Articles by "Fuel Subsidy"
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Maikanti Kacalla Baru
President Muhammadu Buhari on Monday approved the appointment of Dr. Maikanti Kacalla Baru as the new Group Managing Director of the Nigerian National Petroleum Corporation.

The appointment was contained in a statement by the President’s Special Adviser on Media and Publicity, Mr. Femi Adesina.

With the latest appointment, Baru replaced Dr. Ibe Kachikwu who has been doubling as the Minister of State, Petroleum Resources and GMD, NNPC.

Buhari also approved the composition of the Board of the NNPC as provided for under Section 1(2) of the corporation Act of 1997, as amended.

The new board has Kachikwu as its chairman, while the Chief of Staff to the President, Abba Kyari, is also a member.

Apart from Kachikwu, Baru and Kyari, other members of the board are the Permanent Secretary of the  Ministry of Finance; Dr. Thomas M.A John; Dr. Pius O. Akinyelure; Dr. Tajuddeen Umar; Mallam Mohammed Lawal, and Mallam Yusuf Lawal.

According to the statement,  Buhari urged the new board to ensure the successful delivery of the mandate of the NNPC, “and serve the nation by upholding the public trust placed on them in managing this critical national asset.”

Source: PunchNg

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Kachikwu

There has been a lot of opposing reactions and protests against the decision by the Federal Government of Nigeria to deregulate petrol price and marketing. The Nigerian Labour Congress and the Trade Union Congress have declared an indefinite national strike for Wednesday this week should the Federal government refuse to reverse the deregulation policy. 

Here are some things Nigerians should be aware of in regards to the petrol price and marketing:

1. Over the years the four existing refineries have been performing poorly and unable to meet domestic supply of petrol, in order to meet the nation's need for petrol the Federal government has to import petrol, regular and long-term importation of petrol has contributed greatly in depleting the nation's foreign reserve and a weak and depressed naira.

2. The hope of getting new investors to build new refineries may be dashed if the deregulation policy on petrol is derailed by organized Labour and pressure groups. No credible investor would carry out massive financial investment in a business where profits would not be made.

3. Over the years the activities of unpatriotic Nigerians have compounded our woes making previous subsidy packages on petrol a huge waste, their activities include diversion of petrol products to neighboring countries, hoarding of products, refusal to sell at official price, and dubious claims for subsidy payments.

4. Nigerians would be able to buy petrol at a cheap rate when we have a stronger naira, this can be achieved when collectively work together to increase the number of products we export, import less, buying made in Nigeria products, use of local raw materials for manufacturing processes, eliminating money laundering, and patronizing Nigerian services.

5. Aborting the current decision on the deregulation of petrol price and marketing would only be postponing the evil day. The current state of foreign currency reserve at the Central Bank of Nigeria cannot support importation of subsidized petrol, we should expect recurrent fuel scarcity and cut throat petrol prices at the black market.

6. The argument and claim by a large number of Nigerians that as an oil producing nation, Nigerians should enjoy cheap petrol price. Those who hold this view should consider the huge financial investment put into crude oil production and refining of petroleum products.

Over the years successive Nigerian government has been unable to fully deregulate the price and marketing of petrol, once again we at that crossroad.

JOHN UZIE
Kwale, Delta State

Source: Olufamous.com
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By Daramola Babalola

On the 12th of May, 2016 Nigerians woke up to the detestable reality that they will now have to pay ₦145 per litre for Premium Motor Spirit (PMS), otherwise called petrol representing over 40% increase from the previous pump price, ₦86.50 



While some are mobilizing for '#occupyNigeria season 2', labour unions in the country are currently planning to commence an indefinite nationwide strike action that will 'shutdown the economy' on Wednesday in a bid to protest the increase in fuel price.




Following the harsh economic realities Nigeria is currently facing, many Nigerians have labelled the Federal Government as being insensitive to the plight of its citizen by making fuel too expensive for consumption.

But really, how expensive is fuel in Nigeria, compared to other countries? and is the Nigerian government really insensitive? We are about to find out.


