Ahead of the federal government’s announcement tomorrow on the removal of subsidy on petrol, Vice-President Yemi Osinbajo has said that the government will have to take tough decisions on the desirability of retaining fuel subsidies, adding that it had become necessary to remove them.
His statement coincided with a remark by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who confirmed that the government would in the next few days unveil a new policy to address the subsidy issue in the country.
Osinbajo, who spoke at the third Ogun State Investors’ Forum held in Abeokuta, the state capital, said: “No matter how we slice it, we are in economic times that are challenging, but they provide us with some of the best opportunities for making a real difference in our economic life.
“I think that we are at a point that a lot has been said about subsidies and what to do with subsidies. I think we are at a point where we must make many difficult decisions and make very tough choices.
“But I think the Nigerian people are prepared for all what is required and all it would take to make a real difference.
“In no way can a country make the kind of progress we expect it to make without being able to ensure that in public life our finance system is transparent and would ensure that there is accountability.
“Our Ministry of Finance has been putting in place a system that would assure accountability. It would ensure that public funds are accounted for and that the country is not exposed to some of the kinds of huge corruption that we had seen over the past few years.”
He also urged state governments to encourage and support agriculture, noting that “in the area of agriculture I know that there is so much room for so much more”.
He said: “The agriculture borrowers scheme is one I am not so sure any other state aside from Kebbi has adopted. And that programme is one where the Central Bank of Nigeria (CBN) has been able to lend to small rice farmers.”
He also advised states to do more in terms of generating electricity, stating: “I think that we can rewrite some of the regulations in such a way that states can generate more power.”
In the area attracting investments to the states, Osinbajo said: “The president has mandated the Minister of Trade, Industry and Investment to do something about the ease of doing business in the country.”
Backing Osinbajo, the former President of Colombia and Secretary General, Organisation of American States, Mr. Cesar Gaviria Trujillo, said a policy that had to be addressed head on was the one on the desirability of the retention of fuel subsidies, saying: “This is the moment to eliminate the subsidies.”
He said: “You cannot keep paying subsidies, most of which end in the hands of some privileged people. What you need is a good tax system – improve income tax, improve value added tax and eliminate subsidies. That is the task this government can use to tackle this crisis.”
Ogun State Governor, Senator Ibikunle Amosun, who hosted the forum, affirmed that the state in the last five years of his administration had been set firmly on the path of prosperity, adding that it intends to consolidate on its successes and chart a new course for socio-economic development and wealth creation.
He revealed that the first and second editions of the investors’ forum had not only earned the state its position as one of the fastest growing investments destination in Nigeria, but in the whole of West Africa.
He said that the forum would focus on improving available infrastructure in Ogun State, while developing new ones, and would encourage genuine investors to acquire land by offering them significant discounts at various levels.
The forum, he added, would create the avenue for the aggressive promotion of agriculture, which has been identified as the pivot of the state’s industrialisation plan, among others.
He said the state would diversify its economy by effectively harnessing its rich mineral resources by encouraging existing and potential investors in the sector.
Ogun state, Amosun noted, would also take full advantage of its proximity to the largest market in West Africa, Lagos, including other South-western states and also the West African sub-region.
Also speaking on the subsidy issue, Kachikwu said that the introduction of price modulation had helped to stabilise the situation.
The minister, who spoke during the second leg of the federal government’s town hall meetings held in Kaduna, however added that it was necessary for the country’s oil sector to reflect the global pricing of the product.
“We are coming up with a policy in the next few days that will allow us develop the price modulation that allow us to swing our price along with international pricing.
“We are now transiting into fuel modulating pricing because we do not have sufficient foreign exchange to continue the fuel importation we have been doing.
“Therefore, NNPC has to import about 100 per cent of the product, that is the cause of the scarcity,” he explained.
According to the News Agency of Nigeria (NAN), the minister said that the NNPC does not also have the logistics and coverage for the effective distribution of petrol, adding that there was no allocation for fuel subsidy in the 2016 budget.
