Newsfront Online …Telling the Public as it is
…We expect fierce opposition from subsidy beneficiaries – Presidency
…FG owes NNPC N2.8trn subsidy payment – Kyari
…IPMAN demands release of paid products
…Analysts fear inflation may rise
Fuel queues which resurfaced across the country on Monday grew longer yesterday, as panic buying by motorists and hoarding by marketers shot the price of petrol as high as N600 per litre. The development followed apprehension created by the removal of subsidy as announced by President Bola Ahmed Tinubu.
Tinubu had shortly after his inauguration as the 16th president and commander-in-chief of the Armed Forces of the Federal Republic of Nigeria on Monday, announced that subsidy on petroleum products was gone for good. “Subsidy is gone. we shall instead re-channel the funds into better investment in public infrastructure, education, healthcare and jobs that will materially improve the lives of millions,” Tinubu stated after taking oath of office. LEADERSHIP gathered that the queues started mounting immediately after the president’s pronouncement, with motorists scampering to buy the product in the Federal Capital Territory (FCT), Abuja.
As of Tuesday, while filling stations operated by major marketers and the Nigerian National Petroleum Company Limited (NNPCL) were selling between N194 and N195 per litre, other outlets operated by independent marketers dispensed the product as high as N600 per litre.
In Abuja, many motorists scrambled to get petroleum products. A visit to the city centre and satellite towns showed long queues in many filling stations as motorists were seen making frantic efforts to buy the fuel in anticipation of the price increase that may follow the announcement.
LEADERSHIP checks revealed that some filling stations that were selling the products before the announcement by the president were under locks and keys. Not even assurances by the Nigerian National Petroleum Company Limited (NNPCL) and petroleum marketers could hold back motorists who thronged dispensing outlets to buy petrol.
In a pacifying message after an emergency meeting, in Abuja, the group chief executive officer of NNPC Limited, Mele Kyari, noted that the removal of the subsidy, which has been a burden on NNPCL cash flow, will free up funds to enable optimal operations in the company.
Tinubu Meets Kyari, Emefiele Over Fuel Subsidy
The national oil company, while reacting to scarcity already being experienced, assured Nigerians of sufficient supply of the product. Kyari said the NNPCL is also monitoring all its distribution networks to ensure compliance. Meanwhile, our correspondents who monitored the petrol situation reported frustrations of Nigerians who lamented the long queues at the few filling stations that are selling.
A visit to filling stations around the Ojota-Ogudu-Ikorodu axis revealed that majority of them were not selling and the few that were selling were overcrowded with long queues. Along the Lagos-Ibadan Expressway, the eight filling stations visited were either under lock and key or open with no fuel attendant.
In a chat, a commuter lamented that buses now charge between N700/N800 from Mowe to Berger (New Garage), while motorcycle riders were charging N1000 or more if they are to take more than a passenger. They said they were now in a rush and endangering the lives of people due to the hike in PMS prices and also the non-availability of commuter buses.
In Calabar, the Cross River state capital, our correspondent reported that the commodity sold for 400 per litre at filling stations. However, the same product was sold by brisk businessmen a few metres away from the Petrol station at N800 to N1000 to panic buyers.
In Benin City, Edo State capital, some filling stations now sell between N500 and N530 per litre as long queues persist in all the fuel stations selling the product. At Sapele road leading to NNPC Mega station, motorists on queue blocked some adjoining streets as they awaited their turn for the product. However, NNPC mega station still sells at N187, while other stations who also have considerable vehicles on the queue sell for between N500 and N530
In Ado-Ekiti, the Ekiti State capital, the pump price of the commodity increased, with both independent and major marketers selling for between N195 and N600 per litre. Some of the Independent marketers sold the commodity for N245, N300 and N350 per litre. The highest pump price recorded in the state capital was N600 per litre. Meanwhile, the governor of the state, Biodun Oyebanji, warned that heavy sanctions await any filling station or marketer found hoarding petroleum products or is involved in arbitrary increase in prices.
Checks in Umuahia, the Abia State capital, and Ohafia indicated that the pump prices range from N500.00 to N600.00. The queues were increasing rapidly due to fears that the filling stations may soon run out of stock.
