President Bola Tinubu’s inaugural address on Monday, where he declared that “petrol subsidy is gone,” threw the country into chaos and put the population and economy on edge.
However, following the chaos that followed the announcement, which saw pump prices rise to as high as N1,200 per liter in Ebonyi State and about N600 per liter in some states, President Tinubu yesterday backpedaled on his decision to remove fuel subsidies, saying it would not take effect immediately.
The Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Marketers Association of Nigeria (DAPMAN) supported subsidy removal after Tinubu’s plan forced the national oil company, Nigerian National Petroleum Company Limited (NNPCL), to hold an emergency press conference at midnight on Monday.
Mele Kyari, NNPCL’s Group Chief Executive Officer, said subsidy reduction, which has been a strain on NNPC’s cash flow, will free up money for optimal operations.
The Independent Petroleum Marketers Association of Nigeria (IPMAN), which serves over 70% of the country, and the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), which has 8,000 fuel stations, opposed the move, saying subsidy removal requires proper planning.
With petrol queues persisting yesterday in major cities and black marketers having a field day, stakeholders have warned that apart from the immediate rising cost of transportation and looming increase in goods and services, the nation’s 36.9 million small businesses, which account for 96.7 percent of all businesses, could collapse if the new government mismanages the fuel subsidy removal.
State governors are threatening to revoke fuel merchants’ CSOs for storing PMS.
The Trade Union Congress of Nigeria (TUC) also opposed subsidy elimination, while the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) said refineries must be operational before the present administration considers them.
“Fuel Subsidy is gone” was “merely communicating the status quo,” according to the president’s team.
The statement said that the federal government would run out of finances to sustain the fuel subsidy system, which led to unnecessary panic purchasing. The president acknowledged that the removal would take time.
Fuel subsidy, adopted in the 1980s when Nigeria started derailing domestic refining, steadily entrenched themselves and rewarded politicians until they became the country’s largest nuisance.
Fuel subsidy cost N17.5 trillion in the eight years under former President Muhammadu Buhari, with N10.5 trillion of that spent in the past 18 months.
Dr. Billy Gillis-Harry, PETROAN’s national president, confirmed yesterday that withdrawing fuel subsidy without forethought will worsen the masses’ problems.
He said NNPC and Dangote Refineries should be operational before the Federal Government removes fuel subsidy, adding that without nationwide and industry-focused stakeholder engagement, the withdrawal will backfire.
Gillis-Harry said the fuel subsidy elimination will hurt Nigerians, but he wasn’t surprised.
Most FCT gasoline stations on the Kubwa highway were empty yesterday. A.A. Rano, Total, ADFIN, Shema, MRS, and others were shut while NNPC outlets in the Ketampe sector of the highway dispensed.
Most stores charged N195 a liter, but motorists had to wait 30 minutes to get the product.
As black marketers damaged the city, most stations, including Nipco, Shema, Shafa, and NNPC retail, dispensed along the airport route for roughly N500 a liter.
Habeeb Jaiyeola, PricewaterhouseCoopers Partner, Energy, Utilities, and Resources, said subsidy elimination is difficult but necessary.
He said the decision will make the downstream sector business-friendly and free from rules that may have slowed it for years.
However, transportation expenses may raise product prices.
The Petroleum Industry Act (2021) mandates thorough deregulation of the petroleum downstream sector to spur investment and growth, according to NMDPRA General Manager, Corporate Communications, Kimchi Apollo.
“We are working closely with NNPC Limited and other key stakeholders to guarantee a smooth transition, avoid any supply disruptions, and ensure that consumers are not shortchanged,” he said in a regulator statement.
On Tuesday, NNPCL Group CEO Mele Kyari said the Federal Government owed the business N2.8 trillion in subsidy cash flow.
Kyari told reporters after meeting with President Tinubu at the Presidential Villa in Abuja that the federation can no longer pay the NNPC for its fuel subsidy, which it plans to recoup from the market.
We are a business enterprise providing the federation during the subsidy system as a supplier of last resort. As a business company, NNPC will not act. No NNPC. I know the government will act. You can’t offer what you don’t have. Thus, the nation cannot afford subsidies.”
Kyari clarified when fuel subsidy reduction will begin: “First of all, the PIA said that six months after the enactment of the Act, PMS will be priced at its commercial value. The PIA will end funding six months later. By February 17, 2022, PMS subsidies should have ended.