  • At ₦145/Litre, is fuel too expensive in Nigeria?
As surprising as it may seem, Nigeria is ranked 12th as per cheapest price of petrol in 173 countries even with the new  ₦145 per litre price according to Globalpetrolprices.com 

 In Nigeria, fuel now costs ₦145/L and with the current exchange rate that is fluctuating between ₦320-₦360 to a dollar, it means we are paying  about $0.44/L

It may however interest you to know that in United States, fuel is sold at the pump price of $0.65/L ( ₦214/L), In South Africa $0.84/L (₦277), In Russia $0.55/L (₦181/L), $0.91/L (₦300/L) in Canada, $0.92 (₦303/L) in Ghana, and it costs $0.93 (₦306/L) in China.

Some will argue that the countries above are not petroleum exporting countries (OPEC) like Nigeria, but what about OPEC member countries like Angola, where PMS is sold at $1/L (about ₦330), In Iraq at $0.64/L(₦211), In Venezuela pump price is $0.60/L (₦198/L) with President Nicolas Maduro calling the approximately ₦198/L pump price 'one of the cheapest in the world'.  

Even in the oil rich, United Arab Emirates (UAE) PMS is sold at $0.45/L which is about (₦148/L) which is more expensive than the price in Nigeria.
With the facts and figures above, at ₦145/L fuel is not expensive, it's actually one of the cheapest in the world, but because of the poor living conditions of millions of Nigerians, it appears expensive and thus, many Nigerians struggle to afford it.

That is why the government needs to provide welfare programs, kill that disease called corruption, invest in electricity, education, fix refineries, provide jobs and increase minimum wage to reduce poverty in the country, because the current ₦18,000 minimum wage is too small compared to how much we buy petrol.

  • Is Nigeria the only country increasing pump price?


Again, the answer is a 'BIG NO'.The excruciating increase in pump price is not even limited to Nigeria alone, major oil rich countries of the world have increased their fuel price this year, some even by over 50%.

See examples below

Saudi Arabia 40% increase
In December 2015, Saudi Arabia increased fuel price in the country by 40%
http://www.aljazeera.com/news/2015/12/saudi-arabia-hikes-petrol-prices-40-pump-151228154350415.html
Oil rich Saudi Arabia, last year announced a record $98bn budget deficit due to 'rock-bottom global petroleum prices'
Like Nigeria, Saudi Arabia suffered a sharp drop in revenues as oil prices have fallen more than 60 percent since mid-2014 to below $40 a barrel.
To address the situation, the Gulf kingdom increased fuel price by 40%

Venezuela increased fuel price in February, 2016
President Nicolas Maduro in February increased fuel price to $0.60 (₦198) as Venezuela's economy was pushed to the brink by the collapse in the oil price, which accounts for about 95% of the country's export revenues.
He said the price over 50% rise was "a necessary measure, a necessary action to balance things, I take responsibility for it."
http://www.bbc.com/news/business-35600921?SThisFB


Fuel price increased in UAE in May, 2016
The oil rich, United Arab Emirates also increased pump price about 2 weeks ago.
Fuel is now sold at $0.45/L in UAE, which is about ₦148/L in Nigerian Naira, ₦3 more than the pump price in Nigeria today.
http://english.alarabiya.net/en/business/energy/2016/04/28/Fuel-prices-in-the-UAE-will-increase-in-May.html

Qatar increased fuel price by 30% in January, 2016
The oil rich country that last increased petrol prices in 2011, also increased pump price in January, 2016 to $0.36 (₦118) which is the 5th cheapest pump price in the world.
http://dohanews.co/qatar-increases-petrol-prices-from-midnight-tonight/


50% increase in pump price in Bahrain in January, 2016
As a result of the unprecedented drop in global oil prices, which has seen the price of oil per barrel decline by over 60%.
The government in Bahrain followed the steps of fellow Gulf Cooperation Council (GCC) member countries the country increased fuel price by 50% in January.

I could go on and on, to give more examples of oil rich countries like Nigeria that have increased pump price in 2016, Nigerians need to understand that this is not a Nigerian, Kachikwu, APC or PDP problem, this is a global problem we are dealing with affecting even the oil rich countries of the world.



We need to stop seeing the Federal government as insensitive, wicked, heartless, unfeeling, inconsiderate, thoughtless and hard-hearted for increasing the pump price to ₦145/L. We need to temporary sacrifice for the greater good, with the hope that as promised we will be better off in the long term. 

To cushion the current challenges, the Federal Government must also sincerely provide social provisions for millions of poor Nigerians who will suffer from the fuel hike. Some of the oil rich countries listed above have increased fuel price this year, but due to the several welfare packages provided, the citizens can ease through this rough patch.