Our correspondent in Delta State reported that most of the filling stations in Asaba, Warri and environs witnessed long queues of vehicles as independent petroleum marketers increased pump price to between N400 and N500 per litre.
The chairman of IPMAN, Delta State branch, Zino Enamor, who reacted to the development, said independent marketers should not be blamed for the hike in pump price, noting that while the removal of fuel subsidy is a good one, the timing for the implementation is not good.
In Kaduna, our correspondent who visited NIPCO and other filling stations beside Sabon Tasha Bridge observed that there was no petroleum product for vehicle owners who were on queue since Tuesday morning to buy. It was further observed that many fuel stations that sold the product on Monday were all under lock and key yesterday, just as other stations that were not locked were not dispensing the product to motorists.
Speaking with LEADERSHIP, some of the Kaduna residents lamented the increase in transport fares by commercial bus drivers and Keke NAPED riders. Friday Ode, who plie Sabon Tasha to Kaduna Central market, said complained: “Today I paid N300 against N150. The bus driver that carried us said no fuel. Our new president should do something before transport fares hike get out of hands”
Another resident, Joe Bala, called on the government to consider the plight of the masses. “This fuel subsidy removal will cause a lot of hardship to we common men and women as big men will not feel it. We the masses will pay for it. This subsidy removal, if not properly managed, will ground Nigeria. There will be too much suffering. We will never recover well from naira redesign and now fuel subsidy removal,” he said.
Meanwhile, our correspondent who went round Enugu observed that most of the filling stations were shut, while the few ones that opened are selling a litre of fuel for between N600 and N1000.MSome of the marketers who spoke to our correspondent claimed that the removal of subsidy informed their decision to increase the price of fuel. Our investigations revealed that the price of fuel may increase to an unaffordable amount if nothing is done before the end of the week.
In Benue State, long queues at filing stations and black market businesses have resurfaced across Makurdi the state capital.NOur correspondent who went round some of the filling stations in Makurdi gathered that price of petroleum products has increased to between N300 and N400 per liter, while black Marketers are selling for between N500 and N600
While AYM Shafa Fuel Station located at Wurukum roundabout was selling at the rate of N200 per litre, Bolek Fuel Station located along Modern Market road was selling N400 per litre with few vehicles on queue. As of the time our correspondent visited NNPC station along Otukpo road, there was a long queue, while the station was yet to start selling the product.
In some petrol stations such as prime power located along Ankpa road as well as Forte oil along modern market road were shut down. When our correspondent called the chairman of Independent Marketers Association of Nigeria, Athanasius Atser Ikyausu, to find out the reason for the sudden differences in fuel pump price in the state, he went wild with rage, saying “go and find out from Tinubu”, and hung up the phone.
A visit to Sobaz at Ekeki in Yenagoa, Bayelas State, showed that the filling station was shut down and the whole place deserted.MIt could not be ascertained whether they had fuel but decided to hoard or they were expecting their tankers to arrive any time soon. At Shafa Energy, a filling station located at Amarata in Yenagoa, the Bayelsa State capital, it was observed that one of their company tankers was offloading fuel into the underground tank. At the time of filing this report, Shafa Energy was selling at N215, additional N5 to their initial pump price of N210 they used to sell before now.
Meanwhile, some of the filling stations in Yenagoa are currently selling at exorbitant prices. A customer who identified himself as Promise said he bought fuel at N450 per liter yesterday at a filling station beside Fire Service office in Gwegwe. Also, a hummer bus driver identified as Nkem said he bought N600 per liter this afternoon at Mobil filling station, Azikoro village in Yenagoa.
Also, petrol stations across Imo State have already adjusted their pump price. While Okwysco fuel station along Okigwe road sold for N380 as at 10am on Tuesday, BGR along Umuguma road sold for N500 at about the same time.
Jindu Filling station along Aba road sold for N700, even as many others were under lock and key, a situation that forced customers to besiege the few stations selling. However many fuel marketers and customers stayed away for fear of attack because of the sit-at-home directive.
There were not many long queues, as the residents were indoors to observe sit-at-home as directed by the proscribed Indigenous People of Biafra (IPOB) to observe national heroes day for Biafra fallen soldiers.
