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  • IMF urges FG to remove fuel subsidy, official exchange rate

    IMF urges FG to remove fuel subsidy, official exchange rate

    Two weeks after the Federal Government suspended the removal of petrol subsidy, the International Monetary Fund has again urged the Nigerian government to stop subsidising fuel.

    The Washington-based lender also asked the Federal Government to remove the official exchange rate

    The Federal Government had on January 24 suspended its plan to remove fuel subsidy this year. It also proposed to extend the subsidy removal implementation period by 18 months, saying it would engage the legislature for the amendment of the Petroleum Industry Act.

    The IMF had in November last year stressed “the need to fully remove fuel subsidies and move to a market-based pricing mechanism in early 2022 as stipulated in the 2021 Petroleum Industry Act.”

    The IMF, in a statement on Monday at the end of its Article IV consultation with Nigeria, said despite the recovery in oil prices, the general government fiscal deficit was projected to widen in 2021 to 5.9 per cent of GDP, reflecting implicit fuel subsidies and higher security spending.

    According to the Washington-based fund, higher debt service to government revenues (through higher US interest rates and/or increased borrowing) pose risks for fiscal sustainability.

    Its executive directors noted that the country’s outlook remained subject to significant risks, including from the pandemic trajectory, oil price uncertainty, and security challenges.

    They emphasised the need for major reforms in the fiscal, exchange rate, trade, and governance areas to lift long-term, inclusive growth.

    The statement said, “Directors highlighted the urgency of fiscal consolidation to create policy space and reduce debt sustainability risks. In this regard, they called for significant domestic revenue mobilisation, including by further increasing the value-added tax rate, improving tax compliance, and rationalizing tax incentives.

    “Directors also urged the removal of untargeted fuel subsidies, with compensatory measures for the poor and transparent use of saved resources. They stressed the importance of further strengthening social safety nets.”

    The IMF welcomed the removal of the official exchange rate and recommended further measures towards a unified and market-clearing exchange rate to help strengthen Nigeria’s external position, taking advantage of the current favourable conditions.

    They noted that exchange rate reforms should be accompanied by macroeconomic policies to contain inflation, structural reforms to improve transparency and governance, and clear communications regarding exchange rate policy.

    The statement said, “Directors considered it appropriate to maintain a supportive monetary policy in the near term, with continued vigilance against inflation and balance of payments risks. They encouraged the authorities to stand ready to adjust the monetary stance if inflationary pressures increase.

    “Directors recommended strengthening the monetary operational framework over the medium term – focusing on the primacy of price stability – and scaling back the central bank’s quasi-fiscal operations.”

    The fund also welcomed the resilience of the banking sector and the planned expiration of pandemic-related support measures.

    The directors agreed that while the newly launched eNaira could help foster financial inclusion and improve the delivery of social assistance, close monitoring of associated risks would be important.

    They also encouraged further efforts to address deficiencies in the Anti-Money Laundering and Countering Financing of Terrorism framework.

    The directors called for stronger efforts to improve transparency of COVID-19 emergency spending.

    The statement said, “Directors noted that Nigeria’s capacity to repay the Fund is adequate. They encouraged addressing data gaps to allow timely and clear assessments of reserve adequacy.

    “Directors emphasised the need for bold reforms in the trade regime and agricultural sector, as well as investments, to promote diversification and job-rich growth and harness the gains from the African Continental Free Trade Agreement. Improvement in transparency and governance are also crucial for strengthening business confidence and public trust.”

  • Rehabilitate Refineries Before Scrapping Fuel Subsidy–CSO Tells FG

    Rehabilitate Refineries Before Scrapping Fuel Subsidy–CSO Tells FG

    By Ya’u Mukhtar

    President of the Civil Society Group for Good Governance, CSGGG, Comrade Ogakwu Dominic, has called on the federal government to revive the country’s moribund refineries before contemplating fuel subsidy removal.

