Buhari’s Parting Gift

Finally, what started during the Iranian crises of the 70s as a cushion for Nigerians now has a definitive expiring date – June 2023. It all started in the days when a dollar exchanged for around 80 kobo, and Nigeria produced almost all her needs, including cars. During those years of the windfall, all our refineries were producing, such that the country even exported petroleum products. In those days, brake pads, tires, and windshields were manufactured here, and our refineries were working. But that was some eons ago when patriotic Nigerians were allowed to roam freely, making their marks in every industry. Over the years, the issue of fuel subsidy has turned out to be a controversial public policy. In recent times, the issue of fuel subsidy in the annual budget has transformed into a national headache that only borrowing can assuage. From the outset, fuel subsidy was never meant to be normative, but then, corruption was not a thing in Nigeria at that time. However, since that time, multi-faceted corruption has gradually but surely hemmed Nigeria in on every side: corruption in the NNPC, as well as corruption in the Ministry of Petroleum Resources, and of course, general corruption in every past administration to date. Due to corruption the country now survives only on the oxygen of debt.

Last year, there was uproar when the NNPC made a request of N3 trillion from the Ministry of Finance to cover fuel subsidy for 2022, but the lack of transparency in terms of how N2.565 trillion was spent for the same policy between January and August 2022 has only been met by an unholy silence. Surprisingly, the projected spending in the 2023 budget from January to June is a whooping N3.36 trillion – clearly, this is not sustainable by any stretch, and experts, politicians, and even ordinary  Nigerians agree. Nevertheless, this humongous figure deserves interrogation. For instance, what is our daily petrol consumption? To put this question into its proper context, consider the response of the comptroller-general of the Nigeria Customs Service (NCS), Hammed Ali during an appearance before the House Representative Committee on Finance on the 2023-2025 medium-term expenditure framework and fiscal strategy paper (MTEF/FSP) in September, he said: “The issue is not about the smuggling of petroleum products. I have always argued this with the NNPC. If we are consuming 60 million litres of PMS per day by their own computation, why would you allow the release of 98 million litres per day? If you know this is our consumption, why would you allow that release?”

“So, how did you get to 60 million litres per day? That is my question. The issue of smuggling, if you release 98 million litres in actual and 60 million litres are used; the balance should be 38 million litres. How many trucks will carry 38 million litres every day?” In this response lies the crux of the matter, because this high volume of consumption forms a major plank of the government’s argument. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had put Nigeria’s daily consumption of premium motor spirit (PMS) at 66 million litres as of September 2022, but in May 2022, the NNPC reported a daily consumption of 93 million litres. Is the difference reconcilable? I doubt. In recent memory, the time of Dr. Ibe Kachukwu as Minister of State for Petroleum Resources was the only time, Nigerians saw a semblance of transparency in daily fuel consumption figures.

These ghost figures lend credence to the idea that petroleum industry cabals and the Nigerian rich are the only ones benefitting from the current subsidy regime. Conversely, should the poor suffer because of criminal-minded oil tycoons? This columnist is in full support of the removal of fuel subsidy to forestall a state where Nigeria becomes insolvent. However, out of laziness or outright wickedness, previous governments, and Buhari’s government in particular, have been unable to put structures in place that would seamlessly ease the country into an era of full deregulation. Besides, deregulation should be orchestrated in such a manner that the poor are protected against monopolies and oligopolies. All political parties and the majority of people in decision-making positions in the country agree that the current subsidy regime is untenable. All the Presidential Candidates have voiced their commitment to remove fuel subsidy if elected, to this end, former Vice President, and Presidential Candidate of the PDP, Atiku Abubakar was saying he would do away with fuel subsidy in 100 days if elected. In light of the 2023 budget, Atiku’s commitment is inconsequential, in that the outgoing president has already done the heaving lifting. But, at what cost?

According to the Finance Minister, Zainab Ahmed: “The plan is, by June 2023, we must have completely exited subsidy, and it has to be gradual.” So, how gradual has it been since last year? In fact, Nigerians have been witnessing a gradual suffocation thanks to Buhari and his team. The gradual suffocation is intended as a prelude to NNPC’s projection that fuel would sell at around N462/L when subsidy is removed in June 2023. However, with all the comparisons that have been made in the past regarding the price of fuel in neighboring countries, a reasonable estimate might be N700. It is an irony, that a man who, eight years ago as a private citizen commented that fuel subsidy do not exist, is ending the same policy after spending more than N10 trillion during his tenure. So, did he lie in 2015, or, was it a case of finding oneself in the belly of the beast (cabal)? We may never know.

At the minimum, before the Federal Government can remove fuel subsidy importation should have been away with. At least, the Port Harcourt Refinery that is being refurbished, and the newly built $19 billion Dangote refinery must have started production. Secondly, the Gas – to – Fuel policy conceived in 2020 by the Buhari administration ought to have been completed, or accelerated. Thirdly, mass transit systems ought to have been deployed in every major city (Lagos is already light years ahead of most major Nigerian cities in this regard). This was the ‘Change’ we expected when Buhari won in 2015. Then again, has he actually failed, or is he plain wicked? If you follow the news the way I do, you might notice that something does not add up. For example, the 650, 000 bpd Dangote refinery was projected to be completed in the third quarter of 2022, but that date has been moved to mid-2023. Interestingly, at full capacity, the refinery can produce up to 50 million litres of petrol per day. Secondly, Phases 1 and 2 of the rehabilitation of the Port Harcourt Refineries will restore a processing capacity of 189,000 bpd as of December 2023 which will inject more than 14 million litres per day. Thirdly, some modular refineries are already producing. Undoubtedly, this might sound like a conspiracy theory, but numbers don’t lie.

Clearly, the NNPC monopoly is being primed to give way to the oligopoly of Dangote and BUA in the petroleum industry. Ordinarily, there is nothing wrong if these Nigerian giants are the major players in the petroleum downstream, except that since the deregulation of the cement industry, their activities in the industry have not been very favorable to Nigerians in general. For instance, a 50kg bag of cement sold for as low as N2000 in 2014, and then N1500 in 2015. However, since that time, the price of cement has continued on an upward trajectory to its current price of N5000 per 50kg bag even though the product is manufactured in Nigeria with Nigerian raw materials. Another case in point is the unbundling, and deregulation of the power sector; a situation where supply is epileptic and quality of service remains abysmal, yet Nigerians are compelled to bear unmitigated tariff hikes and humongous electricity bills. Sincerely, had President Buhari made good on his promises, subsidy removal would have been a non-issue. Sadly, with half-truths, and ineptitude his administration has thrown the millions who voted for him under the bus.

Indeed, President Buhari has brought change, albeit a retrogressive kind that is virtually hard to imagine considering where the country was in 2015 and the fact Nigerians did not put up a fight in petroleum pricing. His failure reminds me of my good-natured History teacher, Mr. Similalayim Jaja, who was fond of retorting, “If you don’t know it, you don’t know it” during his tests. Apparently, his promises in 2015 were irredeemable promissory notes at best, but removing fuel subsidy after eight years without getting the refineries to work, or improving mass transit systems in the country is the worst parting gift.

By: Raphael Pepple