Secretary-general of the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG), Afolabi Olufemi, says the union will not accept the federal government’s removal of subsidies on the petrol pump price, except the product is refined in the country.
Olufemi said the Jonathan and Buhari administrations had deceived Nigerians about using the proceeds from subsidy removal to refurbish the country’s refineries.
President Muhammadu Buhari had said during his opening remarks to his cabinet at the first-year ministerial retreat that the federal government was too poor to continue sustaining the subsidy regime.
The NUPENG boss, however, said the Jonathan administration had in 2012 promised to invest in repairing existing refineries with the funds from the negotiated subsidy cuts.
Olufemi said the Buhari government had made the same promise when it came into office in 2015 and altogether eight years later, from 2012, nothing had changed.
“Our position has remained constant right from inception,” he said. “We do not want deregulation based on importation.
“Since 2012, what has the government done to put our refinery right since 2012? In 2011, subsidy payment was N2 trillion-plus. In 2012, it was N1 trillion-plus. Now it has dropped to about N760 billion. In 2016, there was no subsidy at all. With the savings, we have made so far, what have we done with it and what is the state of our refineries?”
The Nigeria National Petroleum Corporation (NNPC) in March 2019 commissioned Italian firms, Maire Tecnimont and Eni to carry out repairs on the Port Harcourt refinery.
The first phase of the project was to last for six months at the cost of $50m.
The NNPC promised last year that all the country’s refineries would be functioning at full capacity by 2022.
The Group Managing Director, Mele Kyari, had in July of 2019, said that the three refineries would be ready before the beginning of 2023.
The corporation has since shifted the deadline, with several officials stating on different platforms that they hoped to get all refineries on stream by 2023.
While Tecnimont is expected to handle the engineering, procurement and construction of the two refineries in Port Harcourt, the corporation has yet to state who would take care of repairs in Warri and Kaduna.
Olufemi said the impending strike by the oil and gas workers is essential, as the government has repeatedly lied.
“They have deceived us; they have lied to us several times. Are we going to continue believing them? The argument in 2012 was that they were taking away subsidies to increase the local refining capacity and that we would be able to save money to increase local capacity if we reduce subsidy. For eight years, nothing has happened.”
Contrary to the federal government’s claim that it would not subsidise petrol prices; however, it has maintained a form of cost reduction on the retail price of the product through a currency subsidy.
NNPC is Nigeria’s primary source of foreign exchange. The corporation takes dollars at source to meet the country’s fuel needs.
With the refineries idle, the corporation exchanges the country’s domestic allocation of 445,000 barrels per day for refined petrol through a direct sale and direct purchase deal.
By this means, NNPC has been the sole importer of the product since 2017, meaning there is no competitive market for petrol in reality.
Explaining why organised labour’s intention to embark on a strike to protest electricity tariff increase for customers receiving 12 hours of power and above, Olufemi said the distribution companies had not put in enough investment to demand a pay rise per kilowatt-hour.
He said, “It is easy to put burdens on the consumer. Those who bought these assets from the federal government were supposed to have the technical competence and financial muscle, and they are supposed to have done due diligence, and they have failed at delivering all these. Why should the masses pay for their mistakes?”
Olufemi said the distribution companies should meter all its customers and show proof of service before demanding higher pay.
“In our electricity industry, it feels like if you are going to the filling station with your car, you have to bring your fuel pump,” he said. “They should meter all their customers and show that they are providing service before asking us to pay more.”
The industry experts have asked the Nigerian government to ease the burden on electricity customers by denominating the pricing of gas sold in the Nigerian market in naira.
This, they say, would help power generating companies to reduce their cost of production.