    His call was made during a world press briefing in Abuja.

    In a statement, Comrade Ogakwu noted with worry that, in spite of having four refineries domiciled in Port Harcourt, Warri and Kaduna, the country cannot still refine its crude oil.

    He further expressed concern that, Nigeria cannot afford to continue spending a whopping amount of money yearly to finance the fuel subsidy regime.

    The statement reads in parts…”A key area of concern is Nigeria’s fuel subsidy bill which is growing faster and bigger than what our country’s economy can carry. If you can recall, it was stated recently that the country needs to spend a princely N3 trillion on subsidy in 2022. In the light of this humongous sum, we join well-meaning Nigerians in rehabilitation of the refineries to improve availability of products locally and reduce importation.

    “It is also important that the federal government also ensure that the right policies are in place and improve the country’s domestic refining capacity to meet local demand before subsidy removal is implemented.”

    Dominic further appealed to the Nigerian Customs Service personnel and other security agencies to mount surveillance across Nigeria’s borders to stem the tide of petroleum products’ smuggling to and fro neighbouring countries.

    “We want to use this forum to call on Nigeria Customs Service and relevant security agencies to pay special attention to our land borders in order to mitigate the smuggling of Nigeria’s petroleum products to neighbouring countries.

    ” We are also calling on those involved on aiding and abating the smuggling of petroleum products to desist from this sabotage as the country is bleeding from all its openings and this can no longer be accepted,” he added

  • Fuel Subsidy: FG, Marketers Engage over N3trn Payment

    Fuel Subsidy: FG, Marketers Engage over N3trn Payment

    THE Federal Government has engaged with the Major Oil Marketers Association of Nigeria (MOMAN) over the N3 trillion subsidy payment.

    Chairman of MOMAN, Olumide Adeosun, who confirmed this in Lagos, yesterday, disclosed that members of the association met with Minister of State for Petroleum Resources, Timipre Sylva, last Wednesday.

    He said MOMAN was still seeking further engagement with Mr. Sylva and other government functionaries to understand how the decision would impact the other provisions in the Petroleum Industry Act, PIA and operations in the market.

    He said: “The Major Oil Marketers Association of Nigeria have been approached by members of the press seeking its reaction with respect to the suspension of subsidy removal.

    “The members of the Association are currently seeking to consult with the Ministry of Petroleum Resources, the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other industry stakeholders to understand exactly how this decision would impact the other provisions in the Petroleum Industry Act as well as market operations.

    “Recall, that the reforms contained in the PIA are a combination of several decades of engagement with internal and external stakeholders, capturing local and international best practices to encourage investments in the petroleum downstream sector, optimize costs, ensure transparency, and upgrade industry assets and infrastructure (refineries, depots, pipelines, trucks, and filling stations).

    “The decision having been taken to suspend subsidy removal, the direction of our consultation necessarily would be towards understanding and contributing towards what market philosophy and regulations should be in place during the 18-month period to ensure uninterrupted supply, transparency.

    “This will be in line with long-term objectives for the administration and growth of the industry.

    “Once clarity has been achieved, we shall address a press conference on the issue.”

  • FG must Justify Fresh N3tn Vote, Others for Fuel Subsidy – Senate

    FG must Justify Fresh N3tn Vote, Others for Fuel Subsidy – Senate

    The Senate has said the Federal Government will have to justify the fresh demand for N3tn for the extension of the subsidy on petrol before it is approved by the National Assembly.

    The Chairman of the Senate Committee on Media and Public Affairs, Ajibola Basiru, made this known against the backdrop of the controversy surrounding the actual volume of petrol, which Nigeria consumed daily.

    The government is billed to present executive bills to the parliament to amend the 2022 Appropriation Act and the Petroleum Industry Act, as part of the move to extend the subsidy regime, following the protests that greeted its planned removal.

