Subsidy Regime Corruption-ridden, NNPC Insists

The Nigerian National Petroleum Corporation (NNPC) yesterday defended the federal government’s decision to remove the subsidy on petrol, insisting that allowing market forces determine practices was in the overall interest of the poor.

Group Managing Director of the corporation, Malam Mele Kyari, who spoke when he appeared on a live TV programme last night, posited that petrol subsidy was corruption-ridden and only served the interest of the elite.

Kyari said the move to deregulate the market took a long while because it was difficult convincing President Muhammadu Buhari to sign off on the move because he (Buhari) was worried that the poor would be negatively affected by higher prices.

He said: “Petroleum subsidy has been a big issue for over 20 years. Every corruption you are aware of in the downstream sector of the industry is in one way or the other connected to fuel subsidy.

“Several licences were given to people to build refineries across the country and none could deliver, maybe only just a few. The reason is very simple because people are not sure when you produce petroleum product what price they are going to sell.

“Because we know that those prices are not market-determined and there will be a subsidy element in it, everybody failed to deliver on it. The end result is that this burden is left to the NNPC and the government as a whole.”

The NNPC boss argued that the anger being expressed by the people due to the growing prices of the product may be justified but noted that it was grossly misplaced.

“Government has to provide for that gap that exists. It’s easy for people to get angry that prices have gone up. Just like other commodities because there can be challenges that people will naturally face,” he said.

According to him, the brunt of the sleaze in the subsidy system was borne by the poor who he said are being misguided by the elite who are gaining from it.

Kyari said: “Only a Buhari regime can make this decision. People will not appreciate the fact of the lost opportunity because you are spending an enormous amount of resources, over N10 trillion spent in the last eight to nine years, all trying to service that. That also includes the element of forex lost to it.

“Subsidy is an elitist thing. Only the elite have three, four, five cars. They have many cars in their houses and fill their tanks. The ordinary man loses in infrastructure, hospitals are not built, and schools are not built. Ultimately, the brunt of corruption is borne by the ordinary man.
“Overall they lose everything and get nothing. The anger is coming from those who are not aware they are being cheated. They are being engineered to do those things.

“The outburst is understandable but misplaced because Nigerians are not aware of the opportunities lost.”
On why the president delayed before approving subsidy removal, he said: “The reason it took that long is the persuasion of the president who is a pro-people president. He shares this personally that ordinary people should not suffer because of the acts of people in government or institutions.”

Kyari further disclosed: “There’s a difficult conversation in government to see how we move from this situation to a situation of reality without hurting the ordinary people, adding that “until very recently, the president was not convinced that we should make this move.
“It’s clear we can’t afford it anymore. Ordinary people deserve more infrastructures. We need to free up resources. It was a difficult decision for the president but it will unleash activities in the sector.”

He maintained that with the decision, more jobs would be created, more schools would be built, stating that the long term benefits outweigh the immediate pain.

Asked if there were palliatives to cushion the impact of the hike in fuel prices, the GMD noted that with the economic sustainability programme, small scale businesses, among others, will have access to about N2.7 trillion.
He said the national oil company was engaging the Central Bank of Nigeria (CBN), adding that “within a very short time, oil marketing companies will have access to forex just like the NNPC.”

He said currently, all the four refineries have been shut down deliberately because “delivery of crude oil is challenged and compromised,” and can’t function at full capacity.

Kyari explained that the corporation was conducting full rehabilitation and would, thereafter, operate a Build, Operate and Transfer (BOT) model.

Leave a Reply

Your email address will not be published. Required fields are marked *