President Bola Tinubu caught his admirers, members of his party, the All Progressives Congress (APC), including persons in his kitchen cabinet and hapless Nigerians napping, when in his inaugural speech at the Eagle Square, Abuja, on May 29, 2023, he scrapped the fuel subsidy regime, alluding to the scam and corruption that had trailed the implementation of the subsidy regime. Since then, millions of Nigerians have been grappling with the economic and social impact of the removal of subsidy on petrol, albeit rising inflation and skyrocketing cost of living.
When former President Goodluck Jonathan left office in 2015, the pump price of petrol was N87 per litre. Under the Muhammadu Buhari administration, the pump price jumped from an initial N145 per litre to N195 per litre before he handed over power to Tinubu. Following the President Tinubu’s announcement of the end of the subsidy regime, the pump price has witnessed an astronomical increase, majorly due to the fall of the naira against the dollar in the foreign exchange market and solely owing to the fact that the nation’s four public refineries aren’t refining petroleum products, leaving the country dependent on foreign refined imports.
At a point in time, a litre of petrol was sold for as high as N1, 100 per litre and in some states, higher than that. With each jump in the pump price of petrol, transport fares went up, cost of foodstuffs witnessed an increase and prices of goods and services, ultimately, rose as well. In all these, the major culprit for the importation of foreign refined petroleum products if the corruption riddled and inefficient Nigerian National Petroleum Corporation (NNPC) Limited, which has repeatedly failed to manage and run its four local refineries, despite several attempts to carry out turn around maintenance of them.
Critics of the Tinubu administration have criticized the hasty manner in which the subsidy regime was jettisoned without the administration putting the necessary economic and social measures in place to enable Nigerians cushion the effects of the subsidy removal. Till date, Nigerians are still reeling under the economic impacts of this action by the current government. For instance, not much has been achieved in much of the policies and programmes put forward by the administration to assist survive this phase of subsidy removal. Apart from the increase in the national minimum wage, progress in the provision of CNG mass transport vehicles and the transition from the reliance on petrol to CNG has been minimal.
Former Vice President, Atiku Abubakar has been virulent in knocking the Tinubu administration has handled the subsidy removal issue, asserting that the government’s trial-and-error manner of battling to reverse the negative consequences of subsidy removal have failed Nigerians. According to the 2023 presidential candidate of the Peoples Democratic Party (PDP), the Tinubu administration needs to come clean on its actual position on the subsidy policy, by providing clarity on the fuel subsidy regime, including the fiscal commitments and benefits from the fuel subsidy reform and the impact of this on the federation account, instead of the knee jerk approach it has adopted so far.
“It is curious that since April 2024, fuel queues have mounted at many filling stations across Nigeria, and the infamous ‘black market’ has sprouted in several states. How much PMS is being imported and distributed, and at what cost? What is the implicit subsidy?” If the subsidy regime had been characterized by opaqueness, what would we say of a situation where the subsidy is still being paid under the cover without Nigerians in the know?
“Like millions of Nigerians, I was shocked to learn through media reports that the government is still supporting downstream consumption.
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Now, we know that expenditure on fuel subsidy may reach N5.4 trillion in 2024, compared to the N3.6 trillion spent in 2023, the same year that Tinubu claimed to have abolished fuel subsidy. I wish to restate that Nigeria is not working, and what we have had in a little over a year is a cocktail of trial-and-error economic policies. Paying subsidies and lying about it is nothing to brag about. Nigerians deserve better than this deception,” Atiku had said.
The Presidency in replying Atiku, said the N5.4 trillion expected subsidy savings would be invested in the provision of infrastructure and social welfare programs to improve the lives of Nigerians. Bayo Onanuga, special adviser on information and strategy to Tinubu, responded to Atiku’s comments by dismissing the former vice president’s submissions as outdated and unrealistic. Onanuga declared that Atiku’s postulations revealed his misunderstanding of the depth of Nigeria’s economic decay, which the Tinubu administration inherited. The presidential spokesman highlighted that since 1978, Nigeria has adjusted petrol prices 22 times without fully removing the subsidy. This approach, he said benefited only a select few and placed an undue burden on the economy. “The subsidy system drove the country into severe economic disarray,” adding that fuel prices remained artificially low despite the government spending trillions to keep them that way.
Describing Atiku’s remarks as “hare-brained propositions lacking practical alternatives,” Onanuga further argued that Atiku should acknowledge the scale of economic mismanagement under previous administrations, including the staggering subsidy costs that exceeded oil revenues. According to him, the N5.4 trillion expected in subsidy savings for 2024 will be channeled into development projects benefiting all tiers of government. These funds are set to elevate living standards by boosting social interventions and enhancing infrastructure across Nigeria.