    Already, the House of Representatives, last week, resolved to investigate the correct daily consumption volume and the actual state of the nation’s four refineries. The Speaker, Femi Gbajabiamila, had set up two ad hoc committees to carry out the probes separately within six and eight weeks, respectively.

    Speaking to one of our correspondents on Sunday, the Senate’s spokesman stated that whatever the executive proposed would not enjoy automatic approval.

    When asked if the Senate would determine the actual volume of products consumed daily before approving the coming requests, Basiru said, “Every request made to the National Assembly will be scrutinised by the relevant committees before we take a decision.

    “We will scrutinise all the requests and see whether they are justifiable or not, in line with our constitutional mandate and oversight function.”

    When asked if it would not be automatic for the National Assembly to approve the requests, Basiru said, “It is not automatic, of course! We will scrutinise whatever they bring and see whether they are justifiable.”

    Chairman of the ad hoc committee set up by the House to determine the actual petrol consumption volume, Abdulkadir Abdullahi, said the panel would commence work this week.

    Following the Federal Government’s decision to extend payment subsidy on petroleum products, as part of the implementation of the Petroleum Industry Act to deregulate the downstream sector, the Nigerian National Petroleum Corporation Limited has presented a bill of N3tn to the Federal Executive Council as a requirement for 2022.

    The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, on Wednesday, disclosed that the FEC meeting presided over by the President, Major General Muhammadu Buhari (retd.), considered the request to provide additional funding for the government to meet incremental fuel subsidy payment in the 2022 Appropriation Act.

    Ahmed noted that only N44bn is presently available in the 2022 budget meant to accommodate subsidies from January to June.

    The minister also explained that with the harsh economic realities on the ground and the dearth of structures to support subsidy removal, the NNPC requested N3tn from the Ministry of Finance for 2022.

    PENGASSAN backs petrol consumption probe, FG yet to begin PIA amendment

    On its part, the Petroleum and Natural Gas Senior Staff Association of Nigeria on Sunday said it would welcome any probe by the National Assembly that would ensure transparency in the downstream oil and gas sector.

    It disclosed this as senior officials at the Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Company Limited stated that the government had yet to start any amendment on the sections of the Petroleum Industry Act that touched on petrol subsidy.

    They told one of our correspondents that the matter would have to be presented to the Federal Executive Council before such an amendment would be implemented, adding that work would, however, begin on the issue soon.

    “It has to be tabled before the President and the Federal Executive Council before the amendment is to be implemented. But a decision has not been taken on the key sections yet,” an official at FMPR, who pleaded not to be named due to lack of authorisation to speak, stated.

    The source added, “This is because there are actually two sections that are to be looked into critically, Section 64(M) and Section 317 Sub-Section 6 of the Petroleum Industry Act.”

    Also speaking on the matter, an official at NNPC said, “There are basically two sections that they are going to look at that directly touch on petrol subsidy. But a decision has not been taken on which one is going to be amended or removed or added.

    “So nothing has been done at the moment but I know they are going to visit it shortly. Right now no decision has been taken on the modality of carrying out this task.”

    Section 64 of the PIA talked about the objectives of NNPC Limited, among which include that the firm would carry out petroleum operations on a commercial basis, comparable to private companies in NIgeria carrying out similar activities.

    Such activities include exemption to Public Procurement Act, Fiscal Responsibility Act and Treasury Single Account, among others.

    Section 317 Sub-section 6 of the PIA stated that “From the effective date, the government on behalf of the federation may request the services of NNPC Limited as supplier of last resort to ensure adequate supply and distribution of Premium Motor Spirit for a period not exceeding six months and all associated costs shall be for the account of the federation.”

    On whether oil workers would support the probe by the National Assembly as touching petrol consumption in Nigeria, the General Secretary, PENGASSAN, Lumumba Okugbawa, told our correspondent that the association would back whatever would bring transparency in the petrol supply business.

    He said, “Any action that will help bring transparency in the oil and gas (sector) will be a welcome development.”

