President Bola Tinubu’s plan to implement his predecessor’s decision to remove fuel subsidies by the end of June has faced opposition from the Independent Petroleum Marketers Association of Nigeria( IPMAN).
In Abuja on Monday, Tinubu firmly stated that his administration would not bear the burden of subsidizing petroleum products any longer.
Citing the significant opportunity cost borne by the Federal Government to finance subsidies, Tinubu emphasized that it was no longer justifiable to persist with such measures.
Amidst the atmosphere of his inauguration as the 16th President of Nigeria, Tinubu passionately declared, “The fuel subsidy is gone!” These words reverberated through Eagle Square in Abuja, marking a significant moment in his address.
In light of depleting resources and the escalating costs associated with subsidies, the President affirmed, “Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care, and jobs that will materially improve the lives of millions.
“We commend the decision of the outgoing administration in phasing out the petrol subsidy regime which has increasingly favored the rich more than the poor.”
President Tinubu clarified that as of June 2023, since there was no allocation for subsidy in the budget, it had effectively been removed.
As part of his economic agenda for the upcoming four years, Tinubu outlined his administration’s objective to achieve a minimum annual GDP growth rate of six percent. To accomplish this, the new government plans to implement budgetary and tax reforms that will stimulate the economy and tackle the issue of excessive multiple taxations, which hinders foreign direct investment.
“On the economy, we target a higher GDP growth and to significantly reduce unemployment. We intend to accomplish this by taking the following steps: First, budgetary reform stimulating the economy without engendering inflation will be instituted.
“Second, industrial policy will utilize the full range of fiscal measures to promote domestic manufacturing and lessen import dependency.
“Third, electricity will become more accessible and affordable to businesses and homes alike. Power generation should nearly double and transmission and distribution networks improved. We will encourage states to develop local sources as well.”
Addressing both foreign and local investors, Tinubu assured them, “Our government shall review all their complaints about multiple taxations and various anti-investment inhibitions. We shall ensure that investors and foreign businesses repatriate their hard-earned dividends and profits home.”
IPMAN rejects the idea
In reaction to the idea, IPMAN expressed its opposition to the newly elected president’s plan to remove subsidies.
Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, urged the new government to engage in dialogue with marketers before making any decision regarding the removal of subsidies.
“We strongly oppose the removal of fuel subsidy at this moment,” declared Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria. He emphasized the need to prioritize the repair of refineries before making such a decision, as it could lead to soaring inflation and exacerbate the hardships faced by the masses.
Chief Ukadike expressed discontent with the notion of adopting the recommendations outlined in the transition document inherited from former President Muhammadu Buhari’s administration. He highlighted the irony of receiving advice from a president who had retained the subsidy for eight years. He deemed this unfair and suggested that the new government should engage in discussions with marketers and other stakeholders to devise strategies for effectively managing the fuel subsidy regime.
Considering the upcoming Dangote Refinery, Chief Ukadike emphasized that while progress had been made, the existing refineries were still non-functional. Therefore, he believed that removing the subsidy at this juncture would be ill-advised.
Chief Ukadike expressed IPMAN’s willingness to collaborate with the new government and offer solutions to address the fuel subsidy regime, rather than abruptly halting the subsidy altogether.
However, when approached for their stance on the matter, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) declined to comment at the moment. The General Secretary of PENGASSAN, Lumumba Okugbawa, explained that they were currently studying the situation and assessing the policies of the new administration under President Tinubu before making any official statements regarding the removal of fuel subsidies.
While IPMAN remained steadfast in its stance that subsidy removal should be contingent on refinery repairs, the Major Oil Marketers Association of Nigeria (MOMAN) maintained its position that fuel subsidies should be discontinued.
Clement Isong, the Executive Secretary of MOMAN, emphasized that Nigeria was depleting its earnings by allocating trillions towards petrol subsidies. He highlighted that the projected expenditure for this year alone was approximately N6 trillion. Isong further asserted that deep down, it was widely recognized that if this substantial amount were invested in sustainable programs, it would significantly contribute to economic growth. Thus, he advocated for redirecting these funds towards more productive avenues rather than expending them on fuel subsidies.
