EXCLUSIVE: Transition committee proposes removal of fuel subsidy
The All Progressives Congress (APC) transition committee has asked President Muhammadu Buhari to work out “detailed and coordinated” plan to remove subsidy on premium motor spirit (PMS), otherwise known as petrol.
The advisory body, whose report is expected to influence the policy direction of the new government, also recommended that kerosene subsidy should be scrapped immediately.
While kerosene is officially N50 per litre, the end users pay as much as N150 despite the existence of subsidy — a case of double jeopardy for the government and consumers but a source of massive income for marketers and fuel import contractors.
The committee also asked Buhari to privatise the nation’s four refineries by adopting the Nigerian Liquefied Natural Gas (NLNG) as a model.
NLNG is jointly owned by the Nigerian National Petroleum Corporation (NNPC) 49%, Shell Gas B.V. 25.6%, Total LNG Nigeria Ltd 15% and Eni International 10.4% — but it is not managed by the Nigerian government, unlike the nation’s refineries which are solely managed by the NNPC.
These recommendations, in a report seen by TheCable, are intended to “eliminate waste and redirect resources to fuel development, growth and job creation”, according to the committee headed by Ahmed Joda, former super perm secretary.
Fuel subsidy, which gulps billions of dollars every year, has been a very volatile issue in Nigeria’s political economy since the mid-1980s, leading to riots and demonstrations because of the resultant increase in pump prices of petroleum products.
But with dwindling oil revenue, ballooning subsidy claims and growing national debt, there is an emerging consensus that the expenditure can no longer be sustained.
Attempts by the administration of former President Goodluck Jonathan to remove the subsidy in 2012 were greeted with nationwide protests amidst allegations of scam in payments to marketers running into trillions of naira. Jonathan eventually reversed the policy.
Nigerians queue endlessly for kerosene
Federal government currently owes oil marketers over N200 billion, a development that recently resulted in a nationwide fuel crisis as they cut down on importation.
With another N400 billion owed in salary arrears to federal workers, the Joda committee has asked Buhari to pay arrears of salary and fuel subsidy, “failing which it could lead to mass labour unrest which could undermine the goodwill of the Administration”.
The committee recommended that all outstanding subsidy liabilities should be audited and the verified claims paid to marketers to “ensure PMS is readily available to the market to avoid further fuel queues”.
Other key recommendations concerning the oil and gas sector include:
- Reviewing all Nigerian Petroleum Development Company (NPDC) operations and agreements especially the Strategic Alliance Agreements executed with third parties. This is to recoup any unearned royalties, taxes and any potential over-lifting under these agreements. This is one of the issues raised in the recent audit of NNPC.
- Reviewing all pioneer status and tax waivers, and renegotiating or revoking concessions granted in order to recoup unpaid taxes. The Nigerian Investment Promotion Council (NIPC) was recently accused of indiscriminately granting pioneer certificates which led to an estimated loss of $20 billion revenue over five years.
- Commencing a full-scale reorganisation and restructuring of NNPC and its subsidiaries to reposition it as a globally competitive national oil company and “significantly enhance reserves, output and revenues while creating major linkages with other sectors of the Nigerian economy”.
- Incorporating the existing joint ventures (JVs) and reducing federal government stake to 49% “which should be on the listed on the Nigerian Stock Exchange”. This is expected to raise significant revenue from asset sale, relieve the government of the burden of cash call obligations and facilitate investment for accretion of reserves.
- Commencing an audit of all Offshore Processing Agreements and Crude Swap Agreements entered by NNPC to identify and claim any reimbursements for excess crude lifted vis-a -vis products delivered based on a fair and transparent audit process.
- Providing relevant security hardware and personnel to eliminate vandalism to critical pipeline infrastructure and unauthorised offshore vessel loading.
The Joda committee submitted its report on June 12, recommending, among other things, that Buhari should reduce the number of ministries to 19 from the current 28.
Very sound advice. Kudos Joda
i think this sounds pleasant to he ear now…but it is easier said than done…#Nigerians
Looks like a good idea, Jonathan tried it before, will the oil moguls in Lagos refrain from sponsoring another massive NLC strike that will paralyze the country. this is the epitome of greed and live and let’s die.
Well done job. This is the beginning of the changes. Past admin has been so wicked & oppressing to the poor masses . Too bad !