I am glad about the N500 billion social intervention programmes provided in the 2016 budget, which includes jobs, social safety allowance for the most vulnerable people, free schooling for students, soft loan to traders, investment in infrastructure etc. Hopefully Buhari's 'anti-corruption' centered government can channel the funds with 100% sincerity and accountability.



  • But why did the fuel price have to increase?

For that barber down the street who relies on petrol most times to power his small generator to keep his business running, it will be difficult for him to understand how the fuel price increase will benefit him in the long run. Infact, he will most likely rant everyday about the hardship the government is causing him.

I'm sure many have wondered why a country like Nigeria, blessed with oil suffer for it? But unfortunately, Crude oil price is an internationally traded commodity , the prices are not set by the countries that produce it. Neither do oil producing countries get a discount in the international market for producing this product.


While many think the current increase in fuel price is about removal of fuel subsidy, this notion is totally wrong because it was brought about by the non-availability of foreign exchange to import petroleum products. infact, there is no provision for subsidy in the 2016 budget according to the Vice President, Yemi Osinbajo.

Oil is selling at below 40 dollars and the currency (dollar) needed to purchase the refined petrol is no longer available, that is just simply the problem here.

Oil and gas make up more than 90 percent of exports in Nigeria, providing the critical source of Nigeria’s foreign exchange.

It’s that simple; a collapse in oil prices could lead to the same in Nigeria’s foreign exchange which is crucial to support consumption of imports. Foreign exchange rates also influence capital flows- investment funds that move into and out of a country. If oil prices continue to drop it would have an adverse effect on the country’s currency value, making it less attractive to foreign investors.

Since our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers. 

However marketers have drastically reduced their importation for several months due to a scarcity of FOREX, thus the need for them to source independent of CBN to be able to meet the nation’s demand arose.

Now any Nigerian entity is free to import the product, subject to existing quality specifications and other guidelines issued by Regulatory Agencies.

All oil marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources.

It is expected that this new policy will lead to improved supply and competition and eventually drive down pump prices.

In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector.


  • The difference between Jonathan's attempt to increase fuel price in 2012 and this? - And why the anti-₦145/L protests will fail
Former President Goodluck Jonathan ran into trouble after he removed fuel subsidy on New Year’s Day in 2012.




This took fuel price from ₦65 to ₦141 at filling stations. This led to massive protests by civil-rights groups, labour unions, and Nigerians generally. APC, the opposition party at that time, took political advantage of the situation by identifying with the suffering and criticizing the Jonathan administration for removing subsidy. 

Four years later President Buhari officially removes fuel subsidy. Millions of Nigerians are angry. Nigerians are understandably accusing the present administration of cowardice, deception, and hypocrisy, but how true is this?

How much was oil price in 2011? Oil price was $113 per barrel. Today, oil price is just about $40 per barrel after going below $30  early this year.

And the exchange rate? Under Goodluck Jonathan’s leadership, the exchange rate was $1 to N162. Today, exchange rate is officially N199 to a dollar; N320-N360 in the parallel market.

And foreign reserves? Nigeria’s foreign reserves stood at $35billion in January 2012 and $29.61billion as at 28 May 2015, the eve of hand over to President Buhari. Today, foreign reserve is $27.1 billion, amid myriad of restrictive measures to stem the steady slide in the economy’s external sector.

 Under the previous administration, Nigeria was enjoying an economic-growth rate of 6% averagely. Thanks to Foreign Direct Investment (FDI) riding on the back of a devalued Naira. President Jonathan also, largely, had the right economic mix. But corruption and terrorism were two of its greatest challenges. There were allegations of massive corruption, particularly what was reported to be a fuel-subsidy scam right under Goodluck Jonathan’s nose.

Rather than tackle these allegations by investigating and prosecuting those involved in the scam, President Jonathan decided to remove subsidy as the solution to the problem. The administration claimed removing fuel subsidy would free up funds for capital projects. But Nigerians had little or no trust in the administration. The administration was incompetent and corrupt. How can it be trusted to save for the future? This was a fundamental issue. So ‪#‎OccupyNigeria‬ shot down Nigeria’s economy in January 2012, not simply because Goodluck Jonathan increased fuel price but mainly because millions of Nigerians did not trust the administration with the money it claimed it would “save” for the future.



Today there are strong reasons to believe that if fuel-subsidy removal had been allowed in 2012, most of it would have ended up in private bank accounts.