In the midst of the gloom resulting from the end of the subsidy regime and the brickbats that followed, the completion and coming on stream of the Dangote Refinery was like a silver lining, portending hope for a nation that its economic life wire is tied to petrol. But unexpectedly, there was a twist in the tale; instead of the populace celebrating that likely reduction of the pump price of petrol with the emergence of the Dangote Refinery, they’re subjected to months of haggling between the federal government, through the NNPC Ltd, that insisted on selling crude to Dangote in dollars, denying the refinery the supply of crude oil, allegations that refinery’s products weren’t clean enough, to attempts to become the sole buyer and supplier of Dangote’s refined products and other blackmail tactics employed by other players in the petroleum industry, all seeming to frustrate the Dangote Refinery to bridge the gap in the availability of locally refined petroleum products and ultimately, reduce the nation’s over-dependence on fuel imports.
The good news now is that all the issues between the NNPC Ltd and Dangote as well as the retailers who petrol and other petroleum products to the public have been resolved amicably. On November 11, the NNPC Ltd announced that it bought fuel from Dngote Refinery. The cost was N898 per litre. Spokesperson of the NNPC Ltd, Olufemi Soneye, in confirming the development said: “We successfully loaded PMS at the Dangote Refinery today. The claim that we purchased it at N760 per liter is incorrect. For this initial loading, the price from the refinery was N898 per litre.”
Before the U-turn by the NNPC Ltd became public on November 11, the Independent Petroleum Marketers Association of Nigeria (IPMAN) had the previous night announced that its over 30,000 members were set to buy petrol, from the Dangote Refinery in bulk. IPMAN also revealed that the price of petrol was N940/litre and N990/litre when purchased using ships and trucks, respectively. Heartwarming was equally the decision of the independent oil marketers not to import petrol again following the deal to begin direct lifting from the Dangote Refinery.
IPMAN President, Abubakar Garima, speaking on a television programme, said the pump prices of petrol at its retail outlets will drop following the agreement with the Dangote Refinery to lift products directly from the plant. Garima stated that “presently, we have been given two different arrangements on how to buy fuel from the refinery. There is the one that we can load the vessels and carry to our various depots at the rate of N940 per litre. Then for the depots, it is at the rate of N990 per litre. The difference is because we have to load it and carry it to another part of the state. We use vessels to carry these products and there is another one to load from the gantry.
“For Port Harcourt, Warri, Calabar, we have to use vessels because there is no Dangote loading gantry there, we have to carry it to our private depot and discharge and distribute it to our members.” He expressed optimism that the collaboration will ensure a consistent and affordable supply of petrol and other petroleum products nationwide. Most importantly, Garima projected that the petrol pump price may be reduced by N50 or more, depending on the location of purchase, explained that direct purchases from the Dangote Refinery will eliminate payments to intermediaries and depot owners. According to him, this reduction in costs will be reflected in the prices of petrol within the coming weeks.
“We have the overall market in the country. We go everywhere in the country. The implication goes beyond the issue of price, but still, price is the main target. The masses are looking for how we, the independent petroleum marketers, can reduce price for them. So the price too will reduce because we are not buying through the third party.So the profit that we have been giving to the third party like the NNPC and depot owners will be reduced. That is the issue. For instance, the current price in Maiduguri now is N1, 200 per litre. So with these current changes, it may likely reduce to N1,150 which there is a reduction of N50. So that’s N1,150. It may even be below that.
“And as we continue, you know, this thing, since its deregulation. Yes. As we continue. It can go down. It can go down continuously because, provided that the product is available, you may find that the market will come a little bit low, and then the naira will start appreciating. And then if the crude oil price is reduced, automatically, the same thing will be reduced,” he explained.
Also, he highlighted that the new arrangement will help end fuel scarcity, as products will be more readily available. “Again, the availability is also there. If a marketer pays for a product before, these retailers hold our money before supplying us with fuel. That’s the reason why you may find sometimes these filling stations don’t have fuel. But now, since we are getting the product directly from the Dangote Refinery, the issue of delay is eliminated. Immediately, we get the product, we discharge to our filling stations,” he added. Furthermore, Garima revealed that the NNPC has begun settling its N4bn debt owed to marketers.
The implications of the Dangote Refinery entering the market are huge for the country. The strain on the naira will reduce drastically, as the era of refined petroleum products may have come to an end, unending fuel queues at filling stations may become a thing of the past, transport fares may come down and the cost of living for the common man may become more bearable.
