After six weeks of silence on the issue, President Muhammadu Buhari said monday that his administration would not make any decision on the clamour for the removal of fuel subsidies, adding, however, that his government would handle the issue on their removal “with care”.
According to the statement by Garba Shehu, the president’s Senior
Special Assistant, Media and Publicity, the president spoke after
receiving a briefing from the Ministry of Petroleum Resources, Nigerian
National Petroleum Corporation (NNPC) and other agencies in the oil
sector.
Shehu said Buhari told the officials that he had so far received a lot of submissions on the need to remove fuel subsidies but that he was still carefully reviewing them.
He quoted Buhari as saying: “I have received many literature on the need to remove subsidies, but much of it has no depth.
“When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rent. That is for those who earn salaries, but there are many who are jobless and will be affected by it.”
Buhari also said that the lack of security, sabotage, vandalism, corruption and mismanagement, not necessarily subsidies, were the most serious problems of Nigeria’s oil sector.
He promised to deal decisively with all identified problems in the oil and gas sector.
“We have to go back to the good old days of transparency and accountability,” the president said.
Buhari directed NNPC to review existing agreements for the crude oil swaps with a view to injecting more honesty and transparency into the process to reduce costs.
He also asked NNPC’s management to do more to improve the supply of liquefied petroleum gas (LPG).
Buhari also assured investors in the oil and gas sector that his administration would implement far-reaching reforms to boost accountability and transparency in Nigeria's oil and gas industry.
The president made the statement when he held a meeting with senior officials of Chevron led by the company’s President for Africa and Latin America, Mr. Ali Moshiri.
Buhari stated that his administration was ready to effectively address the challenges in the sector.
“We understand the situation in the industry and we will do our best to address the challenges affecting exploration, production and distribution of oil products in the country,” he told the delegation.
While acknowledging the merits of the Amnesty Programme initiated by President Umaru Musa Yar’Adua to stem militancy in the Niger Delta region, Buhari said his administration would build on good aspects of the programme.
The president, according to the statement, added that his administration would also implement other measures to enhance security in the Niger Delta and optimise investments in Nigeria's oil and gas industry.
Moshiri urged Buhari to restore the confidence of international investors in the industry.
He identified improved security in the Niger Delta as key to increased investment in the oil and gas sector in Nigeria.
According to Moshiri, Chevron, which has a 36.7 per cent stake in the West African Gas Pipeline Company Limited, is keen to support Nigeria’s gas sector and provide more electricity for Nigerian consumers.
Meanwhile, the governor of Kaduna State, Nasir el-Rufai, yesterday declared that NNPC has failed in its statutory responsibilities, should be scrapped and replaced with a new fit-for-purpose national oil company (NOC).
El-Rufai, who spoke at the 2015 Wole Soyinka Media Lecture Series with the theme, “Nigerian and the Oil Fortune” in Abuja, also alleged that in the last three years, NNPC failed to remit to the government N3.670 trillion, which he said represents 42 per cent of monies earned by the country from her oil and gas activities from 2012 to the first half of 2015.
He explained that NNPC made about N10.463 trillion within the period but remitted just about N6.793 trillion but has failed to remit the balance, thus confirming last year’s PricewaterhouseCoopers’ (PwC) forensic audit report and the 2013 report of the Presidential Committee on Verification of Subsidies headed by Aigboje Aig-Imoukhuede that the corporation retains some 43 per cent of oil earnings for its operating cost.
NNPC has argued on several occasions that its deductions are backed by the Act establishing it and former President Olusegun Obasanjo had given it permission to make the deductions for its operations.
However, the Aig-Imoukhuede committee had recommended that the practice be stopped, as NNPC had no right to spend funds belonging to the federation without appropriation.
El-Rufai held the view that there was an urgent need for the government to consider scrapping NNPC and setting up a new NOC to pursue its aspirations in the sector.
He noted that if there was anyone with the requisite political will to initiate and oversee reforms in the country's oil and gas sector, it was Buhari having garnered enough experience as a former oil minister during the military era.
“The long and short of the situation of our oil industry is best exemplified by the parallel government called the NNPC. In 2012, it sold N2.77 trillion of domestic crude oil but paid only N1.66 trillion to the Federation Account.
“In 2013, it earned N2.66 trillion but paid N1.56 trillion to FAAC, in 2014 N2.64 trillion but remitted N1.44 trillion, while between January and May 2015, it earned N733.36 billion and remitted only N473.2 billion,” el-Rufai said.