  • FEC Receives N3trn As Fuel Subsidy for 2022 from NNPC

    The federal executive council (FEC) says it has received a bill of N3 trillion from the Nigerian National Petroleum Corporation (NNPC) as payment for petrol subsidy in 2022.

    This is coming after the federal government proposed an 18-month extension for the implementation of the petroleum industry law to cater for subsidy shortfall.

    Zainab Ahmed, minister of finance, budget and national planning, told state house correspondents on Wednesday at the end of the FEC meeting presided over by President Muhammadu Buhari.

    Daybreak had reported that petrol subsidy payments gulped N1.43 trillion in 2021.

    According to Ahmed, a request was presented to provide additional funding to meet the incremental petrol subsidy request in the 2022 budget.

    She said this is because the sum of N443 billion was presently allocated for fuel subsidy in 2022 from January till June.

    She added that with the realities on the ground, including the present hardship faced by Nigerians and the lack of structures to support subsidy removal, the NNPC made a request for N3 trillion .

    “What this means is that we have to make incremental provision of N2.557 trillion to be able to meet subsidy requirement which is averaging about N270 billion per month,” she said.

    According to her, the subsidy payment for 2022 is estimated at N270 billion per month due to soaring oil prices.

    “We also presented to Council today a request for Council’s consideration to make additional funding provisions to enable us to meet incremental fuel subsidy request in the 2022 Budget,” she said.

    “You’ll recall that in the 2022 Budget, as appropriated, we have made a provision of N443 billion for a subsidy for January to June.

    “Having taken into account the current realities; increased hardship in the population, heightened inflation, and also that the measures that needed to be taken to enable a smoother exit from the fuel subsidy are not yet in place, it was agreed by Council that it is desirable to exit fuel subsidy.

    “The Nigerian National Petroleum Company (NNPC) has presented to the ministry a request for N3 trillion as fuel subsidy for 2022. What this means is that we have to make an incremental provision of N2.557 trillion to be able to meet the subsidy requirement, which is averaging about N270 billion per month.

    “In 2021, the actual under-recovery that has been charged to the Federation was N1.2 trillion, which means an average of N100 billion, but in 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because an NNPC’s assessment is that the country is consuming 65.7 million litres per day, now we’ll end up with the incremental cost of N3 trillion in 2022.

    “So, this has been considered by Council and we’ve also been asked to approach the National Assembly for an amendment to the fiscal framework as well as the Budget, to also further discuss with NNPC on how to make provisions for this and also how to rationalize this expenditure.

    “The PIA had required that all petroleum products should be deregulated within six months of signing the PIB into law. And the six months would have meant from August to February.

    “But when we were doing the budget we stretched that to June. So it means technically that from September, there will be a new fuel subsidy.

    “But having to step back and take into account the realities of today, what it means is we have to go back and amend the PIA, so the ministry of petroleum resources will be leading on that. “They had indicated that they will be asking for an amendment to extend it to 18 months from six months. And then it means we can now also amend the budget. So the two processes will go side by side.

    “In the case of the budget, we’re looking at extending to December in the first instance, because this budget year is January to December and we’re going to engage NNPC to further interrogate the request that they presented with a view of trying to see how we can scale it down so that the country is not incurring N3 trillion for a fuel subsidy.”

  • FG Proposes Extension Of Fuel Subsidy Removal By 18 Months, Seeks To Amend PIA

    FG Proposes Extension Of Fuel Subsidy Removal By 18 Months, Seeks To Amend PIA

    The Federal Government is proposing to extend the period for the implementation of the removal of subsidy on Premium Motor Spirit (PMS), popularly known as petrol, by 18 months.

    The Minister of State for Petroleum Resources, Mr Timipre Sylva, announced this on Tuesday while briefing State House correspondents in Abuja.

    He disclosed that the government has concluded plans to approach the National Assembly to amend the Petroleum Industry Act (PIA).

