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Tinubu’s petrol subsidy gulps N15trn as scarcity worsens

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President Bola Tinubu’s administration has spent N15.096 trillion on petrol subsidy in the last 14 months, according to BusinessDay’s calculations.
 
The value of the subsidy expenditure under Tinubu was obtained from the National Bureau of Statistics (NBS) data and information from petroleum marketers.
 
According to the NBS, Nigeria imports between 1.4 billion litres and 2.5 billion litres per month, indicating an average of 1.95 billion litres per month. In 14 months (June 2023-July 2024), the country has consumed 27.3 billion litres.
 
On the other hand, independent marketers say the landing cost of petrol and other logistics costs stand at N1,203 per litre. The NNPC Retail sells petrol at N650 per litre at its stations, leading to a differential of N553 for each litre of petrol.
 
With the N553 differential and 27.3 billion litres consumed in 14 months, the amount likely to have been spent over the period by the Tinubu administration is N15.097 trillion.
 
Kelvin Ayebaefie Emmanuel, CEO of Dairy Hills, said Nigeria must first of all be honest with the number of litres of petrol consumed in the country.
 
“The first step to address the cost of under-recovery on the premium motor spirit (PMS) subsidy is finding the actual daily consumption.
 
“The other two major factors that have gone into the re-introduction of under-recovery is the price of crude oil and the exchange rate. The only way to achieve non-payment is to have the Naira to USD pair at 750 and Brent prices at $75 per barrel,” he said.
 
“This is the reason why the government needs to adjust the domestic crude oil supply obligations and guarantee domestic refineries the feedstock they require to backwardly integrate production.”
 
President Bola Tinubu in his inauguration speech on May 29, 2023, said petrol subsidy was gone. However, it has grown bigger than the amount being paid before he came to power.
 
Nigeria’s former President Muhammadu Buhari spent N10.7 trillion on petrol subsidies between 2016 and the first six months of 2023.
 
In one year, however, Tinubu’s petrol subsidy expenditure has eclipsed that. Analysts attribute this to the naira slump after the foreign exchange liberalisation in 2023.
 
Naira has lost more than 60 percent value since it was liberalised by the current administration, analysts say. A dollar exchanges for N1,592.06 on Tuesday as against N740 on June1, 2023.
 
A week before the 2023 presidential election, which led to the new administration, Mele Kyari, group CEO of Nigerian National Petroleum Company (NNPC) Limited, revealed that the country was spending more than N400 billion monthly on fuel subsidies.
 
But on Monday, in a viral video, Kyari told the press that the state-owned company was not paying fuel subsidies.
 
“I told you there is no subsidy whatsoever. We are recovering our full costs from the products that we import.
 
“We understand why the marketers are unable to import. We hope that they do this very quickly and these are some of the interventions the government is doing. There is no subsidy,” he said.
 
BusinessDay’s analysis, however, has revealed that while the retail price of petrol stands between N650 and N750 across the country, the landing cost of petrol per litre is over N1,200 as of Monday, August 19, 2024.
 
“The government has seen the analysis and has now recognised the subsidy is back and bigger,” said Jide Pratt, chief operating officer of AIONA and Country Manager of TradeGrid.
 
Pratt said that the subsidy levels before Tinubu’s government were circa N50/N60 naira per litre using the gasoline index and the exchange rate.
 
He said: “A few months ago it was in the N200 per litre range. The exchange rate has been all over the place and this affects the landing cost of the sole importer of PMS, which is the NNPC.
 
“It was hard to justify how NNPC Retail had an N42 price advantage over other marketers who buy from her. It was very odd to justify in a petroleum market with slim margins.
 
“But I guess the chicken has come home to roost. The queues we keep witnessing albeit now longer and more frequent are a testament to maybe struggles with payment as and when due.”
 
According to a recent report by The Cable, President Bola Tinubu has approved a request by the NNPC Ltd to utilise the 2023 final dividends due the federation to pay for petrol subsidy.
 
The report showed that the president also approved the suspension of the payment of 2024 interim dividends to the federation in order to augment NNPC’s cash flow, according to presidency sources.
 
In addition, the national oil company told the president it will be unable to remit taxes and royalties to the federation account for now because of the subsidy payments, which it termed ‘subsidy shortfall/FX differential’.
 
Despite the Petroleum Industry Act of 2021 and the deregulation of the downstream sector, which permits licensed private oil marketers to import petrol, the state-owned oil company remains the only importer in Nigeria.
 
However, private marketers have struggled to access the foreign currency needed for petrol imports, forcing them to rely on the state-owned oil company for supply.
 
Over 90 licensed petroleum marketers in Nigeria have been unable to import products due to unresolved price differences, leaving them inactive nearly nine months after President Bola Tinubu announced the deregulation of the downstream petroleum sector.
 
“If you look at the price of international crude, and you compare the refined products across Africa, how much is the landing price? Right now, every refined product you have is imported,” said Pedro Omontuemhen, partner & Africa oil and gas leader, PwC Nigeria.
 
“When you compare the international price, landing price, and the state of price (in the country), that means the difference is being borne by the government, either directly or through some of the government agents.”
 