He further stated: “That means that the NNPC only remitted about 58 per cent of the monies earned between 2012 and the first half of 2015. A company with the audacity to retain 42 per cent of a country's money has become a veritable parallel republic.”
While questioning NNPC’s powers to withhold oil funds from the government, el-Rufai said: “The NNPC feels entitled to consume more resources than the 36 states, the FCT and the federal government combined.
“The example just given is only with respect to domestic crude oil sales. Similar leakages exist in Nigerian Petroleum Development Company (NPDC), NAPIMS procurement and subsidiary budgets.”
He called for a mix of fresh strategic thinking and a firm commitment to reform which should be injected into the system by the government.
“We need a mix of fresh strategic thinking and a firm commitment to reform. We need to define exactly what we want the oil industry to be and to achieve, and then define the structure that can best deliver it.
“An efficient and productive oil sector, able to create jobs, spur industrialisation and earn more revenues requires that we tackle the monster that the NNPC has become.
“This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself,” he said.
El-Rufai further declared: “We should replace the NNPC with brand new organisations that are fit-for-purpose and among others, a commercialised and corporatised national oil company and new industry regulators.
“This new national oil company should be capitalised once and for all, and then freed to fend for itself like other national oil companies do, seeking its financing independently from the financial markets and paying due taxes and royalties.”
Continuing, he said: “The corruption and nonchalance that have hobbled the NNPC are symptoms that its best days are over. We should give it a deserved funeral so that a new institution, active and nimble, can promptly replace it.
“NNPC's subsidiaries and associated companies can be reviewed, restructured and privatised or commercialised as appropriate consistent with national interest and objectives.
“The government should review the Joint Venture strategy, with the governing principle being to shift the financing and operational risks to the markets and operators respectively.
“Government should avoid owing the oil companies, and should more proactively review the terms and implementation of the Production Sharing Contracts (PSCs) and concentrate on collecting the royalties and taxes due to it.”
On his position that Buhari was best suited to initiate such reforms, he said: “No one is better qualified to do this than the person that birthed the NNPC through the merger of the NNOC and the Ministry of Petroleum in 1977 – President Buhari himself.
“No one can appreciate the gap between the vision of NNPC’s founding fathers, the beautiful baby of 1977 and the 38-year-old monster it has become better than President Buhari.
“The NNPC of today must make Chief Sunday Awoniyi of blessed memory squirm in his grave. Something fundamentally decisive must be done to tame this monster.”
On the need for sustained political will to carry through his proposed reforms in the oil and gas sector, el-Rufai said: “We must have the political will to make all oil industry transactions transparent.
“There should be clear rules and processes for licensing, concessions, procurement and contracting. Opaque systems tend to be corrupt, and it is time to shine the light.
“The president has already taken the commendable step of directing that all revenues be remitted either to the Federation Account or the Consolidated Revenue Fund as required by Sections 80 and 162 of the constitution.
“President Buhari is therefore clear that oil industry revenues will no longer be treated as some slush fund of the federal government.”
He also explained that for such reform to become real, Nigerians should be carried along all through the way.
“It is the national consensus that we arrive at regarding the oil sector that we can finally codify in a new Petroleum Act, which should be a simply worded, concise piece of legislation that spells out the general governing principles for the industry.
“Specific matters can then be based on subsidiary legislation, regulations and agreements. Complex and densely worded laws conduce to opacity and should therefore be avoided.
“I am by no means underestimating the titanic struggles that might be necessary to change the Nigerian oil industry. The vested interests will be all out to thwart change and uphold the status quo.
“The media and civil society organisations (CSOs) have the major role of pushing for transparent disclosures and adherence to due process,” he said.
El-Rufai equally linked his verdict on NNPC to the current level of poverty in Nigeria.
According to him, “About 40 per cent of Nigerians are estimated to be very poor. That is about 70 million people living below the poverty line in a country that has earned at least 1 trillion in current dollars from oil in 50 years.
“For our vast masses, oil is no fortune. It is more of a mirage, but a more insidious kind, because the fortune is visible in the lifestyles of a few thousands of the privileged elite but is stubbornly inaccessible to tens of millions of ordinary people.”
Giving more statistics on oil production, he said in 2014, Nigeria was producing on the average about 2.2 million barrels of crude oil per day, while importing most of its daily consumption of 43.5 million litres of refined petroleum products.
That reliance on imports of refined products, he explained, “Has seen unsustainable expenses on questionable subsidy payments, exemplified by $8.99 billion in the 18 months between January 2012 and June 2013.”
He added that about N971 billion was budgeted for subsidy payments in 2014 alone of which more than twice of that was eventually paid.