For over a year, residents of Owerri bought fuel for between N350 and N430 until the recent threat by the Nigerian Labour Congress (NLC) to shut down the state if government failed to take proactive steps to stem the tide. While stations were adjusting to dispense at less than N300, the announcement by Tinubu may have triggered them to raise the pump price.
As at 2pm, no fuel station sold less than N550
Most Petrol stations in Maiduguri, the capital city of Borno State, are under lock since the announcement of the subsidy removal by the president. Some of the Petrol stations that managed to operate skyrocketed their pump price from N220 a litre to N350, while NNPC subsidiary stations dispensed at N198,00, amid massive crowd and queues.
In parts of Port Harcourt, the Rivers State capital, petrol was sold for between 230 and 300 yesterday. While private filling stations located in the city sell for between230 and 250 per litre, operators of black market sell for 300 per litre. However, outlets of the Nigerian National Petroleum Company Limited sell for 165 with very long queues. LEADERSHIP observed that several private filling stations in Port Harcourt were not selling the products.
In Sokoto, virtually all filling stations within the metropolis are shut down, signalling fuel scarcity within the state capital. Reports from the outskirt where black marketers operate indicated that the price of fuel has skyrocketed following the pronouncement of removal of subsidy on petrol by President Tinubu.
A driver, Abubakar Sidi, who ply Sokoto – Illela road, told our correspondent that some filling stations outside the metropolis dispense fuel, while the product has suddenly become a scarce commodity within the town. He said, “Owners of filling stations have created panic situation with the pronouncement of the removal of fuel subsidy. Those selling are doing so at cut throat price while a good number of the marketers have closed their stations. “What we usually buy between N200 – N250 per litre, is now sold for N400 per litre, where available.”
The few filling stations that opened for operation in Ilorin, Kwara State, yesterday were dispensing fuel at N300 per litre. There were long queues of vehicles and motorcycles at the filling stations that were dispensing fuel.
However, the state governor, AbdulRahman AbdulRazaq, has warned marketers against hoarding the petroleum products. Consequently, the governor has constituted a task force headed by his deputy, Kayode Alabi, on the sudden fuel scarcity in the state. He charged the committee to ensure that filling stations that have fuel in their reservoirs dispense it to members of the public.
Also, queues have resurfaced in most of the fuel stations in Jos, the Plateau State capital, and its environs. Residents of Jos woke up yesterday morning to discover that some fuel stations have shut down, while the few operating were selling at the rate of N400 to N500 per litre.
This development has created tension in the Tin City as prices of good and services have increased astronomically. Also, long queue of vehicles yesterday morning returned to petrol filing stations across Osun State following the removal of fuel subsidy by the federal government.
LEADERS gathered that most of the filing stations that were dispensing the essential commodity before the president’s speech shut their gates to motorists shortly after the inaugural speech. Meanwhile, beside BOVAS filing station, the NNPC filing stations and and a few others that were selling for between N195 and N200 per liters sold at between #300 and #350 per liter. Meanwhile, the state government has warned fuel dealers to desist from hoarding the essential product.
A release made available to journalists in Osogbo by the spokesperson to the state governor, Mallam Olawale Rasheed, threatened that any filing station found culpable of hoarding fuel will face the consequences of its action. Also, long queues resurfaced in many filling stations in Lokoja, capital of Kogi State, yesterday.
Our correspondent who visited some fueling station on Lokoja-Kabba Road, Ganaja Road, among other filling stations in Lokoja sighted long queues of vehicles and motorcycles, while other outlets that sold the petroleum products before the declaration were already closed.
We Expect Fierce Opposition From Subsidy Beneficiaries – Presidency
Meanwhile, the presidency has reaffirmed government’s commitment to tackling the long-standing issues of fuel subsidy and multiple exchange rates, saying fierce opposition from beneficiaries of the subsidy regime was not unexpected.
Vice President Kashim Shettima disclosed this to State House correspondents on Tuesday in his first interview after resuming work at the presidential villa. He emphasised the urgent need to address the challenges for the betterment of the Nigerian nation.
