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Shedding light on the petrol subsidy imbroglio

Published

2 years ago

June 24, 2023

By Olukola Osunbunmi

Nigeria is a blessed country, no doubt. Almighty God in His infinite mercies has blessed Nigeria with everything that most developed countries in the world do not have. But there is a curse to our development or should one say there are clauses or impediments for the giant in Nigeria to be reawakened. In the 1960s, Nigeria was at par with the Asian Tigers namely Hong Kong, Taiwan, South Korea and Singapore. But unfortunately, we were left behind by the aforementioned countries between the early 1950s and 1990s as they underwent rapid industrialization while at the same time maintained exceptionally high growth rate of 7 percent a year. At a time in the history of this nation, our currency, the naira, was one of the strongest in the world. It had more value than the dollar and pound sterling.

In March 2009, the late President Umaru Musa Yar’Adua of blessed memory unveiled and launched the logo of the ‘Rebranding Nigeria’ campaign with the slogan: ‘Good People, Good Nation’. Truly Nigeria is a country of good people but we have been very unlucky with those at the helm of affairs, elected or appointed. The sleaze that characterized the administration of former President Muhammadu Buhari cannot be over emphasised. Those saddled with the responsibilities of putting smiles on the faces of fellow compatriots rather made them weep in agony and pain. The attendant consequences have been followed with the gale of suspensions of the leading figures of the last administration and more will still come.

On May 29, 2023 at the Eagle Square Abuja during a change of baton between former President Buhari and President Bola Ahmed Tinubu, the latter made a pronouncement that put paid to the ghost of subsidy in Nigeria once and for all. The pronouncement meant that the Government will no longer subsidise petrol for the citizens rather the subsidy will be pushed to other sectors like health, education, transport and others that will make life more meaningful for an average Nigerian. It was a tough decision to make but Nigerians are gradually embracing the reality and are expectantly looking forward to how the Tinubu’s government will cushion the effect of the subsidy removal for them.

It did not however come as a surprise that the shylock oil marketers increased the pump price of petrol from N195 to N547 per litre, an increment of more than 250 percent. The question to ask is: how did the NNPC arrive at the new price? Immediately after the speech made by the President on the Petrol subsidy removal, one observed that petrol marketers in Abuja started selling at N350 per litre and this continued until the NNPC made their pronouncements that the pump price would henceforth sell at N537 per litre in Abuja. It however mean a litre of fuel is being subsidised at N352 per litre. Where is the money, who is keeping it for Nigeria and Nigerians, who are the beneficiaries and who are their cronies? Could these fellows come out boldly and tell Nigerians where the humongous money generated from the subsidy debacle are stashed.

To start with, how much does it take Nigeria to transport and bring back its refined crude from abroad? The understanding is that the crude is transported abroad to be refined and after the process is completed, the refined product is brought to Nigeria. The Premium Motor Spirit (PMS) otherwise known as petrol is not the only refined product from crude oil, there are diesel, kerosene, asphalt, paraffin, consumer goods, cosmetics among others.

It is high time agencies that have things to do with our oil and as well as the security agencies come forth to give account of their stewardships to Nigerians. How many litres of petrol does Nigeria consume daily? As at last year and early this year before the subsidy pronouncement, the Nigerian National Petroleum Company Limited (NNPCL) said Nigeria consumes 68 million litres daily. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) within the same period contradicted NNPCL’s claim. The NMDPRA also contradicted itself. It first gave 62.9 litres and later 66.8 litres. The Comptroller General of Nigeria Customs Service, Retired Colonel Hameed Ali also disagreed with NNPCL on the daily consumption of fuel. Following the subsidy removal, it is however strange that Nigeria now consumes between 13 million and 16 million litres of petrol per day. Where is the payment for the non-existing 52 million litres or thereabout been bandied about in the last 18 months? Where is the excess going to? Who is deceiving who? The oil industry players and heads of security agencies must come out clean. He who comes into equity must come with clean hands!

As a chartered Accountant, one cannot explain and convince myself as to how the NNPCL arrived at the N547 per litre and this has to be itemized and explained to all Nigerians as transparently as possible so as to earn the respect of all. The decision affects the life of all Nigerians and to a large extent, the explanation will help the Tinubu administration gain the trust of the people.

That being asked, it is being suggested that the Federal Government should allow the modular refineries to operate as the Dangote Refinery so as to cut down on perceived monopoly of the Dangote brand. If there is no competition, Nigerians will be forced to buy at the price being forced in them by this monopoly. In addition, those in the area of oil and gas and who have the capacity should in the interim be encouraged to bring in the PMS for competitive pricing and competitive service to Nigerians.