Under Buhari administration, though partly due to some of its own reactive and over-restrictive economic policies, the Nigerian economy is sick. There is scarcity of foreign exchange. Oil marketers are finding it extremely difficult to import petroleum products into the country. FDI has nose-dived. The low international-oil price meant there was no need for it.

 Now that fuel price has increased internationally, we expected the government to subsidize to alleviate people’s suffering. The Buhari administration says ‘No. We don’t have enough foreign exchange to do so.” Oil marketers are having difficulties opening letters of credit to import petroleum products. The result is that NNPC alone has had to supply over 90% of petroleum products since October 2015. This has not always been so.

NNPC used to supply 48% of petroleum products. Since NNPC does not have what it takes to supply so much, there will continue to be fuel scarcity. To tackle the scarcity problem, the government painfully decides to free up the oil-supply system by allowing the international-oil price determine fuel price locally without any fiscal intervention. Oil marketers are now accessing foreign exchange (through secondary sources) to import petroleum products into the country since ₦145 naira per litre provides some reasonable profit margin after supply costs.

Meanwhile, the government is taking measures to block leakages through zero budgeting, Single Treasury Account (TSA), and its Anti-Corruption Agenda. We are now talking about refineries, public and private-owned refineries that will eventually make fuel scarcity a thing of the past.

Nigerians asked Jonathan to work on old refineries and build new ones, given the resources available at the time, and first kill the regime of fuel importation. Subsidy would have died a natural death and the process of privatization would have been smoother. Today, some of the refineries are functional again, which were not in Jonathan’s days. Government-owned outlets sell refined fuel today, at a far cheaper rate. Not the private ones.

As labour go all out on Wednesday to attempt to shutdown Nigeria, my prediction is that they will not even achieve up to 5% of what the 2012 #OccupyNigeria protests achieved, the protest is bound to be a massive failure, because more Nigerians trust the sincerity of Buhari's government unlike his predecessor. And while the ₦145/L price remains a hard pill to swallow, it's still the 12th cheapest price in the world, facts only.


Daramola Babalola is a political analyst and News Editor 


Source: Nigeria Eye
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Ibe Kachikwu

There had been reports earlier today that some lawmakers on the platform of the Peoples Democratic Party (PDP) refused to allow the minister into the House for any explanations on the fuel subsidy removal, but some of their colleagues later prevailed over them. And when he was finally allowed into the premises to make his address, Kachikwu told members of the House of Representatives that they were left with no option than to increase the price of fuel.

Here are five major things he said during the meeting:

1. The diminished foreign exchange supply situation in Nigeria, which forced marketers to stop importation and imposed over 90 per cent supply on the Nigerian National Petroleum Corporation (NNPC) since October 2015 is responsible for the subsidy removal.


2. Significant decline in government’s foreign exchange revenues and renewed sabotage and pipeline vandalism in the Niger Delta.


3. There was no provision for subsidy in the 2016 Appropriation Act and as at Monday, the fuel price of 86.50 gave an estimate subsidy claim of 13.7 Naira per litre, which translates to 16.4 billion Naira monthly.


 4. The new price band had gone into effect and the market had stabilised in terms of product availability.



5. NNPC will no longer resort to federation barrels and would endeavour to meet its obligation to pay FAAC 100 percent of its entitlement from the 445,000 barrels per day in the coming months.

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The scheduled appearance of Minister of State for Petroleum, Ibe Kachikwu, at the House of Representatives on Monday has left the lower chamber bitterly divided, as lawmakers bicker over whether the minister should be allowed to enter into the chamber or not.

Mr. Kachikwu was invited to brief lawmakers on the recent increase in the price of petrol.

But when Mr. Kachikwu arrived to honour the invitation, he was met with echoes of anger from lawmakers who started shouting “No! No! No!”

Shortly after noon, House Leader, Femi Gbajabiamila, moved a motion to let Mr. Kachikwu in, but many lawmakers shouted him down. This prompted the Speaker of the House, Yakubu Dogara, to put the matter up for voice vote.


When Mr. Dogara asked if the lawmakers should allow Mr. Kachikwu to come him, majority of them thundered: “No! No!”

But Mr. Dogara said the “ayes” have it, nonetheless.

But the lawmakers refused to be intimidated, continuing with their chants.

After a few minutes into the commotion, the House demanded that journalists and other observers should excuse them, leaving only members in the plenary to continue what they described as “executive session.”

