Fuel pricing: It’ll be dangerous to go back to fuel subsidy era – Buhari
President Muhammadu Buhari has warned that it would be economically dangerous for Nigeria to go back to the era of fuel subsidy, citing grave financial cost and a return to the era of long fuel queues as certain results.
President Buhari spoke on Monday while declaring open the First Year Ministerial Performance Review Retreat for Ministers, Permanent Secretaries and Top Government Functionaries, at the State House Conference Centre.
The President, who was represented by the Vice President, Professor Yemi Osinbajo (SAN), also spoke about the recent electricity tariff adjustment, which he regretted had to be allowed in order to be able to address the inconveniences that Nigerians have over the years had to experience in power supply.
Speaking on the fuel price hike, President Buhari noted that this was as a result of the decision to deregulate the price of the premium motor spirit (PMS), popularly called petrol and the eventual removal of the subsidy previously provided for the importation of the product, explaining that the recent hike was as a direct result of the activities in the global petroleum market.
He observed now that the subsidy had been removed, government has removed and saving the country lots of financial resources, going back to subsidizing would not be advisable now, considering that national revenue had dropped by 60%, also pointing out that the revised 2020 Budget has no provision for fuel subsidy.
He, however, assured Nigerians that government would play its role in the new regime by ensuring that marketers do not take advantage of the populace through arbitrary price fixing.
“The COVID-19 pandemic, which has affected economies globally, has compelled us to make some far-reaching adjustments that may cause some initial pain, but which is necessary for long-term gains. As you all know, when oil prices collapsed at the height of the global lockdown, we deregulated the price of premium motor spirit (PMS) such that the benefit of lower prices was passed to consumers.
“This was welcomed by all and sundry. The effect of regulation though is that PMS prices will change with changes in global oil prices. This means, quite regrettably, that as oil prices recover, we would see some increases in PMS prices.
“There are several negative consequences, if Government should resume the business of fixing or subsidizing PMS prices. First of all, it would mean a return to the costly subsidy regime. Today we have 60% less revenues; we just cannot afford the cost. The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration. Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices.
“Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now have no choice.
“Nevertheless, I want to assure our compatriots that Government will remain alert to its responsibilities. The role of government now is to prevent marketers from raising prices arbitrarily or exploiting citizens. This was why the PPRA made the announcement a few days ago setting the range of price that must not be exceeded by marketers. The advantage we now have is that anyone can bring in petroleum products and compete with marketers, that way the price of petrol will be keep coming down”, the President said.
Speaking on the recent electricity tariff hike, President Buhari said he had been unhappy over the poor state of electricity service supply to Nigerians for many years, acknowledging also that the hike would be coming with discomfort, he said the administration had directed that consumers who fall within poor and vulnerable category be protected as the tariff adjustment would only affect those with higher consumption.
He said further that government had taken due notice of the prevalent complaints of arbitrary estimated billings by electricity distribution companies (DISCOs) and has directed that a mass metering programme be initiated to correct the menace of estimated billing.
“The other painful adjustment that we have had to make in recent days is a review of the electricity tariff regime. If there is one thing that we have heard over and over again, it is that Nigerians want consistent and reliable power supply. So the power sector remains a critical priority for the administration.
“Protecting the poor and vulnerable, while ensuring improved service in the power sector, is also a major priority for Government. And our policies, like the social investment programmes and other socio-economic schemes to benefit Nigerians, show that we remain focused on improving the welfare of the common man.
“The recent service-based tariff adjustment by the Discos has been a source of concern for many of us. Let me say frankly that like many Nigerians I have been very unhappy about the quality of service given by the Discos. That is why we have directed that tariff adjustments be made only on the basis of guaranteed improvement in service.
“Under this new arrangement only customers who are guaranteed a minimum of 12 hours of power and above can have their tariffs adjusted. Those who get less than 12 hours supply (Band D and E Customers) will not see any tariff adjustment. The poor and under privileged who were on R1 lifeline tariffs in the old structure will be maintained on lifeline tariffs, meaning that they will experience no increase.
“Government has also taken notice of the complaints about arbitrary estimated billing. Accordingly, a mass metering program is being undertaken to provide meters for over 5 million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process. NERC has also been instructed to strictly enforce the capping regulation which will ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood,” he said.
