President Tinubu: Smart by Half with World Bank/IMF on Petrol Subsidy

How do you explain that a man who schemed to rule this country since or even before 2015 has carried on in the last one year as if he was just conscripted to head the government? Every day, events unfold that show President Bola Ahmed Tinubu was at best totally unprepared to govern the country or at worst outrightly incompetent despite assurances he has been giving. And his health status is even making matters worse for him or rather for Nigeria.

There is a saying that ‘it is better to measure 99 times and cut once.’ But because the president was too eager to ingratiate himself and garner the endorsement of the twin sisters- the World Bank and International Monetary Fund(IMF), he made the pronouncement on fuel subsidy stoppage few minutes from his inauguration to impress them and now it is backfiring from both ends- the Nigerian end and that of the international credit duo.

But for the recently concluded Nigeria International Energy Summit (NIES) held in Abuja where the Chief Executive Officer and Managing Director of Pinnacle Oil and Gas Limited, Mr. Robert Dickerman revealed that the Nigerian Government still pays N1 trillion every month for petrol subsidy, Nigerians would still have been believing the lies and propaganda of this government on subsidy withdrawal.

Former governor of Kaduna state, Nasir El’Rufai had earlier raised the alarm that the federal government is definitely paying more on petrol subsidy than what the Buhari government paid.

Independent Petroleum Marketers Association of Nigeria (IPMAN) also collaborated the same story on the government still paying fuel subsidy though they tied their reason to the cost of crude oil at the spot markets and the Naira free fall against the US Dollar.

Now, the World Bank and the IMF, and even the Bank of America had come out openly to say the same thing even painting a gorier picture.

All that the Federal Government through its Ministry of Petroleum Resources and the Nigerian National Petroleum Company Limited could say was that the various claims by different individuals and groups on the alleged return of subsidy on Premium Motor Spirit, popularly called petrol, were wrong.

So who is saying the truth and who is lying now; also who do Nigerians believe- Government or the others? Without mincing words, the facts and figures from the various arguments are clearly showing the government has reintroduced subsidy payments.

This is what the IMF/World Bank is saying about the status of the Nigerian fuel subsidy scheme in a country report released Thursday, 8 May 2024: “Nigeria’s reintroduction of gasoline/petrol subsidy months after it was scrapped is expected to guzzle almost half of its projected oil revenue this year, an estimated 8.43 trillion naira ($5.9 billion) of its projected 17.7 trillion naira of oil revenue.”

Another cousin of theirs, The Bank of America also projected that it could cost Nigeria between $7 billion and $10 billion this year on subsidies if it imports between 18 and 25 billion litres of gasoline(petrol).

Recall that President Bola Tinubu halted the $10 billion subsidy at his inauguration mid-last year to help the government repair its finances after debt-service costs jumped to 96 percent of revenues.

“Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care, and jobs that will materially improve the lives of millions. Petrol subsidy is gone,” Tinubu had declared.

It’s a well-known fact that it was the announcement of fuel subsidy removal and subsequent devaluation of the naira days later, though aimed at creating a free-floating currency, that led fuel prices to more than triple, fanning inflation and protests.

The President’s announcement sparked the increase in fuel price from N185 per litre to between N480 and N570. The pump price was subsequently reviewed upward to N617 per litre and now sells for anywhere between N680-N1000 per litre.

So which subsidy are we talking about again? “Subsidy is gone”–Bola A Tinubu, 29th May, 2023” or another one?

Was this same subsidy not the reason we are now buying petrol at over N700 per litre from N185 where Tinubu met it? So Tinubu is paying more for Subsidy today then Buhari did and yet the price has more than triple. How do you explain this?

Truth be told, the President was very offhand to declare that fuel subsidy was gone on the day of his inauguration without even making proper arrangements for the expected ripple effect. Floating the Naira immediately after that doesn’t make sense either as both policies increased the misery index of the populace and created the current mess the government and the people are in.

This issue is far more than whether the federal government through the NNPCL has smuggled back payment of fuel subsidy on imported petrol or not. We all know that there was no provision for fuel subsidy in the 2023 and 2024 Appropriation Acts, so where is the NNPCL getting the money from to fund this operation?

One disclosure had it that the NNPCL was using proceeds from Nigeria LNG dividends to pay subsidies on petrol while other reports claimed the company deducts the subsidy amount from the proceeds of Nigeria’s crude oil sales before remitting the remaining balance to the federation account.

This is where it gets interesting: As said, the exact amount deducted by NNPCL from both the NLNG Dividends and whatever is left of Nigeria’s earning from crude oil sales (as most of our produced oil had been sold as collateral for NNPCL credits from China and America) remains unclear, but unofficial data claims it could be as high as N17.72 billion daily, raising concerns about transparency especially with a company like the nation’s apex oil concern that has an established track record in opaqueness.

A report by the Federation Account Allocation Committee last August showed that over N169 billion was used to pay subsidies, a development that reveals what the country is up against.

If the Federal Government is not secretly subsidising the importation of petrol into the country, why should the International Monetary Fund (IMF) in its February Country Report be advising the Nigerian government to completely phase out petrol and electricity subsidies in the country despite the president’s announcement?

Was it not this same IMF and their sister, the World Bank that told the president to remove Fuel subsidy in the first instance? He obeyed without considering the consequences. Now he has seen that the country has been thrown into immeasurable hardship, he wants to secretly renege on his earlier vow to obey any counsel dished out to him by the duo.

He thought he can clandestinely smuggle back the policy to save his politics without the World Bank and IMF shouting foul. That’s being smart by half because those task masters will never let you eat your cake and still have it. He could have insisted on settling down first to study the magnitude of the problem before making any policy pronouncement. That could have given him room to know how to manoeuvre the murky waters of this subsidy issue.

Now the IMF has instructed that “as inflation subsides and support for the vulnerable is ramped up, costly and untargeted fuel and electricity subsidies (whatever that means) should be removed, while e.g., retaining a lifeline tariff.” The question is: has inflation ever subsided in this country? And how many vulnerable Nigerians can be honestly supported by the government through its hardship allowance? Corruption is there o, don’t forget! Anyway, our God no go shame us. He never did!

(IFEANYI IZEZE writes from Abuja and can be reached on: [email protected]; 234-8033043009)