Nigeria’s Minister of Petroleum Resources, Mr Timipre Sylva, on Tuesday expressed doubts over Nigeria’s daily petrol consumption figures, describing them as crazy and opaque.
The minister who appeared on the Nigerian Television Authority (NTA), a government-owned broadcast station, in apparent frustration, noted that there’s nothing that needed to be interrogated that had not been questioned on the subsidy matter.
Also, the Founder/Chairman of Heirs Holdings Limited, Mr. Tony Elumelu, on Tuesday said incessant oil theft in the Niger Delta region remained a major national challenge requiring urgent attention by the country’s leadership. Elumelu, while delivering the National Defence College, Course 30 Lecture titled: “Strategic Leadership: My Business Experience,” further described the activities of oil thieves as a national disgrace which requires national seminar and dialogue to address.
Sylva agreed that figures released by concerned authorities were questionable, stressing that the best solution to the issue would have been to completely remove the subsidy.
Nigeria’s subsidy regime has for decades remained a subject of controversy, with the figures from the authorities ranging from between 50 million litres per day to around 103 million litres.
As at today, the Nigerian National Petroleum Company (NNPC) is the sole importer of the product, since private businessmen exited the scene due to non-availability of foreign exchange years ago.
Having backtracked on its plan to remove fuel subsidy as dictated by the Petroleum Industry Act (PIA), the executive arm of government is set to approach the National Assembly to approve the N3 trillion for the payment of subsidies in 2022. The government last week extended the implementation by 18 months.
The minister alleged that a few persons were holding the rest of the country to ransom, explaining that the rich rather than the most vulnerable in the country gain more from the payment of subsidies than the poor.
Speaking on the dynamics of rising consumption figures and increasing subsidy payment, Sylva explained that although there was something fishy about the data, there’s nothing that hadn’t been done in the past to muscle those bleeding the country without success.
“There have been efforts at controlling some of the smuggling. And then something dramatic happened. When we had the deregulation discussions, and the price moved up to N162 from N145 where I met it, we realised that the consumption dropped to less than 50 million litres or to the 40 million.
“So, later on, once the exchange rate also now moved up a little bit and swallowed the gains we made from the N162 move, the figures increased again.
“And sometimes, the figures you hear are crazy. I mean, when they tell you 90 million litres a day, I mean, they’re crazy figures. So I mean, so for me what is the sum total of all this? We’ve been interrogating these numbers for 20 years.
“We continue to interrogate these figures because we all know that there is a problem here, it’s opaque . The opportunity, the premium is not coming to government and it is not going to the poor people. It is going to a select people who are feeding fat on these things.
“So why don’t we just get rid of this thing? Okay, we should interrogate this thing, but I mean, to me that is not the solution. Why don’t we get just get rid of this whole subsidy so that we know that this problem is over once and for all.
“I know when people say the figures are… I mean, we agree that the figures are all opaque. We agree. That’s why we are saying look, let’s stop all the shenanigans. Let’s stop all this discussion.
“Let’s leave all this opaqueness, all this corruption in the subsidy, let us move away from subsidy and go on higher ground. And then they say no, no, no. There’s been trial of subsidy thieves. Oh, we’ve gone on television to say okay, these are the template, these are the components of the templates,” he stated.
The minister was reacting to the insistence by a co-guest, Prof. Yinka Omorogbe, an energy law expert and President Nigerian Association of Energy Economists (NAEE), that Nigeria must investigate how many litres it consumes, among others.
The minister maintained that even labour which is against the removal of the subsidy knows the issues, adding that Nigeria continues to hemorrhage because the subsidy regime persists.
“Why don’t we just get out of it? Okay, there has been some corruption. So we can always deal with the corruption issues. We can always deal with all the opaque issues. But should we allow Nigerians who are not benefiting from this thing as you agree with me, to continue to be hemorrhaging?
“Because we need to get out of this, because look at it, N3 trillion budgeted. You can imagine if this N3 trillion were to be budgeted for something else. Who’s going to be benefit from it? I’m not into the downstream, I’m not going to benefit,” he stated.
He argued that even the Dangote refinery would not survive in a subsidised environment, reason the businessman carefully planned it as an export facility around the Export Free Zone (EFZ) in Lagos.
“It is by his port, because he was not refining to sell at a loss as the other refineries were designed to do. He designed his to sell at a profit internationally. If we are to buy from him, we will also buy at the international market. The only saving we will make as a government in that case, is the cost of freight,” he argued.
“So, you find that that it was his own model, it is still not going to function under a subsidy regime, even Dangote refinery will not function. So, it is agreed that no refinery in the world can survive in a subsidy regime,” Sylva added.
On the issue of pipeline maintenance and repairs, the minister stressed that under the PIA, the refineries will be managed distinctly from the crude oil pipelines.