The governor stated that in the eight years leading up to 2014, joint venture production declined by 50.4 per cent, adding that some 100,000 barrels per day, amounting to about five per cent of total production, is estimated to be lost to organised theft.
Shehu said Buhari told the officials that he had so far received a lot of submissions on the need to remove fuel subsidies but that he was still carefully reviewing them.
He quoted Buhari as saying: “I have received many literature on the need to remove subsidies, but much of it has no depth.
“When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rent. That is for those who earn salaries, but there are many who are jobless and will be affected by it.”
Buhari also said that the lack of security, sabotage, vandalism, corruption and mismanagement, not necessarily subsidies, were the most serious problems of Nigeria’s oil sector.
He promised to deal decisively with all identified problems in the oil and gas sector.
“We have to go back to the good old days of transparency and accountability,” the president said.
Buhari directed NNPC to review existing agreements for the crude oil swaps with a view to injecting more honesty and transparency into the process to reduce costs.
He also asked NNPC’s management to do more to improve the supply of liquefied petroleum gas (LPG).
Buhari also assured investors in the oil and gas sector that his administration would implement far-reaching reforms to boost accountability and transparency in Nigeria's oil and gas industry.
The president made the statement when he held a meeting with senior officials of Chevron led by the company’s President for Africa and Latin America, Mr. Ali Moshiri.
Buhari stated that his administration was ready to effectively address the challenges in the sector.
“We understand the situation in the industry and we will do our best to address the challenges affecting exploration, production and distribution of oil products in the country,” he told the delegation.
While acknowledging the merits of the Amnesty Programme initiated by President Umaru Musa Yar’Adua to stem militancy in the Niger Delta region, Buhari said his administration would build on good aspects of the programme.
The president, according to the statement, added that his administration would also implement other measures to enhance security in the Niger Delta and optimise investments in Nigeria's oil and gas industry.
Moshiri urged Buhari to restore the confidence of international investors in the industry.
He identified improved security in the Niger Delta as key to increased investment in the oil and gas sector in Nigeria.
According to Moshiri, Chevron, which has a 36.7 per cent stake in the West African Gas Pipeline Company Limited, is keen to support Nigeria’s gas sector and provide more electricity for Nigerian consumers.
Meanwhile, the governor of Kaduna State, Nasir el-Rufai, yesterday declared that NNPC has failed in its statutory responsibilities, should be scrapped and replaced with a new fit-for-purpose national oil company (NOC).
El-Rufai, who spoke at the 2015 Wole Soyinka Media Lecture Series with the theme, “Nigerian and the Oil Fortune” in Abuja, also alleged that in the last three years, NNPC failed to remit to the government N3.670 trillion, which he said represents 42 per cent of monies earned by the country from her oil and gas activities from 2012 to the first half of 2015.
He explained that NNPC made about N10.463 trillion within the period but remitted just about N6.793 trillion but has failed to remit the balance, thus confirming last year’s PricewaterhouseCoopers’ (PwC) forensic audit report and the 2013 report of the Presidential Committee on Verification of Subsidies headed by Aigboje Aig-Imoukhuede that the corporation retains some 43 per cent of oil earnings for its operating cost.
NNPC has argued on several occasions that its deductions are backed by the Act establishing it and former President Olusegun Obasanjo had given it permission to make the deductions for its operations.
However, the Aig-Imoukhuede committee had recommended that the practice be stopped, as NNPC had no right to spend funds belonging to the federation without appropriation.
El-Rufai held the view that there was an urgent need for the government to consider scrapping NNPC and setting up a new NOC to pursue its aspirations in the sector.
He noted that if there was anyone with the requisite political will to initiate and oversee reforms in the country's oil and gas sector, it was Buhari having garnered enough experience as a former oil minister during the military era.
“The long and short of the situation of our oil industry is best exemplified by the parallel government called the NNPC. In 2012, it sold N2.77 trillion of domestic crude oil but paid only N1.66 trillion to the Federation Account.
“In 2013, it earned N2.66 trillion but paid N1.56 trillion to FAAC, in 2014 N2.64 trillion but remitted N1.44 trillion, while between January and May 2015, it earned N733.36 billion and remitted only N473.2 billion,” el-Rufai said.
He further stated: “That means that the NNPC only remitted about 58 per cent of the monies earned between 2012 and the first half of 2015. A company with the audacity to retain 42 per cent of a country's money has become a veritable parallel republic.”
While questioning NNPC’s powers to withhold oil funds from the government, el-Rufai said: “The NNPC feels entitled to consume more resources than the 36 states, the FCT and the federal government combined.
