Nigeria: Jonathan’s Govt to increase fuel price in 2013

By IndepthAfrica
In Nigeria
Nov 17th, 2012
2 Comments
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People protest following the removal of a fuel subsidy by the government in Lagos, Nigeria. More than 10,000 demonstrators swarming its commercial capital to protest soaring fuel prices and decades of government corruption in the oil-rich country. (AP)

There were strong indications on Friday that the Federal Government would increase the fuel price in 2013.

President Goodluck Jonathan had on Thursday in Abuja said total fuel subsidy removal was a must.

He stated that only total removal of subsidy on petroleum products would attract investors to the oil sector and end the importation of fuel.

SUNDAY PUNCH’s investigations have revealed that the President’s statement was a prelude to another partial deregulation in 2013 because the N971bn fuel subsidy budget for 2013 would not sustain importation of the product throughout the year.

The amount is N83bn or 9.35 per cent higher than the N888bn that is currently being spent in the 2012 fiscal year.

It was reliably gathered that government had opted for a phased deregulation of the downstream sector, which would lead to a price hike.

Top sources, in the oil industry, who spoke with one of our correspondents in Abuja, said the hike in fuel prices next year was “inevitable.”

The sources who pleaded not to be mentioned because they were not authorised to speak on the matter, said Nigerians should prepare for the new price regime.

One of the sources said government was considering two options in 2013.

He said, “It is either the current fuel scarcity continues or the government embarks on another partial deregulation, leading to another price increase.

“But from all indications, the government will go for the second option. Another price increase is inevitable in 2013.”

On Friday, Jonathan, through his Special Adviser on Media and Publicity, Dr. Reuben Abati, insisted that, “the downstream sector of the petroleum industry has to be deregulated; the fuel subsidy regime is not sustainable and to attract investment into the sector, there must be fair competition. The subsidy regime does not give room for efficiency.”

However, Abati, did not mention when fuel subsidy would be removed.

He said, “The President did not make any categorical statement on the time the subsidy would be removed.”

Last year, some of the marketers had invested in the downstream sector with hope that government would embark on total deregulation in January.

Such marketers have been pushing for total deregulation.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Obafemi Olawore, and the Chairman, Depot and Petroleum Products Marketers Association of Nigeria, Dapo Abiodun, had in separate interviews last week, called for total deregulation of the sector.

On Friday, marketers told our correspondents that Nigerians would buy fuel at higher prices in 2013.

Chairman of the Independent Petroleum Marketers Association of Nigeria, Port Harcourt Unit, Mr. Sunny Nkpe, said since the President said fuel subsidy was not sustainable, Nigerians should get ready to pay more for fuel.

“Of course, the price of fuel will definitely increase,” he said.

Oil marketers under the Jetty and Petroleum Tank Farm Owners also faulted the N971bn budgeted for the subsidy in the 2013 fiscal year.

The group said the amount would not be enough to guarantee adequate supply of petroleum products.

The Executive Secretary, JEPTFON, Mr. Enoch Kenawa, said this during a telephone interview with our correspondent.

Kenawa said by budgeting N971bn for fuel subsidy in 2013, the Federal Government would be putting Nigerians in double jeopardy.

He said, “It (N971bn) will not be adequate. What the government is doing is putting Nigerians in double jeopardy.

“They said they are subsidising fuel, yet people can’t see the products to buy and where they have fuel, people still pay very high to get this product.

“The N971bn for fuel subsidy can never be adequate. At 35 million litres of fuel consumption per day, the money can’t be enough.”

He said rather than N971bn, the government should have provided for between N1.2tn and N1.5tn, based on current consumption pattern.

He said, “If they want to remove, let them remove it (subsidy) instead of what they are doing right now.

“Based on the demand, the amount that would be reasonable for fuel subsidy should be between N1.2tn and N1.5tn.”

The marketers attributed fuel scarcity in many parts of the country to the N888bn voted for subsidy this year, which was not enough.

They said the low budget led to inadequate supply, which caused fuel scarcity in many parts of the country.

Efforts to get the Minister of Finance, Dr Ngozi Okonjo-Iweala, to react to the marketers’ claim on the 2013 fuel subsidy budget were not successful as calls and text messages sent to her Senior Special Assistant on Media, Mr. Paul Nwabuikwu, were not replied as of the time of going to press.

But the minister had in the past faulted the marketers on the 2012 fuel subsidy budget.

Okonjo-Iweala had insisted that the N888bn was enough.

Currently, the Nigerian National Petroleum Corporation is solely responsible for the importation of fuel.

The NNPC spokesman, Mr. Fidelis Pepple, who had confirmed this to one of our correspondents on Monday, blamed marketers for the current fuel scarcity.

He said the marketers had not been selling products, which were supplied to them.

But the marketers faulted him, saying the fuel imported by the NNPC was inadequate.

In spite of the NNPC’s insistence that it had imported adequate fuel, there is a shortfall in supply.

Besides, the NNPC, which had abandoned oil pipelines, is relying on depot owners and marketers for distribution of fuel.

It would be recalled that government had in January hiked the pump price of petrol from N65 to N141 but was forced to reduce the price to N97, following mass protests organised by civil society groups.

Meanwhile, civil society groups have told the Federal Government to expect the mother of all strikes if subsidy is removed.

The  Convener, Save Nigeria Group, Pastor Tunde Bakare, told our correspondent on the telephone on Saturday, that the groups were ready to protest.

He said, “The Nigeria Labour Congress has spoken that it would mobilise civil society groups to go an unprecedented strike. What Nigeria experienced in January will be a child’s play compared to what will happen this time.”

Similarly, the Executive Director, Coalition Against Corrupt Leaders, Mr. Debo Adeniran, said, “Jonathan is not going to have it easy this time. Let him continue with his plan; we won’t stop him. But, he won’t be able to stop us when the masses take to the streets and make the country ungovernable for him.”

The President, Campaign for Democracy, Joe Okei-Odumakin, also said, “What the government subsidises is corruption. We are going to use the last drop of our blood to stop the removal. The January protest will be a child’s play. They should expect the mother of all strikes. The government has taken us for granted.”

In the same vein, the Executive Director of Anti-Corruption Network and a former member of the House of Representatives, Mr. Dino Melaye, stated that, “The plan for total removal of petroleum subsidy is an invitation to anarchy. I dare the FG to remove total subsidy. Any attempt to effect total removal of subsidy, we will shut down Nigeria.”

Activist lawyer, Mr. Femi Falana, also told SUNDAY PUNCH that Nigerians won’t pay more for corruption.
The Punch

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