Why the lawmakers invited Mr. Kachikwu and still declined to give him audience to explain himself has left many in the chambers befuddled.

As at 1:00 p.m., the House has not reopened the plenary to reporters and Mr. Kachikwu’s whereabouts is unknown.

Premium Times
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To cushion the harsh effect of the new pump price of Premium Motor Spirt, PMS also called petrol on the people, the presidency is set to implement the N500 billion earmarked in the 2016 budget for social welfare.

 A statement by the media spokesperson for Vice President Yemi Osinabjo, Mr. Laolu Akande in Abuja on Sunday stated “All together the federal government would be directly impacting the lives of more than 8 million Nigerians in different social investment 2016 budget spending that would provide succor and be a ready-made palliative to ordinary Nigerians.”

 Giving a breakdown of the interventions and palliatives, Akande said that said that there would “the direct payment of N5000 monthly to one million extremely poor Nigerians for 12 months as provided for in the 2016 budget for which N$68.7B has been appropriated.”

 Similarly, the government has also made available a “direct provision of very soft loan -cash for market women, men and traders, including artisans and Agric workers.

This would be for a total of 1.76m Nigerians, without the requirement for conventional collateral. Some of the traders will likely get about N60,000.

A total sum of N140.3B has already been appropriated for this in the budget”. The details also showed their there would be “payment of between N23,000 to N30,000 per month to 500,000 unemployed graduates who would be trained, paid and deployed to work as volunteer teachers, public health officers and extension service workers among other responsibilities.

They would also be given electronic devices to empower them technologically both for their assignments and beyond”.

According to the media aide, “100,000 artisans would also be trained and paid N191.5B has been set aside for this in the passed budget.” He also said that “At least 5.5 million Nigerian primary school children -ie starting first in 18 states-three per geopolitical zones-would be fed for 200 school days under the free Homegrown School Feeding Programme”, as “N93.1B has been appropriated for this in the 2016 budget.”

In this same vein “100,000 tertiary students in Science Technology Engineering & Maths-STEM, plus Education will partake in the N5.8B already provided for this education grant in the budget. Akande stated that “This payment would also be paid directly to the students.”

 He stated that these measures that would start in a matter of weeks would certainly lift the ordinary man from the pangs of economic hardship and poverty. “Long before now, the Presidency has made adequate arrangements in the 2016 budget to ensure that Nigerians are lifted from poverty and hardship,” Akande said, adding that “the Buhari presidency is keen to ensure that Nigerians are lifted and that if necessary on an ongoing basis palliatives measures would always been considered to address the conditions of the people.”
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NANS
 NANS body with over 40 million Nigerian students would re-enact the Occupy Nigeria protest against the removal of subsidy from petroleum product in Abuja next week

Ibadan Protest


Ibadan Residents protest yesterday (Friday) against Fuel subsidy Removal

The protest witnessed the heavy presence of market men and women who were in their hundreds, as they complained about the prices of food and the cost of living.

National Labour congress

NLC to embark on strike next week wednesday and set to Occupy Nigeria over removal of fuel subsidy



Others will be revealed later
#Pacesetter Omoluabi


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Protesters
Action Front group on Friday, May 13 organized a protest against the government’s policy which triggered the increase of a litre of fuel from N87 to N145.

The protest witnessed the heavy presence of market men and women who were in their hundreds, as they complained about the prices of food and the cost of living.

The group led by its coordinator in Oyo state, Dr Demola Aremu started its march from University of Ibadan with a call on the federal government to reverse the decision in the interest of the Nigerian masses.

According to him, the present administration had only given Nigerians negative changes in salary payment, power, food prices, roads and “fraud in the increment of price of fuel.” “Any government that encourages petroleum product marketers to source for money from secondary market is unserious, fraudulent and irresponsible,” Dr Aremu opined.

 He described the petrol price increment as a direct attack on the Nigerian people, adding that the only achievement of the present administration is high inflation.



The protest witnessed the heavy presence of market men and women who were in their hundreds, as they complained about the prices of food and the cost of living.
Read more: https://www.naij.com/830112-fuel-subsidy-removal-protest-rocks-ibadan.html?source=notification
The protest witnessed the heavy presence of market men and women who were in their hundreds, as they complained about the prices of food and the cost of living.
Read more: https://www.naij.com/830112-fuel-subsidy-removal-protest-rocks-ibadan.html?source=notification
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