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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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Supreme court dumps govs suit seeking to declare EFCC, ICPC illegal

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By Kayode Sanni-Arewa

The Supreme Court on Friday dismissed a suit filed by 19 state governments against the federal government, challenging the constitutionality of the laws establishing the Economic and Financial Crimes Commission, EFCC, and two others.

The apex court threw out the suit for lacking in merit and substance.

Justice Uwani Abba-Aji who read the lead judgment held that the states were completely wrong in holding that EFCC established by an act of the National Assembly was an illegal and unlawful body.

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In the unanimous judgment of a 7-man panel of Justices of the court, the power of the EFCC, ICPC and NFIU to arrest and prosecute offenders were affirmed.

The plaintiffs, in the suit, marked: SC/CV/178/2023 had argued that the Supreme Court, in Dr Joseph Nwobike vs Federal Republic of Nigeria, had held that it was a United Nations Convention against corruption that was reduced into the EFCC Establishment Act and that in enacting this law in 2004, the provision of Section 12 of the 1999 Constitution, as amended, was not followed.

The argument was that, in bringing a Convention into the Nigerian law, the provision of Section 12 must be complied with.

According to them, the provision of the Constitution necessitated the majority of the states’ Houses of Assembly agreeing to bring the convention in before passing the EFCC Act and others, which was allegedly never done.

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The argument of the states in their present suit, was that the law, as enacted, could not be applied to states that never approved of it, in accordance with the provisions of the Nigerian constitution.

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Appeal Court voids MC Oluomo’s election as NURTW president

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By Kayode Sanni-Arewa

The Court of Appeal in Abuja has upheld the re-election of Tajudeen Baruwa as the National President of the National Union of Road Transport Workers (NURTW), rendering the recent election of Musiliu Akinsanya, widely known as MC Oluomo, invalid.

According to court documents, the appellate court affirmed the March 11, 2024, judgment of the National Industrial Court, Abuja, which recognized Baruwa’s leadership. This judgment effectively nullifies the November 9, 2024, election that saw MC Oluomo emerge as the union’s president during a conference held in Osogbo, Osun State.

The ruling was delivered by a panel of three justices—Hamma Akawu Barka, Nnamdi Okwy Dimgba, and Asmau Ojuolape Akanbi—who dismissed the appeal and imposed a cost of N100,000 on the appellants.

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This Appeal is devoid of merit and the same is hereby dismissed,” the court stated in its judgment, which was read by Justice Barka.

The court further affirmed the National Industrial Court’s validation of the delegates’ conference held on May 24, 2023, across six zonal councils, where Baruwa secured a second term as president. It also upheld the August 23, 2023, National Delegates Conference in Lafia, Nasarawa State, where Baruwa and other national officers were inaugurated.

Justice O. O. Oyewumi of the National Industrial Court had earlier ruled that the October 25, 2023, national delegates’ conference, which produced Isa Ore as acting president, and the subsequent November 9, 2024, election overseen by Ore, were invalid.

The judgment declared that there was no evidence of a leadership crisis in the union to justify the invocation of a ‘doctrine of necessity,’ which led to the formation of a caretaker committee by the former president, Najeem Yasin.

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Oyewumi also restrained Yasin, the union’s former president and chairman of its Board of Trustees, from interfering in the day-to-day operations of the union, limiting his role to board matters.

“This National Delegates Conference held on October 25, 2023, cannot stand and is hereby declared null and void,” the judge ruled.

The Appeal Court’s decision has now cemented Baruwa’s position as the legitimate leader of the NURTW, invalidating all actions taken by the Isa Ore-led caretaker committee and the election that brought MC Oluomo to power

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BREAKING: Taraba boils, many feared k!l|ed as herders, farmers clash

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By Kayode Sanni-Arewa

Four persons have been reported dead following a fresh conflict that erupted between herders and farmers in
Karim-Lamido LGA of Taraba State.

The violence which occurred in Bambur community of the council, was reported to have started on Thursday after a heated argument over farmland escalated, resulting in fatalities and injuries of varying degrees.

Confirming the incident, the council chairman, Bitrus Danjos, stated that measures have been implemented to prevent further loss of lives and property.

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He disclosed that security personnel have been deployed to the affected areas to restore peace.

“When the issue arose, the council acted swiftly by collaborating with security agencies to bring the situation under control,” Danjos said.

Though he could not give the exact figure of those who sustained injuries, he confirmed that those injured are currently receiving medical attention at Bambur General Hospital and Zailani Dispensary.

Calling for calm, he urged the warring parties to embrace peace, assuring the community that efforts are ongoing to resolve the matter amicably through dialogue and other measures.

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“The council is committed to ensuring a peaceful resolution and has taken various steps to engage stakeholders in meaningful discussions,” Danjos emphasized.

Also confirming the report, the Taraba State Police Command, through its spokesperson, Usman Abubakar, said heavily armed anti riot policemen have been drafted to the area, and that normalcy had been restored.

While residents of the community claimed that four deaths were recorded, Police sources told our reporter that only one person was killed, and two others injured.

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