Speaking further, the President said beyond the efforts being made to improve reliable and stable power supply through the conventional national grid source, the federal government, through the recently initiated Economic Sustainability Plan (ESP), is working on electrifying five million homes, which are not connected to the national grid, through the solar home systems.
According to him, this innovation has more than just giving light to the homes of more than 25 million Nigerians, but would also provide job opportunities to around 300,000 persons.
“In addressing the power problems we must not forget that most Nigerians are not even connected to electricity at all. So, as part of the Economic Sustainability Plan, we are providing Solar home systems to 5 million Nigerian households (impacting up to 25 million individual Nigerians) in the next 12 months.
“We have already begun the process of providing financing support through the CBN for manufacturers and retailers of Off-Grid Solar Home Systems and Mini-Grids who are to provide the systems. The Five million systems under the ESP’s Solar Power Strategy will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation. This means that more Nigerians will have access to electricity via a reliable and sustainable solar system.
“The support to Solar Home System manufacturers and the bulk procurement of local meters will create over 300,000 local jobs while ensuring that we set Nigeria on a path to full electrification. The tariff review is not about the increase, which will only affect the top electricity consumers, but establishing a system which will definitely lead to improved service for all at a fair and reasonable price,” he said.
On the concerns about the timing and reason behind introducing both price adjustments at about same period, he explained “it is important to stress that it is a mere coincidence in the sense that the deregulation of PMS prices happened quite some time ago, it was announced on 18 March 2020 and the price moderation that took place at the beginning of this month was just part of the on-going monthly adjustments to global crude oil prices. Similarly, the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made,” he explained.
He, however, assured that his administration is not insensitive to the plights of Nigerians at the period, reiterating the commitment to continue introducing relief packages to alleviate the conditions of the people as well as to support various sectors of the economy.
“This government is not insensitive to the condition of our people and the very difficult economic situation and we will not inflict hardship on our people. Ministers and senior officials must accordingly ensure the vigorous and prompt implementation of the ESP programmes to give succour to Nigerians at this difficult time.
“In this regard, the Central Bank of Nigeria (CBN) has created credit facilities (of up to N100B) for the Healthcare (N100 Billion) and Manufacturing (N1 Trillion) sectors. From January 2020 to date, over N191.87B has already been disbursed for 76 real sectors projects under the N1Trillion Real Sector Scheme; while 34 Healthcare projects have been funded to the tune of N37.159B under the Healthcare Sector Intervention Facility.
“The facilities are meant to address some of the infrastructural gap in the healthcare and manufacturing sector as a fall out to the COVID-19 pandemic and to facilitate the attainment of the Governors 5-year strategic plan,” he said.
Addressing the participants at the retreat, the President said “to address our current economic challenges, and consolidate on our achievements over the past year, this retreat has been designed to: Review the performance of each Minister in delivering the priority mandates, including programmes and projects assigned to them upon their appointment in 2019; Identify key impediments to implementation; and Re-strategize on how to accelerate delivery of results, given the current economic situation; evaluate the activities of the Ministries over the last twelve months with regard to the delivery of our agenda and promise to Nigerians.
“The Ministers are urged to work closely with the Permanent Secretaries to ensure accelerated and effective delivery of the policies, programmes and projects in the priority areas. I have also directed the Secretary to the Government of the Federation to intensify efforts at deepening the work of the Delivery Unit under his coordination”, he said.
In his welcome address, Secretary to the Government of the Federation, Mr. Boss Mustapha, reeled out the programme and content of the retreat out to the participants, emphasizing its importance and charging them to accord it the attention it required.
Mustapha, who acknowledged that the government had been unable to effectively track and monitor FEC approved policies, projects and programmes as earlier envisaged, due to the lock-down, arising from the COVID-19 pandemic, assured all that the process would be accelerated by Delivery Unit in the coming months.
He said that as of September 2, 2020, the number of Memoranda, Briefs and Notes processed by the Cabinet Affairs Office stood at 282, while Federal Executive Council (FEC) had considered/approved 191 Memorandum, Briefs/Notes.