Subsidy Removal; A Blessing in Disguise - Robert Obi, IPMAN Calabar Boss

Well, the issue of subsidy has been there since the time of General Sani Abacha, when our refinery collapsed and unable to refine petroleum products...

Jun 26, 2023 - 13:31
Jun 26, 2023 - 13:42
 0  17
Subsidy Removal; A Blessing in Disguise - Robert Obi, IPMAN Calabar Boss
Robert Obi IPMAN Chairman Calabar zone
Subsidy Removal; A Blessing in Disguise - Robert Obi, IPMAN Calabar Boss


N

igerians woke up on May 29, expecting a new economic direction like to ameliorate purported hardship instigated by the lopsided policies and turbulent financial sector witness under the past administration of Muhammadu Buhari.

However, the citizens were hit by a thunderbolt when President Bola Tinubu, against all expectations, announced the removal of fuel subsidy, triggering a new price regime for the premium motor spirit, commonly known as petrol.

As expected, the new price which is pecked at N510 – N550 has escalated the prices of goods and services across all facets of the society. The Beagle News crew successfully tracked the Chairman, Calabar Zone of the Independent Marketers Association of Nigeria, Comrade Robert Obi, to dissect the economic imperatives of subsidy removal, implications for the masses, what it portends to the downstream sector and its inherent benefits to the economy. It is a loaded package with scathing revelations.

Excerpts…

May we meet you, Sir?

My name is Comrade Prince Robert Obi, Chairman of Independent Petroleum Marketers Association of Nigeria, Calabar Unit.

Can you give us your views on the subject under review?

I thank you for finding me worthy to invite me to shed light on the issue of fuel subsidy removal.

Well, the issue of subsidy has been there since the time of General Sani Abacha, when our refinery collapsed and unable to refine petroleum products. The then Head of State started importing petroleum products. Remember how they even imported toxic fuel into the country. So it continued like that. Abacha left, Abdulsalam Abubakar came in, then Olusegun Obasanjo, Musa Yar’Adua, Goodluck Jonathan, Mouhammadu Buhari, and now, Bola Tinubu. They all inherited fuel subsidy crisis.

During the days of Obasanjo, he decided to open up the space more. We had just 21 existing depots in the country at the time. We discovered that those depots, especially in Calabar were no longer coping with the influx of the trucks and high demand for petroleum products. With the growth of the economy and more marketers into the business, Obasanjo opened up tank farms and issued operation licenses. Today, in Calabar, we have about 37 private tank farms, second to only Lagos.

But before Obasanjo left, he discovered that it was not good for the country to continue to import fuel, though our refineries were unable to refine. The cabals had taken advantage and suppressed optimal functionality of the refineries. It affected local production. So Obasanjo decided to privatise it. Unfortunately, Yar’Adua came and revoked those contracts and returned us back to square one. Then the NNPC staff that are saddled with the responsibility to regulate left their jobs and began to register companies. That was how it started degenerating so badly into what it is today. They brought false documents to claim fuel subsidy. It became so bad. Then in 2012, former President Jonathan attempted to remove the subsidy. And all of us are aware that he was resisted, because he was a minority president. The powerful cabal did not key into the agenda. Immediate past president Buhari, in my opinion, never believed that subsidy existed. He was saying it is a scam until he took over in 2015. That was when he discovered that there was something called subsidy. But he did not want the marketers to handle the subsidy aspect of things. He removed the tax from independent marketers and handed over the responsibility to NNPC. NNPC became the sole importer of petroleum products into the country. And government was paying them in what they called under recovery, where crude oil is swapped for white products after being taken overseas.

Before Buhari came on board, our crude oil stood at nine million barrels per day. Our OPEC quota was 2.2, but Nigeria was only able to make 1.9 million barrels. During Buhari’s administration, because of the crude oil swap, our exports started shrinking; it dropped from 1.9 to 900. They blamed it on oil theft. Who were those stealing the oil? It is still them. They just manipulate figures and fleece the nation’s commonwealth in the excuse of oil theft. The OPEC quota numbers kept dropping until last year we were unable to export.

