing. The anger is coming
from those who are not aware they are being cheated. They are being
engineered to do those things.

“The outburst is understandable but misplaced because Nigerians are
not aware of the opportunities lost.”

On why the president delayed before approving subsidy removal, he
said: “The reason it took that long is the persuasion of the president
who is a pro-people president. He shares this personally that ordinary
people should not suffer because of the acts of people in government
or institutions.”

Kyari further disclosed: “There’s a difficult conversation in
government to see how we move from this situation to a situation of
reality without hurting the ordinary people, adding that “until very
recently, the president was not convinced that we should make this
move.

“It’s clear we can’t afford it anymore. Ordinary people deserve more
infrastructures. We need to free up resources. It was a difficult
decision for the president but it will unleash activities in the
sector.”

He maintained that with the decision, more jobs would be created, more
schools would be built, stating that the long term benefits outweigh
the immediate pain.

Asked if there were palliatives to cushion the impact of the hike in
fuel prices, the GMD noted that with the economic sustainability
programme, small scale businesses, among others, will have access to
about N2.7 trillion.

He said the national oil company was engaging the Central Bank of
Nigeria (CBN), adding that “within a very short time, oil marketing
companies will have access to forex just like the NNPC.”

He said currently, all the four refineries have been shut down
deliberately because “delivery of crude oil is challenged and
compromised,” and can’t function at full capacity.

Kyari explained that the corporation was conducting full
rehabilitation and would, thereafter, operate a Build, Operate and
Transfer (BOT) model.

Marketers Tip Nigeria to Become W’Africa’s Refining Hub

Meanwhile, major marketers yesterday listed the gains of the
deregulation policy, which include making Nigeria the refining hub for
West and Central Africa and a net exporter when the policy blossoms.

The marketers spoke against the backdrop of the deregulation and
liberalization of the petroleum downstream sector, which has made the
federal government hands off petrol price-fixing with the marketers
determining the cost of the commodity.

However, the National Chairman of the Peoples Democratic Party, Prince
Uche Secondus, has restated opposition to the policy that has
triggered a higher price regime for petrol, accusing President
Muhammadu Buhari and the All Progressives Congress (APC) of failing
Nigerians.

But the ruling party took on the PDP and former Vice President Atiku
Abubakar, who had earlier faulted the high petrol price under
deregulation, saying they were being hypocritical in their assessment.

The marketers, under the aegis of Major Oil Marketers Association of
Nigeria (MOMAN), stated in a statement yesterday that the new federal
government’s policy on alternative energy as well as the coming on
stream of new modular refineries would help in actualizing the
national dream.

The Chairman of MOMAN, Mr. Adetunji Oyebanji, who issued the
statement, also said deregulation could help Nigeria to shift to
alternative energies such as gas and solar energy.

He said Nigeria must ensure the development of green alternative
energy sources and encourage the people to use it.

According to him, cheaper and cleaner alternatives to petrol and
diesel must be provided to the public, especially as full deregulation
of the Nigerian petroleum downstream sector commenced.

Oyebanji added that the association was also supporting the gas
initiatives of the federal government and keying into the autogas
policy to give Nigerians a cleaner and a greener alternative to power
their automobiles, homes and other equipment.

“The idea of deepening the use of gas comes at a very auspicious time
as we grapple with increasing petrol prices due to the deregulation of
the petroleum downstream sector,” he said.

He stated that the imperative to develop CNG and cooking gas as
alternatives to petrol and other fuels had never been more critical,
especially with the recovering crude oil prices and the rising demand
of refined products ahead of the winter months in Europe.

The statement said: “Using other countries where gas has been adopted
and integrated as an alternative auto fuel as case studies, gas
requires government support and interventions to take root. The gas
value chain is awash with opportunities for new investment, skills
development and enhancement of our local public transportation
infrastructure.

“Clear policy directives and legislative framework aimed at generating
demand, as well as Customs duty and tax waivers will be required and
fast-tracked to jump-start the sector and attract investment into the
gas space.

“Nigeria, being a gas country must be able to benefit locally from its
abundant gas reserves and transfer the advantages to the Nigerian
consumer.”