According to Omontuemhen, it doesn’t matter what the government is saying as the reality of things in the country continues to show that someone is paying for the subsidy.
 
“One thing we should be aware of is that there are subsidies everywhere in the world. Another name for subsidy is a grant. They are all over the world.”
 
 
Negative impact on government revenue
 
Petrol scarcity has worsened across the country, with a litre selling at N900 and N1,000 at some filling stations in Lagos, Abuja, Port Harcourt, Kano and other parts of Nigeria. Petrol stations selling at N650-N750 often have long queues.
 
Muda Yusuf, chief executive officer of Centre for Promotion of Private Enterprise, said the current economic situation has necessitated the open acceptance of the subsidy payment, noting that the petrol product is already being subsidised.
 
“Obviously, this affects government revenues because remittances from NNPC is one of the major sources of revenue for the government. If that is removed, we will be left with just revenues from taxes and forex gains. And when you talk about the tax revenues, a lot of it has been taken off by tax credits being offered to some companies.”
 
Yusuf said that the current price of fuel, which ranges from N617 to N1,000 across the country, is already being subsidised by the government.
 
He explained that the prices of fuel may remain high until Nigeria stops the importation of petroleum products.
 
“It is a dilemma for the government also as they are in a tight corner. Look at the recent nationwide protest, which was because of the sufferings occasioned by fuel subsidy removal.
 
“With the exchange rate, the amount we currently pay for fuel has a huge subsidy component – just that the government is not open to us. Until we stop fuel importation, we may not get any relief from the high price of petrol,” he further said.
 
Ken Ife, lead consultant on private sector development to the ECOWAS Commission, said that the government has always subsidised the price of petrol, which is why it could be sold for less than N1,200 per litre.
 
“The price of petrol should be at about N1,200, but we still get to buy at N600 plus, which means somebody is paying for subsidy somehow and I do not see the price of per litre dropping anytime soon.
 
“And if the price must drop, then some things must be done and they include ensuring that Dangote receives sufficient crude and it is allowed to pay in Naira. Also, the NNPC must also buy refined crude from Dangote.
 
“Another issue of concern is that the NNPC has almost securitised all of its crude. So, we do not know how much it has left, but it is important we ensure that Dangote Refinery gets sufficient crude in naira. Also, if the NNPC continues to import refined petrol with all the cost payable in dollars, this may cause the price of PMS to remain high,” he added.
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Just in: Tinubu, Party Leaders Reach Accord On Lagos Assembly Crisis

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By Kayode Sanni-Arewa

After weeks of back and forth and in spite of a subsisting court case over the removal of Mudashiru Obasa as Speaker of the Lagos State House of Assembly, President Bola Tinubu and some leaders of All Progressives Congress (APC), weekend, reached a political solution considered a win-win for all parties.

Sources at the villa hinted that Tinubu had received many prominent party leaders, including former APC national chairman, Chief Bisi Akande; former governor of Ogun State, Olusegun Osoba; Minister of Solid Minerals, Mr. Dele Alake; and a former commissioner in Lagos State, whose name the source refused to disclose for political reasons.

Ahead of the meeting between the president and the party leaders, the source added that another prominent Nigerian and nonagenarian from the South-west (name withheld) had also met the president over the Assembly matter and other national concerns, during which he pleaded with the president to consider his request on Lagos as his birthday gift.

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THISDAY gathered that the president met with different people on the Lagos Assembly matter, with each analysing the implications of letting the situation escalate beyond the point it was at the moment, even though some damage had been done. It was against this backdrop, the source said, that the meeting agreed that Obasa’s removal had come to stay and there was no going back on his speakership, especially as the laws guiding the Assembly were clear about the election and removal of a speaker.

Particularly more instructive was the revelation that virtually everyone, who had something to say on the Assembly crisis, spoke badly about the leadership of Obasa and his conduct for the period he held sway.

They argued, among other things, that if 37 out of his 39 colleagues stood against him with scathing remarks about his leadership, in addition to the position of the political leaders in the state, who also wrote him off, then returning him would be against the tide. They reckoned that would be dangerous for the politics in the state, and the democratic credentials of the president.

It was on the strength of these arguments that the president resolved at the meetings that Obasa’s removal had come to stay, but a plea was made to salvage his political future by giving him a soft-landing.

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It was in the bid to give him a soft-landing, the source added, that a conclusion was reached during the meetings that Obasa’s removal should be quashed and commuted to resignation, the same way the removal of a former deputy speaker of the Assembly, Hon. Funmi Tejuosho, was converted to resignation.

Once that was settled, the fate of the current speaker, Hon. Mojisola Meranda, was next on the agenda and it was somewhat tricky for the president, the speaker being a woman.
The source explained that while the president wanted the elevation of a woman in the politics of the state, the speaker coming from the same senatorial district as the governor – Lagos Central, made it impossible for her to keep her position.

One of the reasons canvassed in support of that viewpoint was that, if the governor was elected from Lagos Central and his deputy from the East, then the largest senatorial district, Lagos West, could not be left out of the power equation on account of the leadership crisis in the Assembly.