He said: “The federal government has struggled to offset the N600 billion subsidy balance when the administration came into power.”
On the uncompleted Petroleum Institute in Kaduna, the minister said that his ministry had created a skills learning department to coordinate staff training and the running of its specialised centres in Warri, Lagos and Kaduna.
Kachikwu said the department would provide research and training skills needed for effective refining and other services in the oil sector.
He said the Kaduna Petroleum Institute was programmed to provide skills to HND graduates in refining and solar energy and to prepare them for employment in the oil industry.
On oil exploration in Northern Nigeria, the minister said that the government had invited investors to explore for oil in the region.
“I am one of those who believe that with modern technology, oil and gas exist in every part of Nigeria,’’ he said.
According to him, research conducted in the last six months revealed that oil and gas could be found in the North.
“We are putting a lot of investment and we are inviting people to invest money. We have set up a department which is doing three things for the north,” he said.
Meanwhile, despite the twin attacks on Chevron’s facilities in the Escravos area of Delta State by militants, the company is set to export at least two very large crude carriers (VLCC), each with a capacity of 950,000 barrels of crude oil per week, translating to 1.9 million barrels weekly, investigations have revealed.
The country will also soon experience relief in terms of increased crude exports and availability of more gas for power generation as repair works will be completed at the Shell-operated Forcados subsea pipeline on May 29.
Unlike the February subsea attack on the Forcados pipeline, which forced Shell to close its Forcados Export Terminal, it was gathered that the attacks on Chevron did not disrupt the loading of crude oil into the 400,000 barrels per day Escravos Export Terminal, as many other producing fields in the western Niger Delta continue to feed the export terminal.
There are also indications that the Nigerian National Petroleum Corporation (NNPC) will export more crude oil through the Escravos export terminal as the corporation’s equity crude that should have been sent to Warri and Kaduna refineries, would now be diverted to the terminal following the attack on the pipelines feeding the refineries.
The addition of NNPC’s equity crude, it was learnt, will increase the lifting rate at the export terminal, which a Chevron said normally takes three days to load a 950,000 barrel-capacity crude carrier.
The official, who spoke on the attacks, said yesterday that though the threat by the militants was real, the company would not shut down its western Niger Delta operations.
“Chevron is a business empire and they will not close down operations in the area unless the threat is enough to shut down Chevron in its entirety,” he said.
Investigations further revealed that while Chevron shares its 950,000 barrels equity crude with other partners – Dubri Oil and Conoil – NNPC’s equity crude was also put at 950,000 barrels.
The February subsea attacks on the Forcados pipeline, which reduced production by the Nigerian Petroleum Development Company (NPDC) from 250,000 barrels per day (bpd) to about 115,000bpd, also forced Shell to close the Forcados Export Terminal, removing 250,000bpd from the export schedule, and reducing Nigeria’s output to about 1.69 million bpd, the lowest since June 2007.
Before the twin attacks on Chevron’s facilities, NNPC’s monthly financial report showed that crude oil worth N20 billion was lost to the Forcados attack between February and March.
But it was gathered that the Escravos attacks did not disrupt the loading of crude oil into Chevron’s export terminal, as only the Okan oilfield was partly affected, while other producing oilfields that feed into the export terminal, have continued to pump crude oil.
However, Shell has informed the fifth monthly meeting of the Minister of Power, Works and Housing, Mr. Babatunde Fashola, with operators in the power sector held on Monday at the Shiroro Hydroelectric Plant in Niger State, that the repairs on the Forcados export line would be completed on May 29, 2016.
According to the communiqué issued at the end of the meeting, repairs to this pipeline would be vital to improving the current electricity situation and would be closely monitored by the meeting’s secretariat.
Shell also told power sector operators that it had commenced supply of gas to Gbarain Ubie power plant in Bayelsa State which just started generating electricity.
It was reported that the plant is the only National Integrated Power Project (NIPP) that does not have gas supply issues because of its proximity to Shell’s Gbarain Ubie integrated oil and gas project.