When the Petroleum Industry Act was passed last year, NNPC was unbundled. It now became a company, a limited liability company with the new initials NNPCL. From then until now, it has been over a year that the federal government stopped funding subsidy. It is just that Nigerians do not know. As soon as the PIB was assented to, they stopped paying subsidy. The responsibility was now left to NNPCL to bring in petroleum products into the country and then they continued to subsidise. But it was done secretly without allowing people to know. That was why when the 2022 budget was deliberated on, in preparation for the next appropriation bill, provision for subsidy was never made in the 2023 budget. Everything about subsidy was to end in June. By July, subsidy removal would come in force. But the unions could not tackle these things at the stage when these issues were deliberated upon. They kept quiet, allowed the national assembly to pass the budget, without any provision for subsidy. And now, this present administration, by all indications, is not ready to joke with the subsidy removal conundrum. That was why he vehemently told Nigerians in his inaugural address that subsidy was gone. 

Subsidy removal is a welcome development. For us the marketers, we welcome it. Because we are in the system, we know what is happening; the scam and corruption associated with subsidy is monumental. Unfortunately, the marketers being the closest to the public are always at the receiving end of public complaints, as if marketers are the ones formulating these policies. Ours is to buy, bring to our retail outlets and sell to the public. The people who are actually perpetrating this evil of defrauding this country are there, quietly continuing to milk the country dry. So subsidy removal is a good thing that has happened to this country. Though Nigerians would feel the pangs of hardship, but it is only going to be for a while. There are assurances that soon licences will be given to marketers to begin importation. We appeal to the federal government to expedite action in facilitating those licences and make the process of cquiring of such licences easier for marketers. Since the market has been liberalised, when we start bringing in products, I strongly believe that prices of petroleum products will come down because it will be a highly competitive market. Nigerians should just bear with the leadership of the country; it will be well, very soon.

Why is it difficult for IPMAN, NNPC and FG to name those carting away Nigeria’s subsidy funds? Critical stakeholders have said there is a powerful cabal looting the subsidy funds, but none is able to mention a name. Why is it so?

The reason why they are afraid to mention is because our country is institutionally lame. It is unfortunate that our institutions are not working. We only have powerful people who dictate what happens in Nigeria. If there were institutions, there should be able to pinpoint what is happening and where it is happening. But regrettably, Nigeria is suffering from institutional collapse. We must continue to pray for a leader that would insist on a country that is working. With the way Bola Tinubu has started, with the removal of subsidy and making efforts towards a single-digit exchange rate. These are good policies. If he can make sure that those things come to realisation, our country would be better for it.

Back to the so called ‘cabal,’ how do you mention them? Do you even know them? That is why it is difficult. Because when you mention a name, you must prove beyond reasonable doubt that these are the people doing it. It is a terrible situation. For instance, in the oil sector, the institution that is responsible in regulating is same that is enmeshed in irregularities. Subsidy is done in most countries of the world. In Nigeria, the intention was good; but it has been abused. It is still these powerful Nigerians who are abusing it. They see it as a loophole to enrich themselves against overall good of all Nigerians. So subsidy should go. We should also fix our institutions. If this is done, some of those anomalies will be reduced to the barest minimum. If tomorrow the system is sanitised, things will get better. Today, with the removal of subsidy, we are appealing to the federal government to come up with palliative measures for the ordinary Nigerians to benefit from. When you increase salaries, the ordinary citizen would benefit. Another area is the transportation sector. The government should invest in providing mass transit. Apart from these two areas, the government should not veer into any other, lest the entire system is hijacked.

With efforts towards licensing in the pipeline, what measures should be put in place to check against importation of toxic fuel into the country?

