Oil Subsidy Dilemma: Politics, Cost of Indecision

•Why Buhari Postponed Implementation •Tactical Decision Prevented Disruptions to Economy, Electoral Process •Uproar Over Outrageous N3trn Price Tag

The Federal Government may have found itself in a dilemma over its recent decision to postpone the removal of the oil subsidy regime, which it had fixed for February 2022 after several attempts.

Instead of the expected applause it expected to receive from Nigerians for its volte face on the controversial subsidy regime, the 18-month postponement being put forward has rather exposed the lack of political will by the Muhammadu Buhari Administration to go headlong with a decision many Nigerians had looked forward to as a major reform that it should have embarked upon in its almost seven years in office.

The Nigeria Labour Congress (NLC), which promised to paralyse the nation with mass protests if the subsidy is removed as promised by the Federal Government, also appears to have soft-pedalled as it is now singing another tune over what has been described as yet another victory. However, many observers of the development are not quite impressed with the shifting of the goalpost by the Federal Government over an important decision, such as the subsidy removal, as some have taken it as a postponement of the proverbial evil day.

Only last Tuesday, the Chief Executive Officer, Nigeria Economic Summit Group, Laoye Jaiyeola, while speaking at the launch of the NESG 2022 Macroeconomic Outlook Report in Abuja, said the fuel subsidy, which was “conceived initially as a short-term support tool, has endured over time, thereby becoming a threat to fiscal sustainability.” He however noted that the removal of subsidies on petrol “will come at a cost," adding "Tough reforms are costly and the cost of inactions is also enormous.”

The NESG report maintains that "the abrupt removal of fuel subsidies pronounced on January 1, 2012, led to a week-long nationwide protest and demonstration," stressing that “Since the EndSARS protest in 2020, Nigeria has been in a fragile state and therefore, abrupt fuel subsidy removal might lead to protests that the country cannot afford.”

Jaiyeola however urged the Federal Government to “work to minimise the cost on citizens through direct and indirect interventions," saying, "Implementing subsidy reforms without complementing the policy with effective mitigation measures will only elevate economic hardship for Nigerians and stoke social unrest.”

The International Monetary Fund, which had earlier encouraged the Federal Government to remove the subsidy on petrol, is also calling for caution. The IMF Nigeria Country Representative, Mr Ari Aisen, has advised the Federal Government to take full charge of its reform programmes.

Aisen, who spoke on the decision of the Federal Government to back down on the removal of the subsidy, urged the government to “be in charge of reforms instead of being reactive” and to desist from carrying out reforms only when it is convenient.

With all eyes set on the 2023 general election, the governing All Progressives Congress (APC) may have tactfully postponed the implementation of the subsidy removal under the guise of having the interest of the masses at heart. The speed with which the Nigerian National Petroleum Company Limited (NNPC) also came with a N3 trillion figure as the amount to cover the subsidy for 2022 also gave the government out.

The Nigerian Governors Forum was the first to react, describing the N3 trillion projected as subsidy for 2022 as fraudulent and called for an investigation into the subsidy regime.

The humongous sum of money being put forward also got representatives at the National Assembly furious on Wednesday and Thursday last week as they kept asking questions on the controversial petroleum subsidy to which many Nigerians in their homes and on the streets have been seeking answers for many years. The issue has become a recurring decimal on national life.

On the first day, the Speaker of the House of Representatives, Femi Gbajabiamila, called for an investigation into the stage of the ongoing rehabilitation of the four refineries in Port Harcourt, Warri and Kaduna and the actual volume of petrol being consumed in the country daily, which the Nigeria National Petroleum, Group Managing Director, Mele Kyari, put at 60 million litres.

Sequel to the adoption of the Speaker’s order, two other motions by Minority Leader, Ndudi Elemulu and Ademorin Kuye, (Somolu Constituency, Lagos) were raised and adopted on Thursday.

Elumele’s motion titled, ‘Need to ascertain the actual consumption of Premium Motor Spirit in Nigeria’, noted that “the House was concerned about the large sums of money paid as subsidies and the controversies they have generated,” adding that, “the House was worried that it may not be possible to ascertain the actual sums of subsidy required and being paid without accurate data on the daily consumption of Premium Motor Spirit.”

In the same vein, Kuye’s motion titled, ‘Need to Ascertain the Actual Cost of Rehabilitation of Nigeria Refineries,’ noted “that several billions of dollars of taxpayer’s money have been expended into the Turn Around Maintenance and rehabilitation of the nation’s refineries without any productive outcome.

“The House observes that past government efforts have been sabotaged by variation costs from partners or lack of proper project costing and analysis.”

While the members of the lower chamber of the NASS were doing the work they were elected to do, another telling drama was playing out at the Lagos State High Court sitting in Ikeja, Lagos. There, on Wednesday, the Chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa was undergoing cross-examination as the fifth prosecution witness in the ongoing trial of Abubakar Ali Peters and his company, Nadabo Energy Limited, for an alleged N1.4billion oil subsidy fraud before Justice C.A. Balogun.

The EFCC is prosecuting Abubakar and his company on a 27-count charge for allegedly using forged documents to obtain N1, 464,961,978.24 from the Federal Government as oil subsidy, after allegedly inflating the quantity of Premium Motor Spirit, PMS, purportedly imported and supplied by the company.

Under cross-examination by the defence counsel, E.O. Isirame, Bawa, who has been mounting the dock on this case since December 20 2021, said, among others, "This is the bundle of documents submitted by the defendant to the PPPRA, which we requested from the agency for the certified true copy and they obliged us.

“The covering letter as seen in Exhibit B was signed by Ted Okonkwo, Head, Port Harcourt Zone of PPPRA,” whom he said, “acted, to the best of our knowledge, based on the documents available to him and information received allegedly. Through our investigation, we found out that the content of the documents submitted, including a letter written by Masters Energy to PPPRA that the defendant discharged 14,000MT equivalent to about 19,000,000 litres of PMS in their tank farm is false. From our findings, some documents from the Department of Petroleum Resources (DPR) were also false.”

Nadabo and company have pleaded "not guilty" to the charges.

When THEWILL asked EFCC’s Head of Media and Publicity, Wilson Uwujaren, whether the Commission would charge DPR and PPPRA officials along Nadabo, for complicity, he drew a blank.

“The matter is in court and the EFCC cannot decide what is already before the court,” he replied. The kernel of the question centered on why relevant government agencies would agree to pay without verification and authentication. Attempts to reach officials of Midstream and Downstream Petroleum Regulatory Authority of the NNPC failed as nobody said a word.

Last week, a national newspaper quoted a lawmaker as saying: “We cannot believe NNPC’s claim that Nigeria consumes over 65 million litres a day. It is outrageous. All of them (stakeholders, NNPC officials, oil marketers) will be summoned to explain what is happening. We also hope to summon customs and others to explain how petrol is being smuggled out of the country. Are petrol tankers going through bush paths?”

EXPLAINING THE DECISION?

That same Wednesday, revelations emerged on why the Federal Government, which had a few weeks ago set June 2020 as the target date to end payment of fuel subsidy amid the provision of palliatives of N5, 000 to 40 million poorest of the poor Nigerians, transportation subsidy, ate its own words, just like previous governments before it did in the past 40 years.

In an interview on Channels Television’s ‘Sunrise Daily’ programme on that same Wednesday the House and Bawa were dealing with the now controversial petroleum subsidy removal or continued payment, the Special Adviser to the President on Media and Publicity, Femi Adesina said: “If that subsidy had