Shettima referred to President Bola Tinubu’s recent pronouncements on fuel subsidy, stating that it is crucial to either remove the fuel subsidy or risk its detrimental effects on the country. He highlighted that in 2022 alone, a staggering $10 billion was spent on subsidizing the extravagant lifestyle of the upper class, with only minimal benefits trickling down to the poorest 40 percent of Nigerians. Shettima acknowledged that unveiling such a complex issue would face fierce opposition from those who have been benefiting from the subsidy scam.
Nevertheless, the vice president expressed confidence in the president’s strong will and conviction to push through necessary reforms. He assured the public that the president has noble intentions for the nation, which would become apparent in due time. Shettima pledged that the issue of fuel subsidy would be squarely addressed, urging swift action to be taken.
Additionally, the vice president mentioned the government’s plan to collapse the multiple exchange rates into a single unified rate. He acknowledged that this was another significant challenge that needed to be tackled. Shettima promised that the government would soon unveil its agenda on both fronts, implying that the president would take the lead in articulating the government’s vision.
Vice President Shettima emphasised the importance of a united front, stressing that there can only be one captain steering the ship. He reiterated his loyalty to the president and expressed his unwavering commitment to working harmoniously with him for the greater good of the nation. Shettima drew upon his long standing personal relationship with the president, spanning over a decade, to assure Nigerians of their collaborative efforts.
He said, “The president has already made pronouncements yesterday on the issue of the fuel subsidy. The truth of the matter is that it is either we get rid of subsidy or the fuel subsidy gets rid of the Nigerian nation. “In 2022, we spent $10billion subsidizing the ostentatious lifestyle of the upper class of the society because you and I benefit 90% from the oil subsidy.
“The poor 40% of Nigerians benefit very little. And we know the consequences of unveiling a masquerade. We will get fierce opposition from those benefiting from the oil subsidy scam. But where there is a will, there is a way. Be rest assured that our president is a man of strong will and conviction. In the fullness of time you will appreciate his noble intentions for the nation. The issue of fuel subsidy will be frontally addressed. The earlier we do so, the better. The issue of multiple exchange rates, we are going to collapse it into one. So these are two big elephants in the room and as the days go by we will be unveiling our agenda.
FG Owes NNPCL N2.8trn Subsidy Payment–Kyari
Meanwhile, group chief executive officer of the Nigerian National Petroleum Company Limited (NNPC Ltd), Mele Kyari, has disclosed that the federal government is owing them N2.8 trillion which they have used to pay for the subsidy from their cashflow. The NNPC Ltd GCEO spoke alongside the Nigerian Mainstream and Downstream Petroleum Regulatory Authority (NMDPRA) chief executive, Farouk Ahmed, with State House correspondents after a closed door meeting with President Bola Tinubu on his first day in office at the Aso Rock villa.
Kyari said NNPC wouldn’t be able to continue to pay for the subsidy since the federal government has not offset what they have used to pay hence the need to end the subsidy regime.
According to him, the 2023 budget made provision for the subsidy till the end of June 2023. He said, “So today the country doesn’t have the money to pay for subsidy. There’s incremental value that will come from it. But it is not an issue of whether you can do it or not because today we can’t afford it and they are not able to pay our bill. That comes to how much the federation owns NNPC now.
“Today, we are waiting for them to settle up to N2.8 trillion of NNPC’s cashflow from the subsidy regime and we can’t continue to build this,” he revealed. Since the provision of the N6 trillion in 2022, and N3.7 trillion in 2023, we have not have not received any payment whatsoever from the Federation.
“That means they (federal government) are unable to pay and we’ve continued to support this subsidy from the cash flow of the NNPC. That is, when we net off our fiscal obligations of taxes and royalty, there’s still a balance that we’re funding from our cash flow. And that has become very, very difficult and affecting our other operations.
“We’re not able to keep some of this cash to invest in our core businesses. The end result is that it can be a huge challenge for the company and we have highlighted this severally to the government that they must compensate and NNPC they must pay back an NNPC for the money that we have spent on the subsidy.”
Also speaking, Authority chief executive NMDPRA, Farouk Ahmed said that his office, being the regulatory agency, has been synergising with the Federal Competition and Consumer Protection Commission (FCCPC) to make sure oil marketers did not exploit the consumers.
