The governor of Nasarawa State, Mr. Abdullahi Sule, on Thursday, stated that the Muhammadu Buhari administration expended over $19 billion on repairing Nigeria’s four refineries in eight years without commensurate results.
Speaking on Channels Television, the governor, who was Managing Director of African Petroleum (AP) about two decades ago, stated that the process of fixing the country’s refineries was largely mismanaged.
Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mr. Mohammed Shehu, also on Thursday, expressed support for the removal of fuel subsidy, citing lack of transparency in the scheme.
Nigeria’s ailing refineries were built in the 60s, 70s and 80s, but have since gulped billions of dollars in Turnaround Maintenance (TAM), with the expected outcomes mostly disappointing. However, Sule’s assertion that over $19 billion was spent by the former president could not be independently verified.
Sule also explained that he had always supported the removal of subsidy because he believed that there was massive fraud in the process. He recalled that as Managing Director of AP, he had complained over 22 years ago that there was no way Nigeria would consume 30 million litres of petrol per day at the time.
By 2011, he stated that the consumption moved to 50 million litres per day, and was now about 70 million litres, a development he said was impossible.
Sule said the situation was made worse by the fact that only the volume lifted from the depots, and not the actual consumption data, was known by the Nigerian National Petroleum Company (NNPC) Limited.
Sule argued that Nigeria had been subsidising petrol for surrounding countries; reason there was energy crisis in those countries currently after Nigeria withdrew its own subsidy.
The governor maintained that several licences were issued for the construction of refineries in the past, but said that this had not worked because of the nature of the industry. He stated that subsidy should have been removed in 2015, when the prices of crude oil fell abysmally.
Sule stated, “Just look at how much the President Muhammadu Buhari administration spent on fixing the refineries. In the eight years, he spent more money than the $19 billion that Dangote spent in building his refinery, which is one and a half times the size of all our three refineries combined.
“Our three refineries today have a total capacity of 450,000 barrels per day. Dangote’s is 650,000 barrels per day. He spent $19 billion. We spent more than $19 billion maintaining these refineries in eight years, yet they have not been maintained.”
Sule stated that because a refinery would usually have up to five components, money was most times released to fix one part, which at the end did not yield any results.
He stated that while the ideal thing would have been to fix one of the refineries, monies released were shared among all the facilities, leading to what he described as “zero work”.
“We have not really managed these things well,” he added.
The governor said, “The refinery is actually a component for water, crude, and diesel, about five or six different components that constitute a refinery.
“The moment the government says we are going to spend $2 billion this year on the refinery. The $2 billion is spent and as far as the president is concerned, they have given $2 billion.
“Now when it goes to the three refineries that we have in Port Harcourt, Warri, and Kaduna, then they say, you now take $700 million, you now take $800 million, by the time they take that, it goes to fix maybe only one component out of the four components that are all bad.”
While backing the recent removal of subsidy by President Bola Tinubu, Sule lamented the unavailability of reliable data on Nigeria’s fuel consumption, which he said strengthened the argument for subsidy removal.
He stated, “As I am talking to you now, NNPC just last week confirmed to us that it is between 65 million litres and 70 million litres. That is what the government is paying. So, I asked the officials of the NNPC, ‘how are you determining this consumption?’ They said, ‘well, we are determining the consumption by lifting’.
“You are not determining the consumption by actual usage within Nigeria. That is the only way they can do that. If you have a company and have 10 petrol stations and you come and NNPC gives you 10 trucks to take to 10 petrol stations, if you take only five and take the remaining five out of the country, they have no way of confirming this.”
The former Managing Director of Dangote Sugar Refinery argued that while the government might have good intentions, those who did not share the same aspirations had a way of derailing the process.
He assured that the Dangote refinery would reduce fuel prices, with the cutting of freight and other accompanying charges that were paid on the importation of petrol.
Sule pointed out that accountability would come automatically when prices were determined by market forces, since smugglers will stop buying from the country, which would allow Nigeria determine its actual consumption figure.
Meanwhile, Shehu, on Thursday, backed the removal of fuel subsidy, citing lack of transparency in the scheme.
In a statement, he disclosed that from January 2022 to date, about N8.48 trillion withheld by NNPC as reported by the Office of the Accountant General of the Federation(OAGF) as subsidy claims was yet to be reconciled by the RMAFC, OAGF and the NNPC.
Shehu said the decision of President Bola Tinubu to end the subsidy regime due to the non-budgetary provision for its continuation was a masterstroke that broke the jinx and a step in the right direction.
He said the country could no longer sustain fuel subsidies whose demerits far outweigh its benefits to the citizenry.
The RMAFC chairman said, “It is saddening to note that since 1st January 2022 to date, NNPC has not been contributing to the Federation Account due to the claimed subsidy payments.”
Shehu said in a situation where the records of subsidy transactions were not transparent and crude oil prices were being determined globally, it would be unwise to sustain the phantom payments of subsidy at the detriment of other critical sectors of the economy.
He said ending the subsidy regime would eliminate the alleged uncertainty surrounding its administration and free up funds for the execution of critical national development and human capital enhancement projects. He identified such projects to include provision of an affordable transport system, investment in the education sector, improvement in health care and infrastructural development, and resuscitation of domestic refineries to eliminate dependence on imported fuel, among other key sectors.
He praised the previous administration for providing the necessary enabling environment for the successful take-off of the first private refinery built by Alhaji Aliko Dangote.
Shehu expressed optimism that when the refinery became operational, the country would witness a glorious dawn in hassle-free oil production and distribution in the absence of the subsidy regime.
While commending Tinubu for his uncommon courage and political will in doing away with the issue of subsidy, he urged the new administration to work out strategies that would cushion the attendant effect of the new policy.
He added that deterrence measures should be taken to bring to book all the economic saboteurs who had contributed to national adversity in accordance with the extant laws of the federation.
Shehu said the commission’s position was premised on the fact that the continued payment of humongous amounts to a privileged few in the name of subsidy was a major drain on the nation’s scarce resources, as NNPC, one of the major sources of revenue to the federation account, had since stopped contributing to the national pause due to the fuel subsidy regime, which is characterised by opaqueness and other ambiguities.
He stressed that subsidy removal was long overdue and constituted a major challenge to the economic growth and development of the country.
Ndubuisi Francis, Emmanuel Addeh and James Emejo