Osunbunmi is a chartered accountant and forensic auditor

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Business

Tax Reform Bills: The Verdict of Nigerians

Published

2 weeks ago

March 6, 2025

The Gleamer

Ismaila Ahmad Abdullahi Ph.D

The public hearings conducted recently by the two Chambers of the National Assembly have elicited positive responses from a broad spectrum of Nigerians, cutting across regional interest groups, government agencies, civil society groups, concerned individuals, the academia, and Labour Unions, among diverse others. Contrary to a few dissensions hitherto expressed in the media, almost all the stakeholders who spoke during the week-long sessions were unanimous in their declaration that the hallowed Chambers should pass the tax reform bills after a clean-up of the grey areas.

The public hearings were auspicious for all Nigerians desirous of economic growth and fiscal responsibility. They were also a watershed moment for the Federal Inland Revenue Service, which had been upbeat about the tax reforms. Indeed, the public hearings had rekindled hope in the tenets of democracy that guarantee freedom of expression and equitable space for cross-fertilisation of ideas. Without gainsaying the fact, the tax reform bills have been unarguably about the most thought-provoking issues in Nigeria today, drawing variegated perspectives and commentaries from even unlikely quarters such as the faith-based leaders, student bodies, and trade unions, which speaks much about the importance of the bills.

In the build-up to the public hearings, not many people believed that the bills would make it to the second reading, much less the public hearings. Even the Northern stakeholders who seemed unlikely to support the passage of the bills have softened their stance and have given valuable suggestions that would enrich the substance of the bills. The Arewa Consultative Forum came to the public hearings well-prepared with a printed booklet that addressed their concerns. It concluded with an advisory that the bills should be “Well planned, properly communicated, strategically implemented and ample dialogue and political consensus allowed for the reforms to be accepted.”

The concerns of ACF ranged from the composition of the proposed Nigeria Revenue Service Board as contained in Part 111, Section 7 of the bill, the unlimited Presidential power to exempt/wave tax payment as proposed in Section 75(1) of the bill, the family income or inheritance tax as contained in Part 1, Section 4(3) of the bill, to the issues around development levy and VAT. On the development levy, the ACF stated that unless the Federal Government is considering budgetary funding for TETFUND, NASENI and NITDA, it does not see the “wisdom behind the plan to replace (them) with NELFUND”.

The position of the North was equally reinforced by the Supreme Council for Shariah in Nigeria, Northern Elders Forum, Kano State Government, Professor Auwalu Yadudu, and the FCT Imams. Like the ACF, these stakeholders lent their respective voices to the Section on the Inheritance Tax in Part 1 of the bill and the use of the term ‘ecclesiastical’, which, in their views, undermines certain religious rights and beliefs. The Kano State Government, represented by Mahmud Sagagi, affirmed that “we support tax modernisation” but cautioned that “we must ensure that this process does not come at the expense of states’ constitutional rights and economic stability”. Professor Auwalu Yadudu, a constitutional law professor, drew attention to the use of the ‘supremacy clause’ and cautioned that the repeated use of “notwithstanding” in the bills would undermine the supremacy of the Nigerian constitution if passed as such.

Other stakeholders that made contributions at the sessions included the Nigeria Liquefied Natural Gas, Fiscal Responsibility Commission, Revenue Mobilisation Allocation and Fiscal Commission, Federal Ministry of Industry, Trade and Investment, Institute of Chartered Accountants of Nigeria, Chartered Institute of Taxation of Nigeria, Nigeria Customs Service, and a host of others. While most of their concerns bordered on technical issues requiring fine-tuning, they were unanimous in their support for the bills. They aligned with the position of the Executive Chairman of the Federal Inland Revenue Service, Zacch Adedeji, Ph.D. and the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, which is that the extant tax laws and fiscal regulations are obsolete necessitating reforms aimed at creating a fair and equitable tax and fiscal space to grow Nigeria’s economy.

In one of the sessions, Dr Zaach Adedeji expounded on the criss-cross of trade activities in the Free Trade Zone whereby companies misuse tax waivers as exporters to sell their goods or services in the Customs Area at an amount usually less than the price the operators in the Customs Area who pay VAT and other taxes sell theirs thereby disrupting business transactions. This way, the operators in the Free Trade Zone shortchange the government in paying their due taxes by circumventing extant regulations, which are inimical to the economy’s growth.

Overall, the presentations were forthright, foresighted, and helpful in elucidating the issues contained in the bills. According to the statistics read out at the end of the hearings at the Senate, 75 stakeholders were invited, 65 made submissions, and 61 made presentations. At the House of Representatives 53 stakeholders made presentations. By all means, this is a fair representation. Given the presentations, it is evident that the National Assembly has gathered enough materials to guide its deliberations on the bills. As we look forward to the passage of the bills, we commend the leadership of the National Assembly for their unwavering commitment to making the bills see the light of the day.

Abdullahi is the Director of the Communications and Liaison Department, FIRS.

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