IPMAN Demands Release Of Paid Products
Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has demanded the immediate release of products which its members have long paid for but have not been able to access. The Independent Petroleum Marketers Association of Nigeria (IPMAN), in a similar way, assured compliance with laid down rules to ensure smooth distribution of products and to avert chaos.
National President of the Association, Elder Chinedu Okoronkwo, however, confirmed to LEADERSHIP that some of his members had made payment over a month ago but have not received the product, adding that it would amount to double payment should there be any adjustments in pump price of petrol. He said though his Association is in support of the policy, his members who trade with borrowed funds should be allowed to access products earlier paid for and given time to sell the products before any adjustments.
Similarly, Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Marketers Association of Nigeria (DAPPMAN) applauded and endorsed the pronouncement by President Tinubu, on the phase-out of the petrol subsidy regime.
In a statement in Lagos, the Marketers appreciated the clarity of policy from the Tinubu administration, a direction they said signals a courageous and pragmatic shift in the nation’s economic trajectory. “In light of the assurances given by the Nigerian National Petroleum Company Limited (NNPCL) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), we wish to reiterate that there is no cause for alarm. We strongly urge Nigerians to avoid panic buying or stockpiling of petrol. This behaviour not only creates artificial scarcity but also poses a significant safety hazard.” the statement added.
The Marketers noted that the NNPCL has assured Nigerians of adequate fuel supply and the NMDPRA is working closely with stakeholders to ensure a seamless transition. Considering this clarity of policy, the marketers asked product suppliers to continue supplying products to all legitimate marketers, and appealed to all stations to remain open and avoid hoarding products.
“We eagerly await the day when the Dangote Petroleum Refinery, as well as other licensed importers, will join the current supplier in a bid to diversify the source of petroleum products and enhance market competition.”
Analysts Fear Inflation May Rise
Meanwhile, as the decision to remove fuel subsidy continue to generate controversy in the country, analysts have said inflation in the country could rise to over 40 per cent. They called for palliatives such as wage review to ease the impact on Nigerians. Inflation currently stands at 22.22 per cent as at April 2023, the highest level since September 2005 when it was 24.31 per cent.
Speaking with LEADERSHIP, Head of financial institutions ratings at Agusto&Co, Ayokunle Olubunmi, whilst noting that the removal is something the country needs at the moment said its impact on citizens will be drastic. According to him, the full removal will see inflation which is already at a high level further rise to above 40 per cent. “In a country where you are already having inflation of 22 percent, and you want to move fuel price from roughly N200 per liter to something between N600 to N700 per liter, inflation will jump as high as even 40 something percent although it will come down eventually.
“I believe that full removal of subsidy is going to be counterproductive. I will rather prefer an idea of increasing it gradually so people can easily get used to it, it can be moved to like N250 and gradually remove the subsidy before December.
“But at the same time, these are the kind of decisions that we need to move the country forward, to stop the bleeding”, he stated. To Director and Chief Executive of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said the government needs to provide palliatives for a soft-landing.”
Yusuf, who noted that the removal of subsidy will unlock around N7 trillion into the federation account, said: “there must be palliatives which should be segmented into immediate, short term and medium term deliverables.
“Immediate and short-term options include wage review in public service, introduction of subsidized public transportation schemes across the country and reduction in import duties on intermediate products for food related production to moderate food inflation.”
Welcoming President Tinubu’s decision on subsidy, Yusuf said, fuel subsidy removal has enormous potential benefits. “First, there is the revenue effect. The removal would unlock about N7 trillion into the federation account. This would reduce fiscal deficit, and ultimately ease the burden of mounting debt.
“Second, is the investment effect. Currently It is extremely difficult to attract private investment into our petroleum downstream sector because of the unsustainable subsidy regime and the stifling regulatory environment. The subsidy removal will eliminate the distortions and stimulate investment. We would see more private investments in petroleum refineries, petrochemicals and fertiliser plants.
“Post subsidy regime would also unlock investments in pipelines, storage facilities, transportation and retail outlets. We would see the export of refined petroleum products petrochemicals and fertiliser as private capital comes into the space. Quality jobs will be created. There is a foreign exchange effect. This would result from the import substitution as petroleum products importation progressively decline. This would conserve foreign exchange and boost our external reserves.”