The source disclosed that the president was so disturbed about the situation that he asked if another woman from Lagos West could be sourced and put forward, instead, so that the women folk would not allege discrimination in the power game.

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Unfortunately, the only woman from that part of the state was not only a first timer, but also elected on the platform of a minority party, Labour Party, making her choice impracticable in view of the power arrangement in the state.
The meeting concluded that Meranda, too, should resign and stand down from the speakership position and allow someone from Lagos West to occupy the office, just so that none of the three senatorial districts would feel alienated.

Further explaining how the state arrived at this juncture, the source explained that contrary to insinuations in some quarters, the president did not care about Obasa’s removal, as he was not special.

The source said Tinubu’s response conveyed the impression that if Obasa was unable to manage and carry his colleagues along, to the point that he lost their trust, then the president would not do his job for him.
It added that there was also the feeling that Obasa had served as Speaker for over nine years by riding on the coattails of the president, and that was enough compensation, for now.

However, the source said the president was angry with the fact that Obasa’s removal caught him unaware. He was not just the political leader of the party in the state and at the national level, but also as the Commander-in-Chief of the armed forces. He considered being taken off guard in such situation discourteous, and having attendant political implications.

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But after several interventions, the president, the source said, looked beyond the failings of the assembly members, and was now interested in moving forward. This disposition gave rise to the solutions collectively arrived at.

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Canada: Immigration orders deportation of retired Nigerian police officer, wife

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By Kayode Sanni-Arewa

Canadian immigration authorities have reportedly denied asylum to Wale Francis Akinpelu, a retired Nigerian police officer, and his wife, Ajarat Mojirola.

They were denied asylum due to concerns over his past service in the Nigerian police force.

The decision was based on allegations of human rights violations linked to the Nigerian police, which has faced accusations of corruption and misconduct.

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The couple left Nigeria in 2017, claiming they were fleeing threats from a criminal gang.

Mrs. Akinpelu first traveled to the United States in May 2017, and her husband joined her in October after resigning from the police.

In 2018, they moved to Canada and applied for refugee protection, arguing that they were at risk of harm if they returned to Nigeria.

However, Canadian authorities questioned Mr. Akinpelu’s credibility due to his association with the Nigerian police.

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His application was suspended, and later, a federal court upheld its rejection, ruling that his past employment disqualified him from asylum under human rights laws.

The couple’s applications were processed separately.

Mrs. Akinpelu’s request was initially denied in 2019 after authorities found inconsistencies in her claims.

She appealed the decision, leading to a new hearing, but her asylum application was rejected again in February 2023.

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The court ruled that her evidence contained contradictions, and some documents appeared fraudulent.

In her legal challenge, she argued that the rejection process was unfair.

However, Justice Norris ruled against her, stating that her claims relied heavily on her husband’s statements, which lacked credibility.

The judge pointed out that she failed to provide substantial proof to support her fears of persecution.

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With both asylum requests denied, Canadian authorities are set to proceed with the deportation process for the couple.

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FG Shifts Council Meeting Amid Osun LG Crisis

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By Kayode Sanni-Arewa

The Federal Ministry of Information and National Orientation has announced the postponement of the National Council for Art, Culture, Tourism, and Creative Economy meeting, originally scheduled to be held in Osun State from February 25 to 27, 2025.

The decision comes in response to heightened political tensions in the state following the local government crisis.

The Minister of Information and National Orientation, Mohammed Idris, communicated this decision through an internal memo titled ‘Urgent Action Against Hosting of National Council for Art, Culture, Tourism and Creative Economy from 24-27 February 2025, in Osun State’, which was addressed to State Commissioners, Directors of MDAs, Heads of Departments/Units, and key stakeholders.

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“With reference to the above, I wish to bring to your notice the current tense situation in Osun State stemmed from political unrest and uproar in view of the ongoing local government elections”, the memo partly read.

The memo further directed all concerned parties to take note of the change in schedule and assured them that a new date for the meeting would be announced in due course.

“From the foregoing, I am directed by the Hon. Minister to inform you that the upcoming Council Meeting scheduled to hold in Osun State from 25 – 27 February 2025 has been postponed to a later date that will be duly communicated.

“Any inconvenience(s) caused is highly regretted, please”, the memo further stated.

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The ministry also urged recipients of the circular to ensure its wide dissemination to all relevant stakeholders.

“You are requested to give this Circular the needed circulation. While thanking you for your usual cooperation and understanding, please accept the Hon. Minister’s warm regard”, the memo concluded.

Recall that the Peoples Democratic Party won all the chairmanship and councillorship seats in all the 30 local government areas of Osun State on Saturday.

The Chairman of the Osun State Independent Electoral Commission, Hashim Abioye, made this known at a press conference on Saturday in Osogbo, the state capital.

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Abioye also said the PDP also cleared the 332 councillorship seats in the poll.

The OSSIEC chairman, who said Certified True Copies of the result of the elections would be made available to whoever is interested in having them, congratulated the candidates on their victory at the poll.

Also, on Sunday, Governor Ademola Adeleke inaugurated the newly elected LG chairmen and councillors in the Saturday poll.

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