By Adewale Sanyaolu
Nigeria has been warned to exit the fuel subsidy regime or be ready to ground the economy, Managing Director, 11 Plc, formerly Mobil Oil Nigeria Plc, Mr.Adetunji Oyebanji, has warned.
Oyebanji raised the alarm at the 2022 Annual Dinner of the Institute of Change Management (ICM) with the topic ‘’ Impact of Insecurity and Oil Subsidy on Nigeria’s Economy held in Lagos at the week.
This was even as he said the current fuel scarcityhas been attributed to several factors including; lack of foreign exchange to allow other players import fuel, logistics challenges occasioned by poor infrastructure and increase in vessel hiring charges.
He observed that as Nigeria’s population grows to over 200 million people its revenues have not grown sufficiently to support necessary investments in health, education and country infrastructure to support the population growth, while payment of subsidies for petrol over the decades has continued to drain more resources, to a level where country’s revenues can no longer fund petrol subsidies.
The 11 Plc boss who was the guest speaker at the event lamented that subsidy gulped N4 trillon of the N17.126 trillion 2022 budget.
Given a breakdown on subsidy payments in five years; Oyebanji said Nigeria spent N722.3 billion in 2018, dropped to N360 billion in 2019, climbed again to N450 billion in 2020, jumped to N1.573 trillion in 2021 and bloated to N4 trillion in 2022.
He further disclosed that in 12 years, the country lost about 16 million boreholes, one million classrooms, 27,000MW of solar electricity that could have been added to the national grid,600,000 built and mortgaged houses, 20,000 kilometers of road and 300,000 fully equipped primary healthcare centres to subsidy payments between 2006 and 2018.
Oyebanji who is the immediate past Chairman of Major Oil Marketers Association of Nigeria (MOMAN), said Nigeria must make a choice because artificial interventions in the market such as subsidy, usually create room for arbitrage, leading to corruption. He said the current realities based on high subsidy payment has led to increased borrowing, socio-economic collapse, constrained budget, declining external reserves and rise in inflation while the consequences on the other hand are; declining investment in other sectors, low job creation, unskilled young and growing population.
He explained that while petroleum marketing companies cannot access forex at the official rate of N435 to a dollar from the CBN but could only do so at the parallel market at N750, thus making it practically impossible for them to import.
‘’Today, the only entity importing our daily fuel consumption demand of 60 million litres per day is NNPC. Once that there is hiccup in their operations, this automatically leads to fuel scarcity. And that is why we are advocating for deregulation so that that space could be freed up to allow other people come in. This is not an ideal situation. Any market where you find a single supplier will naturally experience hiccup such as this.
According to him, the recent flood in some parts of the country has equally contributed in no small measure to the current fuel scarcity, assuring that MOMAN and other critical stakeholders in the country are working to resolve the current fuel shortages.
On the claim by the Nigerian Midstream Downstream Regulatory Authority(NMDRA), that it has 30-day sufficiency of petroleum product is stock, Oyebanji said having product offshore is different from such being available at depots and in filling stations.