Muhammadu Sanusi, emir of Kano, says the present operation of the Nigerian National Petroleum Corporation (NNPC), especially on the issue of fuel subsidy could lead the country into bankruptcy.
The former Central Bank of Nigeria (CBN) disclosed this on Friday while speaking at a ceremony to mark his fourth anniversary on the throne as the emir of Kano.
The monarch said money paid for subsidy could make changes in the power, agriculture, education and health sectors.
“What we have is not a subsidy. The federal government guarantees Nigerians a maximum price per litre for fuel. And this is a product we import. And its price is based on unpredictable underlying commodity prices,” Sanusi said.
“So what the federal government is saying is look it does not matter what the price of oil is internationally, what the exchange rate is, what interest rate is, what shipping clearing and demurrage is, I am so rich that I will ensure you get fuel at this maximum price and I will pay the difference.
According to him the balance sheet of the federal government is not hedged in anyway against these risks. “As a professional risk manager, I have never seen a policy that is so guaranteed to bankrupt anyone as this policy.”
The emir said government’s attitude could lead the country into bankruptcy.
On the NNPC, Sanusi said only angels can run the Nigerian National Petroleum Corporation (NNPC) in a transparent manner.
While canvassing for the total scrapping of payment for subsidy, the respected monarch said it is not about the persons in the NNPC but about whether anyone can make a system operate honestly when there are such huge arbitrage opportunities.
“So, for me these are the issues. It is an economist’s nightmare. Sadly the very reason this subsidy should be scrapped is probably the reason it never will be. For those who profiteer from it, it is just too good to be true.
“The petroleum minister has disclosed that this government has spent N1.4trn already on fuel subsidy and for most of this period, oil price was between low and moderate.
“You can imagine how much we will pay as oil price goes up. Imagine if that money had gone into the power sector or agriculture and education and health. So for me this government inherited a bad situation but if it continues with these programmes, the next government will also inherit a bad situation which is a shame.