Describing it as a very thorny issue, he expressed the view that the PIA will be the solution to some of the current problems with managing the pipelines.
He pointed out that before now, the midstream in the industry was grossly under-developed because the fiscals were not there.
“If you have a situation where somebody owns a refinery and then at the same time is expected to run a pipeline that is 600 kilometres long, then it becomes difficult for him to run.
“He should focus on running a refinery if it’s a refinery operator, then you must have somebody who also focuses on running the pipeline and it becomes his business.
“Unfortunately, in Nigeria, we never saw the pipeline as a business. So the pipeline was always an attachment to a refinery. It was becoming very sub-optimally managed because the refinery operators could not manage the pipelines.
“So what we are now doing is to decouple the pipelines from the refineries, outsource those pipelines to people who can now focus on managing the pipelines. So it will be a different ballgame after the fixing of the refineries, he assured”
Omorogbe had in her comments, said that the reforms in the industry were unnecessarily slow, with the PIA taking over 20 years to bring to fruition.
“The downstream has been in a mess for a long time. Any downstream operator will tell you that off the record, and will tell you that it’s worsening.
“I’m just in pains to know how we can implement the petroleum industry act. But I think a lot of the problem is that Nigerians have never really interrogated what this subsidy is, if it’s there to cushion us against the different price effects of importing petroleum products.
“What are the components of what is being paid for subsidy? When you look at landing cost, what are the components of that landing costs? How much of it is the demurrage for example?
“Why are we paying for the incompetence of the system? If the government would get out of this area, I can see that many things would be wiped out, even though one is talking about temporarily having the price shoot up, it’ll come down.
“When there’s competition. No private person will pay for some of the things that are happening right now. That’s why I say I really don’t know where to start. But we should just sit down and interrogate that subsidy, subsidy price and see what we are paying for it and what’s in the landing costs.
“Let’s interrogate and say, how many litres do we use in Nigeria every day? Statistics in the downstream is incredibly opaque,” she argued
Elumelu Raises Concerns over $4bn Oil Theft, Says Its National Disgrace
According to Elumelu, who is also the Chairman of the United Bank for Africa Plc (UBA), between January and September last year, Nigeria lost over $4 billion to oil thieves
who don’t pay tax but use their illicit proceeds to acquire more lethal ammunition and continued to pose threats to the country’s corporate existence.
He expressed worry that the development had put so much money in the hands of those who don’t pay tax and who are not regulated, making the country unsafe.
Elumelu said, “We produce sometimes about 87,000 barrels per day, and thieves take 50,000 per day.”
He said addressing the sordid situation required strategic as well as resilience of leadership adding that, “things can’t continue that way. The country should wake up.”
“We look forward to men and women of this country to help remove this national disgrace,” Elumelu added.
He said, “The theft in the Niger Delta is a national challenge. To me, it requires national seminar and dialogue. It is in my viewpoint, one of the lethal threats to our country, because it is so much money in the hands of people who don’t pay tax, people we don’t regulate and the country is not safe.
“Nigeria in the last three quarters of last year from January to September lost over $4 billion to thieves who don’t pay tax and they use it to pile more lethal ammunition and pose threats to our corporate existence.”
He also attributed the growing youth restiveness in Nigeria and Africa to the absence of strategic leadership principles which he said among others required setting priorities, execution of goals, setting of timelines and milestones as well as clarity of purpose.
He said these leadership principles had helped shape his focus and eventual successes in the private sector, stressing that they are as well applicable to the public sector if results must be achieved.
Elumelu in the course of his lecture also touched on the need for leaders to match words with actions so people don’t lose interest in their leadership.
He also emphasised the need to pay attention to merit and ensure that the most qualified persons are appointed to positions of authority.
On the role of private sector in fighting terror and promoting peace in the continent, the founder of the Tony Elumelu Foundation said he had been a proponent of African capitalism which he believes would lead to long-term investment to address endemic poverty.
He argued that people who have economic hope do not take to extremism, saying only jobless persons are susceptible to social vices.
He said governments must get serious with eradicating poverty and creating economic opportunities for the growing youth population in order to avert a greater catastrophe.
“Unless we get serious on our continent, it’s just starting, ” he said.
He added: “There can’t be peace when people are hungry. It’s an imposed peace and it’s only a matter of time before it explodes.”
According to him, what African youths need is economic opportunity and not interested in handouts adding that they presently lacked such opportunity.
Elumelu said government must wake up and realise that the young ones would someday hold them accountable.
He said the fact that 60 per cent of the Nigeria’s population lived below the poverty index had more to do about leadership.
He said, “We can correct these things. We need to do more. Poverty is the reason we have problems in the world.”
James Emejo and Emmanuel Addeh in Abuja