NLC, Senate fault N5,000 palliative
Nigerians to pay additional N3.4tn annually on petroleum consumption
The Group Managing Director of the Nigerian National Petroleum Company Limited, Mele Kyari, last Tuesday announced at a World Bank event in Abuja that petrol would sell for between N320 and N340 per litre from February 2022.
The current pump price of petrol at filling stations is between N162 and N165/litre, although the product is mostly sold at the upper N165/litre rate due to recent challenges in the downstream oil sector.
In his submissions Nigerians will spend about N6.732tn on the purchase of Premium Motor Spirit, popularly called petrol, within a period of 12 months once the Federal Government stops subsidising the commodity from February next year, he revealed
speaking on the development on Wednesday, The Nigeria Labour Congress described government’s plan as a “penny wise-pound foolish” gamble.
The Senate and economic experts also faulted the Federal Government’s plan to pay N5,000 each to 40 million Nigerians to cushion the effect of fuel subsidy removal.
The N165/litre price is basically because the product is being subsidised by the Federal Government through the NNPC.
Going by the latest revelation of the NNPC boss that subsidy on petrol would end in February and the price jerked up to N340/litre, findings showed that Nigerians would spend about N18.7bn daily for the over 55 million litres of petrol consumed each day across the country.
Users of petrol would spend about N561bn for the average of 30 days in a month, while in the 12-month period, consumers would pay about N6.732tn.
In its most recently published monthly operational and financial report, which was for April 2021, the NNPC put the daily petrol consumption in Nigeria at 55.79 million litres.
“To ensure continuous increased PMS supply and effective distribution across the country, a total of 1.67 billion litres of PMS translating to 55.79 million litres per day were supplied for the month in the downstream sector,” the oil firm stated.
Working with 55 million litres daily consumption figure and the current price of N165/litre, consumers of petrol are estimated to be currently paying N9.075bn daily and about N277.25bn monthly.
By increasing the cost of petrol to N340/litre and matching it against the 55 million daily consumption rate, Nigerians would be paying N18.7bn daily for PMS, while their monthly spending would be N561bn.
This means that the annual fuel consumption bill of Nigerians will be in the region of N6.732tn.
From the foregoing, it implies that Nigerians would pay an additional amount of about N283.75bn every month on petrol when the new N340/litre price for PMS comes into effect.
Therefore within a period of 12 months, Nigerians would spend about N3.4tn extra on the current N3.3tn for the purchase of petrol should the Federal Government halt the subsidy regime.
But the government promised on Tuesday that it had plans to cushion the economic effect of the planned subsidy removal, as it announced plans to replace fuel subsidy with a N5,000 monthly transportation subsidy to the poor.
According to her, a monthly transport subsidy in the form of cash transfer of N5,000 will be given to between 30 and 40 million Nigerians.
The NNPC, being the sole importer of petrol into Nigeria for the past four years, has been subsidising the commodity and has been incurring humongous cost as subsidy.
This development had severely depleted the oil firm’s remittances to the Federation Accounts Allocation Committee, hence, reducing the monthly allocations to the three tiers of government consistently.
NLC rejects subsidy removal, says it’s a foolish gamble
The congress in a statement on Wednesday by its President, Ayuba Wabba, rejected the planned fuel subsidy removal.
It said the government’s thoughts on the move was cloudy, describing it as a ‘penny wise pound foolish gamble.’
The congress described the move as a recipe for aggravated hyper-inflation.
In a statement titled, ‘Nigerian workers refuse to take the bait,” the congress said, “The contemplation by government to increase the price of petrol by more than 200 per cent is a perfect recipe for an aggravated pile of hyper-inflation and astronomical increase in the price of goods and services.
“This will open a wide door to unintended social consequences such as degeneration of the current insecurity crises and possibly citizens’ revolt. This is not an outcome that any sane Nigeria wishes for.”
Wabba said the discussion between the Federal Government and the World Bank is a monologue, adding that the NLC would continue to insist on its rejection of deregulation based on import-driven model.
The NLC President said it was difficult to convince Nigerian workers why the country is the only nation among the Organisation of Petroleum Exporting Countries that could not produce its own refined petroleum products and thus adopts the neo-liberal import production model of refined petroleum products.
The Senate also faulted plans by the N5,000 to 40 million Nigerians as transportation expenses.
But the Chairman, Senate Committee on Finance, Senators Solomon Adeola, told journalists on Wednesday that there was no provision for N5,000 for the said monthly stipend for 40 million Nigerians, in the 2022 budget currently before the National Assembly.
He said the executive would have to bring the proposal to the parliament for approval before it could start its implementation.
He said there is no way the executive would take a unilateral decision on a programme that would gulp N2.4tn without getting the approval of the parliament
He also queried the criteria that the executive would use to determine the beneficiaries of the transportation allowance.