Page 5 - AfrOil Week 03 2022

AfrOil COMMENTARY AfrOil

Certainly, Finance Minister Zainab Ahmed from this. Can’t we do something about it? It is a
has made a good-faith attempt to do so. Last failure on us if we are not able to control it, this
autumn, she said Abuja intended to eliminate particular aspect of smuggling of the petrol, and
the gasoline subsidy completely as of mid-2022. then in return push the burden to the ordinary
Additionally, she stressed that the government citizen.”
would work to mitigate the impact of higher fuel
prices for impoverished Nigerians. Traffic jam ahead?
Specifically, she stated that one of the meas- As of press time, it was not at all clear how the
ures being contemplated was the payment of a matter was likely to be resolved.
travel grant of NGN5,000 ($12.06) per month Within the Buhari administration, the pres-
to the country’s 20-40mn poorest citizens for a ident himself has remained silent, and Ahmed
period of up to 12 months, worth around $5.8bn. also has not responded publicly to Lawan’s state-
She also asserted that it was worthwhile to bear ments. Some Nigerian analysts and observers
the cost of this temporary programme rather have commented on the matter, in line with their The PIA per se is
than continue to pay the subsidy, which was own political leanings. However, Ahmed’s sup-
currently costing Abuja NGN243bn ($586mn) porters at the World Bank and the International not going to be
per month, or nearly NGN3 trillion ($7.23bn) Monetary Fund (IMF), both of which have been
per year. pressing Abuja to eliminate the subsidy for years, enough to remove
At the time, Ahmed reported that the Nige- on the grounds that it is burdensome and a drain
rian government had drawn up this year’s on government revenues, have not spoken up all the obstacles
spending plans with this agenda in mind. Under yet, and it may take several days for them to do to the smooth
the 2022 budget, she explained, Abuja is only so.
supposed to continue paying the subsidy during Meanwhile, concerns are growing within functioning of
the first half of the new year. Nigeria about the lack of political will to remove
subsidies ahead of next year’s presidential elec- Nigeria’s oil and
Lawan’s directions from Buhari tions, noted Ian Simm, principal advisor at
Nevertheless, the government appears to be in consultancy IGM Energy. “This hot potato has gas industry
the process of shifting its plan abruptly to the been passed off between administrations, and
back burner. with Buhari unable to run again next year, there
After a closed-door meeting with Buhari appears to be more than a fair chance he won’t
on January 18, Ahmad Lawan, the president of risk tarnishing his reputation by tackling subsi-
Nigeria’s Senate, indicated that the PMS subsidy dies,” he told NewsBase.
was likely to remain in place. He told reporters Simm pointed out that Buhari’s predecessor
that he had discussed the matter with the pres- President Goodluck Jonathan had removed
ident, expressing constituents’ concerns about subsidies 10 years ago this month, more than
the potential economic impact of a sudden rise doubling fuel prices, only to reinstate artificial
in gasoline prices and recounting legislators’ pricing just two weeks later amid widespread
worries about protests and public unrest. civil unrest. “The trouble is, nobody will get
Buhari responded by expressing his own voted in on a mandate of subsidy removal, and
thoughts on the matter, Lawan said. “I’m happy anyone who enacts such a move may not last
to inform Nigerians that Mr. President never long in office,” he commented.
told anyone that the petroleum subsidy should All in all, this episode should serve as a
be removed,” he declared. reminder that the PIA per se is not going to be
The Senate president acknowledged the enough to remove all the obstacles to the smooth
cost of the gasoline price supports, but he also functioning of Nigeria’s oil and gas industry. The
emphasised that Abuja did not want to make industry is going to encounter some bumps and
ordinary Nigerians bear the cost of policy potholes during its journey down this road, and
changes. “I know and I agree that the subsidy is it looks like one of its first major traffic jams may
very heavy. But I think we must never transfer lie just ahead. ™
the burden to the citizens,” he said.
Rather than focusing on the subsidies, he
suggested, the government’s best option might
be to investigate the matter to determine
whether its generosity is being taken advantage
of by smugglers who buy gasoline cheaply in
Nigeria and sell it for higher prices across the
border. He referred to the gap between govern-
ment data suggesting that the country consumes
about 50mn litres per day of gasoline and data
from the national oil company (NOC), Nigerian
National Petroleum Corp. (NNPC), that shows
the figure to be about twice as high.
“We need to look at this critically and see
how we can find the truth because I am not
convinced that within the boundaries of Nigeria
we are consuming 100mn litres [per day]. Prob-
ably neighbouring countries may be benefiting Onigbagbo filling station (Image: TotalEnergies.ng)

Week 03 19•January•2022 www. NEWSBASE .com P5