Despite the PIA’s February 17 termination, the National Assembly and administration wisely arranged for a soft landing in 2022.
The government may spend its money anywhere it wishes to help its residents. The norm. It’s global. In 2022 and 2023, the government did not fund such provisions.
Since 2022 and 2023, the federation has not paid us. We’ll keep subsidizing NNPC’s cash flow because they can’t pay. That’s hard and hurting our other operations.”
Farouk Ahmed, CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), stated that it will give licenses to interested parties to relieve NNPCL of its sole PMS importation load. He stated that fuel importers will follow kerosene and diesel standards.
Before you can import fuel, you must meet certain requirements. All of them are unavailable. Kerosene and diesel imports have the same criteria.
The Nigeria Labour Congress (NLC) stated that President Tinubu’s inauguration day brought millions of Nigerians tears and grief rather than optimism. The NLC stated that he undervalued citizen life by nearly 300 percent.
Thus, it advised President Tinubu to retract his “subsidy is gone” statement from his inauguration speech on Monday, as subsidies cannot be abolished without dialogue with key stakeholders.
Yesterday, NLC President Joe Ajaero said the labor movement was incensed by Tinubu’s decision to remove gasoline subsidies without consulting key stakeholders or taking palliative measures.
He stated his gasoline subsidy withdrawal decision was insensitive since service shutdowns and product price hikes, in some cases exceeding 300 percent, put the nation into a spiral within hours.
He said the NLC is strongly opposed to the decision and wants it rescinded immediately because of its catastrophic consequences for national security and well-being.
“This level of cruelty against the people is not heroism, especially on an inauguration day. If he expects a medal for this action, he will be disappointed to get curses from those who consider it an insult and a betrayal.”
The NLC president recalls Tinubu’s January 8, 2012 letter when Goodluck Jonathan canceled the subsidy. Ajaero encouraged Tinubu to follow his own economic ideas instead of daring the people, saying it may be an expensive bet early in his term.
Yesterday, the Southwest socio-political group Yoruba Ronu Leadership Forum criticized the hasty termination of the gasoline subsidy. “Following the hurried stoppage of subsidy on petrol by the newly sworn-in president, the spiral effects are beginning to spread clumsily and dangerously,” stated forum president Akin Malaolu.
“Not only have fuel pump prices been increased by 100%, President Tinubu’s hurried decision will increase inflation and crash GDP growth.”
The forum advised the new administration, “President Tinubu must provide alternative sources of energy and power before complete removal of subsidies is implemented; secondly, a review of all existing projects, including roads, refineries, and a critical overhaul of the railway systems.”
The Trade Union Congress of Nigeria (TUC) has warned that the Tinubu-led administration should urgently address the terrible N30,000 minimum wage that has been degraded by government monetary and fiscal policies from day one.
In a statement yesterday, TUC President Festus Osifo and Secretary General Nuhu Toro said they were surprised when President Tinubu announced the withdrawal of petroleum subsidies, stating that if he meant pump price increases and the exploitation of the people by unregulated and exploitative deregulated prices, it was a joke taken too far.
They worried that the president’s speech didn’t address industrial relations’ continued decline.
In the education, health, and judiciary sectors, this often led to extended strikes and industrial actions, which hurt society and the economy.
The union said it expected the new government to be wise on such a sensitive issue and be more explicit in its pronouncement to avoid contradictory interpretation when comparing his written statement with what he said and the 2023 Appropriation Act.
TUC asked that Tinubu wait to allow for rigorous conversation, deliberation, and stakeholder involvement to ensure they are peacefully examined and resolved.
In Lagos, The Guardian found that 80% of filling stations are locked, and the handful that supply petrol have huge lines. Pump costs rose to N350–N500 per liter, depending on region. This is nearly 100% higher than N185–N195 per liter. Due to random fee hikes, many commuters were stuck at bus stations.
Most filling stations in Enugu that sell PMS were locked up, probably in honor of the pro-Biafra agitators’ 56th anniversary sit-at-home. When word of the subsidy removal spread on Monday afternoon, filling stations selling between N220 and N230 per liter closed.
One of the new fueling stations on Agbani Road, Enugu, sold for N350 per liter. Another station sold it at N370 per liter. Chukwuemeka Ugwu bought at N600 per liter at a petrol station in Maryland, noting that black marketers sell at N1,000 per liter.