    “We are proposing an 18-month extension but what the National Assembly is going to approve is up to them,” the minister said. “We would approve an 18-month extension and then it is up to the National Assembly to look at it and pass the amendment as they see it.

    “With assent by the President on August 16, 2021, the PMS subsidy removal was therefore expected to take place effective February 16, 2022. However, following extensive consultations with all key stakeholders within and outside the government, it has been agreed that the implementation period for the removal of the subsidy should be extended.

    “This extension will give all the stakeholders time to ensure that the implementation is carried out in a manner that ensures all necessary modalities are in place to cushion the effect of the PMS subsidy removal, in line with prevailing economic realities.

    “The President assures that his administration will continue to put in place all necessary measures to protect the livelihoods of all Nigerians, especially the most vulnerable.”

    Sylva, who chairs the PIA Implementation Committee, stressed that the decision of the executive arm of government to seek an amendment of the law was not politically motivated.

    Rather, he explained that such a move has become necessary to halt the potential suffering of the vulnerable in the society.

    The minister believes other measures such as the Dangote refinery, the Port Harcourt refinery, and other modular refineries will have significantly come on stream by the end of the year.

    According to him, the new PIA provides for unrestricted market pricing for PMS from the effective date.

    Sylva, however, stated that the PIA also envisaged the potential for supply disruption with its resultant effect on the economy.

    “Consequently, it provides for a window of six months from the effective date for the government to request the services of NNPC Limited as the supplier of last resort.

    “This is to forestall supply disruptions and guide market readiness preparatory to migration to the deregulated pricing regime,” he added.

    President Muhammadu Buhari, he stated, has assured Nigerians that his administration would continue to put in place all necessary measures to protect the livelihoods of the citizens, especially the most vulnerable.

  • APC Welcomes Suspension Of Fuel Subsidy Removal

    APC Welcomes Suspension Of Fuel Subsidy Removal

    The All Progressives Congress (APC) has welcomed the Federal Government’s suspension of the planned removal of subsidy on petroleum products.

    According to a statement by the APC, it is commendable that the Federal Government took into consideration the fact that the removal of subsidy at this time will heighten inflation and cause undue hardship on the citizenry.

    While asserting that programmes and policies of government are meant to benefit the people, the APC said that if the timing of the planned subsidy removal would cause hardship on citizens, then a review was necessary.

    “We commend President Muhammadu Buhari for always putting the welfare and well-being of Nigerians first as he has serially displayed in the implementation of programmes and policies of this administration.

    “In line with the new Petroleum Industry Act (PIA), the Federal Government is already putting in place measures, particularly boosting our local refining capacities to reduce the country’s reliance on expensive import of refined petroleum products.

    “This will in due course usher in the eventual and full deregulation of the country’s petroleum sector”.

    The APC commended the cordial and healthy relations between the executive and the 9th National Assembly which it says has ensured good governance.

    “Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, and the Senate President, Ahmad Lawan on the suspension of the planned subsidy removal,” the party added.

  • FG Postpones Fuel Subsidy Removal till Further Notice

    FG Postpones Fuel Subsidy Removal till Further Notice

    The Minister of Finance, Budget and Economic Planning, Hajia Zainab Ahmed, said in Abuja on Monday that the Federal Government had postponed the planned removal of subsidy on petroleum products till further notice.

    Ahmed stated this at a meeting held at the National Assembly.

    The meeting was convened at the instance of the President of the Senate, Ahmad Lawan.

    It had in attendance the Minister of State for Petroleum Resources, Timipre Sylva and the Group Managing Director of the. NNPC Limited, Mele Kyari, among others.

    The Finance Minister said the Federal Government initially had the plans to remove subsidy on petroleum products from July this year.

    She said that was the reason adequate provision was made in the 2022 national budget for subsidy payment till June.

    She said, “Provision was made in the 2022 budget for subsidy payment from January till June. That suggested that from July, there would be no subsidy.