Brillant ideas from a gifted administrator.However,Nigeria never lack ideas on way forward but implementation of our ideas to achieve desired results. I think the implementation of this recommendtions be followed steps by steps. Nigeria needs to move furward fast.
I totally agreed with kudos recommendations
It is unfortunate that for the selfish purpose of grabbing power at all costs at the centre APC did not see any truth in Jonathan’s genuine efforts in scrapping subsidy. Now they see. Nothing new. what should been done long ago is appearing as a new bright idea. Please go ahead and do it and stop deceiving Nigerians. We know better
Ajima! God bless u real good for ur comment. Dis same idea was proposed by the previous administration and for that, it earned the reputation of ‘being evil’ now, it is a brilliant idea. The report above is exactly what is contained in the PIB which the powers that be made sure was not pass by the NASS. Posterity will judge!
Yes i agree. I was a good idea with a bad timing. At the same, its one those things that qualify jonathan a weak leader. Since he had made the decision, he should have Stood by it.
Fine!! They protested and he curbed it.
But why reverse it again? Especially Since he believed it was the good and best decision?
Do u think the cabals will allow this to happen?
Well we leave every thing to the hand of God.
It is the same set of people that that is fighting hard from having steady flow of power supply I Nigeria, we have to pray against this corrupt set of people.
May God help Nigerians.
Jonathan was not actually weak to implement this issue of subsidy but , the son call APC rose against him through mass general strike in Nigeria.
This nation will do better without hypocrites who talk from the two sides of the mouth. Let’s watch this drama unfold.
You are right, but that is the way of politics… anything by the old administration must be bad, even if it is the exact same idea.
Good paper work. Nigeria needs bold people who have the interest of the country at heart to take bold decisions for the betterment of the nation.
This is good from a highly Administrator,But the problem here is the implementation of this advice.If the present administration lead by Gen Buhari can take it up one after the other, I believe Nigerians will witness the change he promise.
These ideas are no brainers, the averagely learned Nigerian knows these are the only options the administration has or the country will collapse.
Jonathan saw planned to remove this same subsidy three years ago and this same APC saw nothing good with the plan. We would have saved a lot of money as a country.
Well they should make sure they do it
God help Nigeria
It’s a sound advise, just that I do not think that there should be any more privatisations if indeed OUR VOTE FOR CHANGE IS AGAINST CORRUPTION.
Copy cat! Though copying good things is allowed.
President Buhari might be for real but APC was, is and will always be a fraud. They never had anything new and good to offer, …just wanted power at all cost. They only succeeded in fooling and using the many ignorant Nigerians to quench their thirst. It is so unfortunate.
Nonetheless, we should sustain the present administration with prayers, righteous living and shunning corruption in our little corners.
“Righteousness exalts a nation but sin is a reproach to every nation “.
God bless the Federal Republic of Nigeria.
Shalom!
“Show me your friend and I will tell you who you are”. Buhari and APC are the same. Time will expose this open truth.
nice recommendation by Mr. Joda led transition committee
Nigeria has never lacked brilliant ideas. What we have always lacked is brilliant implementations. Not until implemented, i see nothing so special from all the Joda recommendations. PIB is one brilliant bill that would have solved all these problems if passed and implemented.
This is a brilliant idea. I urge Nigerians to love, support and encourage government to succeed. Don’t call your leaders bad names and don’t accuse them unduly.
I believe no cabal can operate under this government. No individual or group can be stronger than a government that knows it’s worth. Hurle common criminals into prison with all their wealth and society will be at peace.
There is no fuel subsidy in Nigeria and has never been..let’s no deceive ourselves..the last time anybody ever did anything close to subsidizing petrol was during Abacha’s years..Nigerians never asked for fuel subsidy neither do we need one..
What we have is a criminal racket ran by top ex-generals..fake oil barons..their business partners..cronies..bank partners..and criminal gangs since 1992 when IBB started this whole fuel importation racket that stopped our refineries working..Nigeria has NEVER subsidized fuel for its people on the contrary..Nigerians have been subsidizing the pockets of all these racketeers since 1992..