There are bodies saddled with such responsibilities, like the NNDPR. NNDPR is the regulatory authority to check the kind of petroleum products coming into the country. As a vessel lands in Nigeria, they take custody of it first in a bid to ascertain products safety. They take samples, run analyses and ensure that it meets specifications before it gets to the owners for onward circulation to the public.

Governor Otu has set up taskforce to checkmate hoarding of fuel and price hike. Investigations have it that there is hoarding of fuel and resistance to government directives. What role is IPMAN playing in this situation?

Well, after the president’s pronouncement that ‘subsidy is gone,’ same day, the new regime began. There is nothing like old stock. The public outcry to sell old stock at the old price is out of place. If you sell old stock at the old price, where would a marketer get money to buy at the new rate in the market? The very day the subsidy removal pronouncement was made, petroleum prices changed immediately. Now, product that we bought at 185 naira per litre was increased to 487.66 per truckload of petroleum that was hitherto purchased at 8.5 million is now sold for 22 million. So if you compel the marketer to sell old stock at the old price, where do you expect him to get money to buy at the new 22 million price per truck? It is not possible. Even in the banks, accessing facilities is not easy. So there is nothing like old stock. Petroleum marketers have run into huge losses resulting from the pronouncement of fuel subsidy removal by Mr. President. Even those who had already paid for products before the presidential pronouncement are today being asked to pay differentials. So if marketers sell at the current price, there is no way they continue with the present situation. That argument is there. So there is nothing in selling at the present price rates.

How can IPMAN address the fraudulent metre tampering bedevilling fuel station operators?

That is indeed criminal. IPMAN condemns such practice in its entirety. Buyers must have value for their money. Short-changing them is abhorrent and not acceptable. Again, it is the duty of the Weights and Measure department to check against such unwholesome practices. Same thing we keep complaining; our institutions are not working. They might have compromised in their line of duty, hence the variations in metres between one fuel station and the other. Agencies set up to check these excesses must rise up to the occasion and safe the ordinary Nigerian from undue exploitation.

How long do you think the fuel-price induced hardship would last, and the palliative you talked about, when do you think it would take effect?

There is no definite answer to that. But with the resolutions with the labour unions terminating the proposed industrial action, let us hope that this government will be purposeful to bring about the needed effect in governance.

Let us also hope that the issuance of licenses is done speedily. We also want the government to soften forex trading in the country to enable marketers to bring in products for national consumption as well as bolstering businesses. If these things are fast-tracked, it would not be long before the economy stabilises.

How can IPMAN check the negative effect of gridlocks and disrepair on our roads caused by trucks?

It is good that we have influx of trucks into our state. Their contribution to small scale businesses and the economy of the state cannot be quantified. The past government had given us a 55 hectare land for the development of a truck park. We appeal to the new administration to assist IPMAN in the development of that park, which when completed will check littering of trucks in the city of Calabar, generate huge revenue to government and support local trade.

What are your final words to Cross Riverians, Nigerians?

My message is that Cross Riverians and indeed Nigerians should bear with governemt. This subsidy removal is a good thing. Instead of wasting this subsidy money that goes into the pockets of a few, such funds should be channelled into projects and programmes, such as health, education, infrastructural development, etc., that will benefit the generality of Nigerians. Citizens must continue to endure with government. This policy is good for the nation’s economic growth. For petrol marketers to embrace this policy, one should know that it is for the good of all.

Let me give you another ugly scenario called the petroleum equalisation fund, where you pay transport for every litre of fuel in favour of those going out of the state. When it was done manually, it was fraught with great fraud. They later brought an electronic capturing called ‘aquilla.’ That too has failed. These people are funded to take our fuel to Niger Republic, Cameroon, Chad, etc. Today, we cannot say our fuel consumption rate as a nation. So for the fact that Tinubu had the guts to openly inform Nigerians about removal of fuel subsidy, I give him kudos and hope that he leads the country back to it pride of place as Africa’s giant.