    ” The provision was made sequel to the passage of the Petroleum Industry Act which indicated that all petroleum products would be deregulated.

    “Sequel to the passage of the PIA, we went back to amend the fiscal framework to incorporate the subsidy removal.

    “However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.

    “We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.

    “Mr. President (Muhammadu Buhari), does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.

    “One of these include the roll out of the refining capacities of the existing refineries and the new ones which would reduce amount of products that would be imported into the country.

    “We therefore need to return to the National Assembly to now amend the budget and make additional provision for subsidy from July 22 to whatever period that we agreed was suitable for the commencement of the total removal’

    The Senate President therefore urged the organised labour unions in the country to shelve their proposed nationwide protests as it was no longer necessary.

    The meeting dissolved to a closed session and it was still ongoing as at the time of filing this report.

  • Buhari Not In Support Of Fuel Subsidy Removal – Petroleum Minister

    Buhari Not In Support Of Fuel Subsidy Removal – Petroleum Minister

    The Minister of State for Petroleum, Timipre Sylva, says President Muhammadu Buhari is not in support of the removal of subsidy on the Premium Motor Spirit (PMS), popularly known as petrol.

    Rather, he explained that the Federal Government planned to complete consultations before coming out with a clear policy direction on the matter.

    “I will tell you categorically that at this moment, the complete removal of subsidy is not on our plate at all,” said Sylva during this week’s edition of Channels Television’s Newsnight.

    “The President of the Federal Republic of Nigeria is not in support of removing subsidy at this time,” he said.

    The Minister of Finance, Budget, and National Planning, Zainab Ahmed, had in November last year hinted that Nigeria would effect the complete removal of fuel subsidy in June 2022 and replace them with a N5000-a-month transportation grant to the poorest Nigerians.

    Amid mixed reactions over the issue, the Senate President, Ahmad Lawan, last Tuesday said President Buhari never directed the removal of fuel subsidy.

    NOTE: Watch Newsnight on Channels TV at 9pm on Monday.

    Sylva, on his part, explained that the President’s position in opposing fuel subsidy was predicated on its effect on citizens at the bottom of the pyramid.

    He also identified some of the options the authorities were considering regarding the issue.

    “We are working out the processes,” said the minister. “Of course, we all know that it is a desirable policy direction. Of course, we know that it will have some impacts on the people and that is why we are trying to work out some of those things.

    “Until those details are worked out properly with (the organised) labour, and with all the stakeholders in the sector, we will not remove the subsidy. At this moment, it is not on our plate, I can tell you that.

    “This is something that needs to be worked out between the Federal Government and the states because this is a federation issue. We are working with the governors to see how we can continue with this policy direction of subsidising fuel for the foreseeable future.”

  • Trade Union Gives FG Conditions For Removing Fuel Subsidy

    Trade Union Gives FG Conditions For Removing Fuel Subsidy

    The Trade Union Congress on Saturday gave conditions for the removal of fuel subsidies.

    The Federal Government has hinted that it may end the subsidy programme in June but the move has been opposed in several quarters.

    At the end of its National Executive Council, the TUC in a communique said the government must ensure that local refineries are operational before such a move is implemented.

    While highlighting the “worrisome economic situation and the rising cost of living in the country”, the TUC said both federal and state governments should put in place measures to ensure “food security and infrastructural development.”

    It directed its state councils and affiliates to prepare for “industrial actions” if the government goes ahead with its removal plans without meeting the conditions.

    “The Proposal by National Council of State on the final removal of subsidy on Premium Motor Spirit (PMS) as from June 2022 should take into consideration the attendant economic impact on the masses,” the TUC communique, signed by its President Quadri Olaleye and Secretary-General Musa-Lawal Ozigi, said.

    “There must be assurances that refineries are fully overhauled and establishment of modular refineries encouraged.”

    The trade congress noted that the effective policing of the nation’s borders to stem the rate of petroleum products smuggling must also be implemented.