That was why Prof. Tam David-West raised an alarm in 1996/1997 about petrol stations being built all across the country at a time of fuel scarcity..he wondered aloud whether these new day oil merchants were going to be selling water in their petrol stations?..Alas it soon turned out that the Gestapo run nation like Nigeria had just secretly leaked their classified information to their business cronies..friends and families that petrol business was going to be the next biggest money making thing they country had never seen before.
The solution is very simple and right there before our naked eyes..and even Buhari knows that much hence his fight to become president of Nigeria..that finally yielded fruit. Solution: If our four refineries work at optimum capacity refining 445,00bpd..and more refineries are built by government or private individuals like Dangote’s refinery coming on stream by 2016/2017 which can refine 650,000bpd..we would have more that enough locally refined petrol for our present consumption and future demands as our industries grow. These barrels of crude would be sold to our local and private refineries at either global market rates or reduced prices by government (considering there is limited cost of transporting them to the refineries locally)..Its then left for the refineries to refine them cheaply at a regulated profit range..transport them to depots where trucks can take them to petrol stations who then sell them on.
The whole costing arrangement is visible and can be worked out fairly as it’s done locally unlike the present arrangement which is done through crooks called fuel importers and their cronies at PPRA..whatever fair price we arrive at every period is what Nigerians buy at the pump stations..it could go up or come down as prices of the unrefined crude to local refineries change..even government could impose fuel duty tax on the costing too..or just decide to keep it at a regulated (subsidized) price for socialist reasons if needed..Simple!!
So at current prices of $60 if refined locally we pay less at the pumps..at higher prices of crude say $100 we pay more..its then up to the government for social policy issues to determine if crude oil prices go up how much of it they want to subsidize the barrel of oil for when they sell it to the local refineries..at the moment THERE IS NO FUEL SUBSIDY IN NIGERIA FOR HEAVENS SAKE!!!..What we’ve had for over 20 years is poor..middle class and innocent rich Nigerians subsidizing the corruption of the Nigerian state and the criminal oil racketeers led by ex-generals..their wives..concubines..families..friends..occult members..political party members..fake oil barons..rogue dealers..bankers..militants and criminal gangs..and the time for this disproportionate theft to end is NOW!!!
If there is no subsidy, why is it in the budget?
Nigeria is one country where an assignment that can be undertaken by one man/woman in five days is (routinely) given to an unewieldy and expensive twenty-man committee which takes perhaps 1, 2, or 3months to come up with results. I am shocked that the APC, a party that I voted for, had not had a firm policy in place concerning liberalisation of fuel marketing, the other side of the coin being the removal of fuel subsidy. What the hell were they doing all alnog? They were supposed to have a shadow executive committee whilst still sitting in the opposition. . Meanwhile I bring again to the attention of the reading public what this writer had put out in the public domain more than a year ago. What more can I say?
Excerpt On Electricity Tariff & Fuel Subsidy:
Now, let me tackle a very unpopular subject, tariff. The glitteratti of the Nigerian professional and social landscape, who on the average are far smarter than I am, studiously avoid this topic despite the data at their disposal. It was this same mindset that made it impossible to create the critical mass of enlightened opinion necessary to push through the very necessary removal of the wasteful fuel subsidy. No matter how long it takes, we will yet come to the realisation that the removal of fuel subsidy remains one of the strong legs on which will ultimately rest the very economic survival of Nigeria. To be seen cavorting with the masses at the Gani Fawehinmi Park, became a badge of dubious honour. Well, somebody has to SAY IT AS IT IS (apologies Tunde Fagbenle). If not me, who? Oduche Azih
Your comment..the revolt against GEJ decision to scrap fuel subsidy was sponsored by Tinubu,Falana,Dino Melaye and other APC leaders.we should not forget that they arranged a big party for that with various musicians performing.most nigerians were in the social media lambasting GEJ and calling him clueless.the question is:if subsidy removal is the best thing to do why condemned it immediately.what would have happen if it was removed then,won’t there be benefit for us now.the worst part is that the media played vital role against the policy then.Now people are saying it was the oil cabals that prebented subsidy implementation.it is purely a big lie.we should come out and humbly accept our stupidity and for apc they’ve prove that they are hypocrites and liars.if not the past administration do the ordinary nigerians know what is subsidy?we always villified a good leaders.I expect tinubu,falana and co to protest again if not they are incurable liars.
Will Apc allow this.They blocked it during Jonathan. Will they accept now for Buhari.