Ogun State fueling stations had huge lines again, with few dispensing the gasoline for N400–N700 per liter. Due to this, commercial vehicles and motorcyclists raised their prices, leaving many commuters stranded.
Delta’s capital city lineups returned, causing station pandemonium. Many stations sold, but most raised pump costs from N190 to N650.
The station managers, who did not want their identities published, could not explain why they sold above the permitted price. “We’re just following orders,” one remarked.
One station attendant added, “That is what we are told to sell. We follow orders, not prices.”
Kemi Ashefon confirmed that most filling stations in Ondo State were closed and that independent marketers were selling petrol for N300–N500.
The Ondo State administration blamed panic purchasing for merchants stockpiling items.
The Special Adviser to Governor Akeredolu on Special Duties, Doyin Odebowale, said the state administration was waiting for a presidential pronouncement on subsidy elimination.
AbdulRahman AbdulRazaq, Kwara State governor and Nigeria Governors’ Forum chairman, advised oil merchants not to hoard PMS. He warned that his government would not stand by while marketers caused needless suffering.
In a statement by his Chief Press Secretary, Rafiu Ajakaye, AbdulRazaq described the current scenario of not supplying petrol to motorists as uncalled for. Since marketers had purchased petroleum at subsidized rates, he advised them to quickly sell it at market prices.
“Creating artificial scarcity is a deliberate misrepresentation of President Tinubu’s fuel subsidy statement. Nobody should suffer.
“The Deputy Governor, Mr. Kayode Alabi, will lead a task force to ensure no fuel marketer causes Kwara residents undue hardship. Fuel hoarders will lose their Certificate of Occupancy.
Ekiti State Governor Biodun Oyebanji has also cautioned petroleum marketers against stockpiling gasoline, citing fines. The governor advised merchants to wait for federal government instructions on subsidy elimination and avoid acts that might harm residents.
The governor warned filling stations and marketers that stockpiling gasoline products or arbitrarily raising prices would result in severe penalties.
On Tuesday, the House of Representatives supported oil subsidy elimination despite Nigerian and Labour leaders’ opposition. However, the MPs urged Nigerians to be patient with the incoming administration.
The House’s resolution followed a plenary motion by Jimoh Ibrahim Olajide (Lagos mainland Federal Constituency) on critical public problems.
The parliamentarians agreed “to salute his courage and boldness to serve our country, Nigeria, with honesty and integrity” after the motion. To commend him for his preparation for the national work ahead and service to mankind, and to call on Nigerians to stay patient, resilient, and prayerful so the President may deliver on his promises.”
On Tuesday, Vice President Kashim Shettima said President Tinubu’s government will redefine contemporary governance to promote growth.
“He is going to provide the leadership, and we will rally around him and give him our unequivocal support and loyalty to see to the realization of the Nigerian dream—a Nigeria that every black man in the world should be proud of,” Shettima said when he resumed office at the Presidential Villa, Abuja, Tuesday.
The Vice President responded: “The president has already made pronouncements on the issue. The truth is that either we eliminate gasoline subsidies or they eliminate us.
We spent $10 billion subsidizing the showy lifestyle of the upper class in 2022 since you and I receive 90% of the oil subsidies. Nigeria’s impoverished 40% receive little. Unmasking a mask has implications. Oil subsidy scammers will fight us.
“But if you want it, you can. Our president is strong-willed and determined. You’ll respect his great nation-building ambitions. Fuel subsidies will be challenged. Better sooner.”
Bayelsa State governor Douye Diri warned oil marketers Tuesday against stockpiling and hiking PMS prices. Residents, commuters, students, public officials, and many Bayelsans were left stuck yesterday morning due to the abrupt increase in gas pump prices and transit costs.
Petrol prices rose from N195 to N210 in the morning on May 29 to N400–N500 in the evening and N500–N700 in the morning, depending on the marketer.
In a statement by his Chief Press Secretary, Mr. Daniel Alabrah, Diri threatened to punish filling stations that disobeyed the order.
He said the government had received allegations that filling stations in the state capital had raised fuel pump prices from N193 to N250 per liter to N500 and above.
The Bayelsa governor said it was evil for oil marketers to benefit at the expense of the people after a mere proclamation that had not taken effect.
He remarked that the pump price of fuel affects the cost of products and services in the country and that his administration will not allow selfish merchants to hurt Bayelsans.