Fuel queues resurface
Shortly after Tinubu’s declaration regarding the subsidy, fuel queues reappeared in Abuja, Lagos, and several other states. Motorists flocked to filling stations in Abuja, Nasarawa, and Niger states on Monday afternoon, prompted by the news.
The announcement instigated a surge in demand for petrol, as motorists anxiously sought to fill their tanks amid concerns that the removal of subsidy could result in a significant increase in the cost of Premium Motor Spirit (PMS), potentially exceeding N500 per litre.
Oil marketers had anticipated that the price of petrol could potentially reach N700 per litre once the Federal Government terminates the subsidy in June of this year.
“It’s reasonable to rush and fill your tank now while you can still obtain the product for less than N200 per litre since the new President has declared the end of subsidy,” remarked Ayoola, a motorist waiting in the lengthy queue at Salbas filling station along the Kubwa-Zuba Expressway.
The Conoil filling station located opposite the headquarters of the Nigerian National Petroleum Company Limited in Abuja’s Central Business District also witnessed long queues on Monday afternoon.
In Zuba, Niger State, it was evident that many fuel stations were closed, leaving only a few operational ones like the Mobil station in Madalla, where queues of motorists eagerly awaited their turn to purchase petrol.
Queues in Ogun and Lagos states
Investigations conducted by Celebrity Telegraph revealed the emergence of queues in certain areas of Lagos and Ogun states.
During visits to about 20 fuel stations located along the Egbeda, Oshodi, Ogba, Ikeja, Magboro, Mowe, and Ibafo areas of the Lagos-Ibadan Expressway on Monday, our correspondents observed that out of those surveyed, only two fuel stations were actively dispensing the product.
At one of the fuel stations, Eterna, located in the observed area, the price of Premium Motor Spirit (PMS) was set at N195 per litre, yet queues were still present at the station.
In the Akowonjo area of Lagos State, it was noticed that the Nigerian National Petroleum Corporation Limited (NNPC) outlet was the only fuel station operating as of Monday morning.
Similar circumstances were witnessed in the Anthony area of Oshodi, Lagos, where only a single fuel station was open for operation.
Experts react
The Centre for the Promotion of Private Enterprise (CPPE), through its Chief Executive Officer, Dr. Muda Yusuf, expressed its support for President Bola Tinubu’s decision to implement a unified exchange rate and remove fuel subsidies.
In a statement released on Monday, the CPPE highlighted that the unified exchange rate was not a devaluation measure but rather a pricing mechanism that aligns with the demand and supply dynamics of the foreign exchange market, allowing for necessary rate adjustments. The CPPE welcomed this move by the new president.
“It is a model that is predictable, transparent, and sustainable. It is a policy regime that would reduce uncertainty and inspire the confidence of investors. It is a policy framework that would minimize discretion and arbitrage in the foreign exchange allocation mechanism.”
NLC, TUC
The Nigeria Labour Congress (NLC) criticized Tinubu’s decision to remove fuel subsidies, stating that it was not a well-thought-out move. In an interview with one of our correspondents in Abuja, Joe Ajaero, the National President of the NLC, expressed concern that the announcement made during the inaugural speech would have a detrimental impact on the country’s economy, potentially pushing it back by over 50 percent within the next 48 hours. Ajaero emphasized that Nigerians would voice their opposition in unity at the appropriate time.
The Trade Union Congress (TUC) also insisted that the newly sworn-in president hold a meeting with organized labor before making any pronouncements regarding the removal of fuel subsidies. Timmy Etim, the National Vice President of TUC, highlighted the importance of consulting with organized labor before making such announcements, stating that such pronouncements, without proper engagement, could lead to panic buying, fuel shortages, and increased prices. Etim urged the president not to disappoint the people who elected him by causing unnecessary hardships.