Fuel Subsidy: I’m Sorry For Next President –Sanusi

Former Central Bank of Nigeria (CBN) governor, Alhaji Lamido Sanusi, is full of pity for Nigeria’s next president on account of the scale of the economic challenges awaiting him or her, particularly the knotty issue of petroleum subsidy and debt servicing.

Alhaji Sanusi decried the management of the oil and gas sector, the country’s economic mainstay, saying the Nigerian National Petroleum Company (NNPC) ought to be disbanded.

The erstwhile emir of Kano spoke at the 7th edition of the Kaduna Economic and Investment Summit (KadInvest 7.0) in Kaduna.

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Nigeria, according to him, “does not exist for development but as a sight of rent and extraction to make those who control the state rich, turning them into billionaires overnight.”

He said: “In 2023, if we have an election, we cannot continue to have the trend, because any continuation will lead to insecurity and might get us to Mali, Burkina Faso’s situation.

“We can’t keep towards pushing the brink; we have to come back.

“Debt service is now 108 per cent of revenue. Every naira the Federal Government earns goes to service debt and it is not enough, (as the FG) has to borrow to service the debt and then begin to borrow to build roads, pay salaries and overheads.

“We are leaving a mountain of debt for our children. They (children) might curse us because we are taking all the money borrowed to subsidise petrol and enjoy it cheaply.

“We see the problem and we are going to continue. I’m sorry for the next president who comes in June and says I’m removing fuel subsidy after day one.”

The former Emir of Kano queried often quoted figures by the NNPC that Nigeria consumes 66 million litres of fuel daily.

He said: “In 2019, officially we were importing 40 million litres per day. In 2022 officially, we are importing 66 million per day. In three years, we have increased our petrol consumption by 50 per cent.

“Please tell me, is it the population? Is it the number of cars? Just ask yourself if it makes sense that in three years you increase your consumption of petrol by 50 per cent. Are we drinking petrol?

“The NNPC says we are consuming 66 million litres per day. So we are consuming more than Indonesia, Pakistan, Egypt, Cote d’Ivoire and others.

“Whoever becomes president in 2023, the first thing they should do is ask the NNPC to document and bring evidence for every dollar they took as subsidy. They must give the ships that came and we can verify from the insurance companies if those ships were in Nigeria on those dates.

“That is what the law says. There must be proof that the product came in, at the price you said you bought it, before you pay subsidy.”

Sanusi aligned with Kaduna State Governor Nasir El-Rufai in calling for the unbundling and disbandment of the NNPC.

“NNPC is a money pit instead of a cash cow; it should be unbundled and disbanded. More can be had from simply levying royalties and CIT on private players following models like that of Petronas and Petrobras,” he said.

“Beyond the challenging global context, Nigeria has problems entirely of its own making, where oil revenues, which were once the lifeblood of the Federal Government, have been in secular decline for over a decade. This has been happening regardless of the oil price environment.”

He lamented that the Federal Government would collect only $2.9 billion in oil proceeds this year, compared with nearly $60 billion in 2011, saying, “This is one of the biggest oversights in public financial management anywhere in emerging markets.”

Continuing, he said: “In some ways, Nigeria’s problems are not a failure of the system because it is working as one would expect, but a failure of design and a failure of implementation.

“In the current environment, the first and most obvious problem is the existence of the fuel subsidy and opportunities this creates for fraud. The average daily fuel consumption in Nigeria (by the NNPC’s admission) is 66 million litres per day and on some days as high as 100 million litres per day.

“A different way to benchmark Nigeria’s consumption is to look at PMS consumed by each vehicle on a daily basis. On this metric, Nigeria even outranks Iran, a country with three to four times its level of wealth and a road network that is three times the size on a per capita basis, and this is not just the impact of subsidies because in Iran official fuel price are 5 US cents per litre less than 15% of the pump price in Nigeria.”

He was unhappy that only 50 per cent of the 36 states generate enough recurrent revenue to cover wages, overheads and debt service and recommended that the states advocate for changes that do not rely on fixing failures of system design and policy implementation at the federal level.

He urged states to find ways to free themselves from the effects of leakages and unorthodox policies at the federal level and instead push for new and independent powers of taxation.

Also speaking at the event, President Muhammadu Buhari, who was represented by the Minister of State for Industry, Trade and Investment, Maryam Yalwaji, commended the Kaduna State Government for establishing its credentials as an investment destination of choice in Nigeria, noting that the efforts had received wide recognition as seeing in the response of the business community through the quantum of investments into the state.

According to the President, “Kaduna State has emerged as one of the leading destination for Foreign Direct Investment for Nigeria in the last six years. The success of sub nationals in attracting investments, creating jobs and increasing internally generated revenue is critical to the success of the entire country.”