“The example just given is only with respect to domestic crude oil sales. Similar leakages exist in Nigerian Petroleum Development Company (NPDC), NAPIMS procurement and subsidiary budgets.”
He called for a mix of fresh strategic thinking and a firm commitment to reform which should be injected into the system by the government.
“We need a mix of fresh strategic thinking and a firm commitment to reform. We need to define exactly what we want the oil industry to be and to achieve, and then define the structure that can best deliver it.
“An efficient and productive oil sector, able to create jobs, spur industrialisation and earn more revenues requires that we tackle the monster that the NNPC has become.
“This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself,” he said.
El-Rufai further declared: “We should replace the NNPC with brand new organisations that are fit-for-purpose and among others, a commercialised and corporatised national oil company and new industry regulators.
“This new national oil company should be capitalised once and for all, and then freed to fend for itself like other national oil companies do, seeking its financing independently from the financial markets and paying due taxes and royalties.”
Continuing, he said: “The corruption and nonchalance that have hobbled the NNPC are symptoms that its best days are over. We should give it a deserved funeral so that a new institution, active and nimble, can promptly replace it.
“NNPC's subsidiaries and associated companies can be reviewed, restructured and privatised or commercialised as appropriate consistent with national interest and objectives.
“The government should review the Joint Venture strategy, with the governing principle being to shift the financing and operational risks to the markets and operators respectively.
“Government should avoid owing the oil companies, and should more proactively review the terms and implementation of the Production Sharing Contracts (PSCs) and concentrate on collecting the royalties and taxes due to it.”
On his position that Buhari was best suited to initiate such reforms, he said: “No one is better qualified to do this than the person that birthed the NNPC through the merger of the NNOC and the Ministry of Petroleum in 1977 – President Buhari himself.
“No one can appreciate the gap between the vision of NNPC’s founding fathers, the beautiful baby of 1977 and the 38-year-old monster it has become better than President Buhari.
“The NNPC of today must make Chief Sunday Awoniyi of blessed memory squirm in his grave. Something fundamentally decisive must be done to tame this monster.”
On the need for sustained political will to carry through his proposed reforms in the oil and gas sector, el-Rufai said: “We must have the political will to make all oil industry transactions transparent.
“There should be clear rules and processes for licensing, concessions, procurement and contracting. Opaque systems tend to be corrupt, and it is time to shine the light.
“The president has already taken the commendable step of directing that all revenues be remitted either to the Federation Account or the Consolidated Revenue Fund as required by Sections 80 and 162 of the constitution.
“President Buhari is therefore clear that oil industry revenues will no longer be treated as some slush fund of the federal government.”
He also explained that for such reform to become real, Nigerians should be carried along all through the way.
“It is the national consensus that we arrive at regarding the oil sector that we can finally codify in a new Petroleum Act, which should be a simply worded, concise piece of legislation that spells out the general governing principles for the industry.
“Specific matters can then be based on subsidiary legislation, regulations and agreements. Complex and densely worded laws conduce to opacity and should therefore be avoided.
“I am by no means underestimating the titanic struggles that might be necessary to change the Nigerian oil industry. The vested interests will be all out to thwart change and uphold the status quo.
“The media and civil society organisations (CSOs) have the major role of pushing for transparent disclosures and adherence to due process,” he said.
El-Rufai equally linked his verdict on NNPC to the current level of poverty in Nigeria.
According to him, “About 40 per cent of Nigerians are estimated to be very poor. That is about 70 million people living below the poverty line in a country that has earned at least 1 trillion in current dollars from oil in 50 years.
“For our vast masses, oil is no fortune. It is more of a mirage, but a more insidious kind, because the fortune is visible in the lifestyles of a few thousands of the privileged elite but is stubbornly inaccessible to tens of millions of ordinary people.”
Giving more statistics on oil production, he said in 2014, Nigeria was producing on the average about 2.2 million barrels of crude oil per day, while importing most of its daily consumption of 43.5 million litres of refined petroleum products.
That reliance on imports of refined products, he explained, “Has seen unsustainable expenses on questionable subsidy payments, exemplified by $8.99 billion in the 18 months between January 2012 and June 2013.”
He added that about N971 billion was budgeted for subsidy payments in 2014 alone of which more than twice of that was eventually paid.
The governor stated that in the eight years leading up to 2014, joint venture production declined by 50.4 per cent, adding that some 100,000 barrels per day, amounting to about five per cent of total production, is estimated to be lost to organised theft.
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