Page 7 - DMEA Week 04 2022

DMEA COMMENTARY DMEA

with the government on the very critical issues Certainly, there will be some change. There
of ensuring local refining of petroleum, creation already has been, in that the state agencies that
of sustainable jobs and affordable price of petrol used to regulate the market – the Department
for Nigerian workers and people.” of Petroleum Resources (DPR), the Petroleum
Products Pricing Regulatory Agency (PPPRA),
Emergency subsidy funding and the Petroleum Equalisation Fund (PEF) – no
In the meantime, Buhari’s team has already taken longer exist.
action with respect to the fuel subsidy. They have been replaced with two new agen-
Finance Minister Zainab Ahmed, who had cies – the Nigerian Midstream and Downstream
previously led the effort to eliminate gasoline Petroleum Regulatory Authority (NPRA) and
price supports in line with the PIA, met with the Nigerian Upstream Regulatory Commission
members of the National Assembly on Janu- (NURC), and only the first of these has any juris-
ary 24 and said that the government wanted to diction over gasoline prices and sales.
suspend the lifting of the subsidy indefinitely. Additionally, there will be change in that new
“[After] the [2022] budget was passed, we had refineries are slated to open.
consultations with a number of stakeholders, Dangote Industries is slated to launch the first
and it became clear that the timing was prob- phase of operations at its gigantic 650,000 barrel
lematic,” she said. per day (bpd) oil-processing plant near Lagos
“We discovered that practically, there is still before the end of 2022, and several independent
heightened inflation and that the removal of companies are working to bring small modular
[the] subsidy would further worsen the situation refineries into production as well.
and impose more difficulties on the citizenry. Hopefully, these facilities will help increase
Mr. President does not want to do that.” the amount of gasoline available for purchase
The Buhari administration hopes that the in Nigeria to the point where the price subsidies
launch of new domestic refining capacity will (and the burden the impose on the country’s
help solve problems in the domestic fuel market budget) are no longer necessary.
but still has to fill certain gaps in the meantime, But in the meantime, Nigerian consumers
she said. “What we are now doing is to continue will continue to be able to buy gasoline cheaply,
with the ongoing discussions and consultations as they have been doing for years. Moreover,
in terms of putting in place a number of meas- they will still be doing in February 2023, when
ures,” she explained. the country is due to hold its next presidential
“One of these measures includes the roll-out election.
of refining capacities of existing refineries and Buhari will not be participating in that con-
the new ones, which would reduce the amount of test, as he is legally prohibited from seeking a
products that would be imported into the coun- third term in office.
try. We therefore need to return to the National However, he appears to be rather keen to
Assembly now to amend the budget and make ensure that his party, the All Progressives Con-
additional provision for a subsidy from July to gress (APC), remains in power – and his odds
whatever period that we agreed was suitable for of achieving this aim will certainly be higher if
the commencement of the total removal.” voters are not heading to the polls with fresh
memories of demonstrations over gasoline price
Limited change increases.
In practical terms, this means that the extent of As such, Buhari’s administration is probably
change in Nigeria’s domestic fuel sector will be perfectly content to keep moving slowly towards
limited over the next 18 months. full implementation of the PIA.™

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