Subsidy extension stalls Petroleum Industry Act

BY ABUBAKAR H. MUHAMMAD, JANUARY 26, 2022 | 02:54 PM

Implementation of the Petroleum Industry Act (PIA) is no longer tenable with the continuation of petroleum subsidy payment.

President Muhammadu Buhari will propose an 18-month extension to the National Assembly.

The PIA, signed on August 16, 2021, was billed to take effect next month.

Under the law, price control of oil resources and products by the government ought to end in six months to give way to a free market regime.

The six months would lapse next month. But with the timeline no longer feasible, the executive will return to the National Assembly for an amendment to the PIA.

Minister of State for Petroleum Resources Timipre Sylva told State House Correspondents after meeting with President Buhari, that subsidy removal was put on hold to enable the government put relief measures in place to mitigate the harsh effects.

He said: “It is likely to involve an amendment of the PIA to extend the time. I always do not want to preempt what timeframe the National Assembly will allow, but definitely, at this moment, fuel subsidy removal is not on the card.

“We also see the legal implications. There is six months provision in the PIA, which will expire in February and that’s why we are coming out to say, before the expiration of this time, we’ll engage the legislature.

“We will propose an 18-month extension and then it’s up to the National Assembly to look at it and then pass the amendment as they see fit.”

He said the President directed the suspension to protect the poor and vulnerable against further hardship.

On Monday, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the government would make provision for subsidy payment beyond June.

Sylva said part of the measures is to get the refineries working by the end of the year.

He said: “There is already a provision in the law, but because Mr. President is very humane and is concerned about the plight of the people, especially the less privileged, he believes that the impact the removal of subsidy will have on the poor and vulnerable Nigerians should be mitigated.

“He believes that certain structures must be put in place prior to the removal of subsidy. All those structures are not right now in place.

“One of those is to ensure that the refineries are working. Steps are being taken for all the refineries to be functional very soon.

“The Dangote Refinery is expected to come on stream at the end of this year.

“All our refineries, particularly the Port Harcourt Refinery, is expected to be performing at a certain capacity, not full capacity, by end of this year.

“There are some modular refineries that are also going to come on stream later this year.”

Sylva is also hopeful that by April, conversion of vehicles from petrol to autogas would begin while arrangements are firmed up for palliatives.

He said: “We are hoping that in March or April, the conversion processes will begin.

“We promised that one million cars will be converted initially, and of course, the corresponding amount of gas filling stations will also be built.

“That is in progress and I want to assure you that it will happen very soon. That also has to be in place before we say ‘okay, we want to take out subsidies’.

Asked how long the suspension of the PIA implementation might last, he said: “I will not want to specifically mention the time of extension because that will be a product of a discussion with the National Assembly.”

On the use of gas-fueled automobiles, Sylva said talks have been held with original equipment manufacturers (OEMs) to set up in Nigeria.

“They are actually willing also to give us 50 per cent of the funding. I and the Minister of Finance have discussed also how we can match them with 50 per cent so that it will be 50/50,” he added.

According to him, petrol-powered engines cannot be converted to gas without the filling stations to service them. Sylva said engagements with stakeholders, especially the Labour, would continue.

On queues in petrol stations, he said there was no need for panic buying or hoarding.

He hoped that the uncertainties on subsidy removal that may have caused the queues have been cleared.

“That’s why we want to just ensure that our people know that they can remain calm and don’t have to hoard or do any panic buying, that we don’t intend to remove subsidy now,” Sylva said.

Labour Shelves Nationwide Protests Also yesterday, the Nigeria Labour Congress (NLC) called off the planned nationwide protests over petrol subsidy. It took the decision at its National Executive Council meeting.

NLC President, Ayuba Wabba, at a briefing in Abuja, said members would be demobilised

He said: “The NEC after vigorous debates took a decision to suspend the planned nationwide protest scheduled for 27th January 2022 and the national protest scheduled for 2nd February 2022.

“The leadership of the Congress has communicated this decision to our civil society allies who have stood stoically behind Nigerian workers in our quest for social and economic justice for workers and the downtrodden people of our country.

“Going forward, we will continue to engage with the government on the very critical issues of ensuring local refining of petroleum, creation of sustainable jobs and affordable price of petrol for Nigerian workers and people. “We commend the Nigerian workers and people particularly our civil society allies for their unwavering solidarity and support during this struggle. We sure are stronger together.” LCCI Recommends Phased Subsidy Removal The Lagos Chamber of Commerce and Industry (LCCI) recommended a phased removal of petrol to mitigate its effect on the masses.

Its Director-General, Dr Chinyere Almona, said in a statement that the phased removal should be accompanied by complementary investment in critical infrastructure aimed at supporting production in the economy. According to her, increased production would mean more job creation, poverty reduction and improved economic growth.

The LCCI DG, however, noted that a monthly payment of about N250 billion to subsidise fuel consumption meant an additional N1.5 trillion expenditure in the 2022 budget. She stated that with additional expenditure against the projected revenue, deficit financing would be needed to support the budget expenditure.

Dr Almona noted that the development was likely to see the government borrowing more than projected to finance the bloated expenditure in the face of revenue mobilisation challenge.

“The signing of the Petroleum Industry Bill into law by President Buhari was well-received by all major stakeholders and seen as a commendable act by the government.

“The political will to sign the bill into law was highly applauded because of the expectations of many on the full exploitation of the inherent potential of the oil and gas sector.

“Less than a year into the signing of the Act, the implementation has suffered a flip-flop as some of the provisions of the Act are being suspended,” she said. Dr Aloma said while the LCCI supported the full implementation of the PIA and total deregulation of the oil and gas sector, it was not insensitive to the plight of the masses that might feel the pains of fuel subsidy removal. IPMAN Seeks Action On Refineries

The Independent Petroleum Marketers Association of Nigeria (IPMAN) urged the Federal Government to begin the implementation of programmes and palliatives aimed at cushioning the effects of the eventual removal of petrol subsidy.

Its President, Mr Chinedu Okoronkwo, believes the postponement gives the government an opportunity to put the necessary programmes and palliatives in place.

“The government should ensure that we improve our domestic refining capacity by rehabilitating our refineries. “This is ongoing and hopefully the contractors will adhere to the stipulated timelines.

“Also, the government should give the necessary support to the Dangote Refinery and other private-owned refineries under construction to enable them to come on stream as soon as possible,” he said.

Okoronkwo advised the government to initiate its mass transit programme to help reduce the cost of movement of goods and persons.

“One of the factors contributing to the high cost of foodstuff in Nigeria is transportation. “If we have mass transit buses, this will help us to reduce the prices of foodstuff in our markets,” he said.

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