Presidential Candidates and the Lingering Fuel Subsidy, Power Provision

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CEM INSIGHT | The issue of fuel subsidy have continued to take prominence in many conversations in Nigerian with the recent scarcity which have birth long queues at several filling stations across the country. Nigerians that go through the consequent untold hardship have always strained to hear what top Presidential Aspirant would do to put a peg on the issue permanently.

However, out of the top candidates vying for the number one position with promises to fix the country, only Peter Obi of the Labor Party has made a concrete comment regarding the menace.

Others on the other hand have channeled the crust of their conversations on inflation, security and oil, although they all agree that power need urgent solution.

Peter Obi, the Presidential candidate for the Labour Party stated expressly that he would remove fuel subsidy if elected president of Nigeria in 2023.

He explained that to remove fuel subsidies, Nigerians need to trust their government into passing the cost into areas that affect human development, especially health, education and power.

“In the last 10 years, the subsidy has gotten to over $40 billion. It’s a sinking pipe. That is; we spent over $40 billion on subsidies.

“Total education expenditure in the past 12 years is about N8 trillion. So in 10 years, it is about N8 trillion.”

“The most critical areas of development are health and education, with an expenditure less than fuel subsidy”

“If we spent the next $20 billion in power, we would have been generating at least 20,000 MW.”

According to SBM Intelligence, a socioeconomic research firm, in a February report titled “Growing fuel prices and transport costs: Which way Nigeria.” revealed that between 2017-2021 fuel subsidy in Nigeria increased by 890%, however, fuel prices only increased by 12.1%, and transport costs by 283%.

Former Senate President, Bukola Saraki speaking on the issue of fuel subsidy stood against the Federal Government proposed plans to spend more on fuel subsidy on the bases that Nigeria’s consumes 70 million litres of petrol a day.

He stated that Nigeria’s fuel consumption cannot be more than 35 million litres a day, while hintimg that Nigeria could be subsidizing fuel for neighbouring West African states.

He added that in 2011 when the FG said Nigerians were consuming 30 to 35 million litres a day, “We said at that time that it was too much, and we took steps and made a recommendation and the then government under the Ministry of Finance, Okonjo Iweala, took certain steps that resulted in government seeing a reduction in subsidy by about $500 million.

“Now today, saying we are going to spend N3 trillion, is definitely not adding up, now I am told we consume 70 million lites a day which not possible.”

In April the Senate revised 2022 budget, amended budget amount for Premium Motor Spirit (PMS) subsidy for 2022 by N442.72 billion, from N3.557 trillion to N4 trillion.

Also, Wale Tinubu, the Group Chief Executive Officer, Oando Plc, at the 2022 Nigerian Oil and Gas (NOG) last week also sounded the alarm bells when he noted that Nigeria may not be able to meet its OPEC quota in September due to rising crude oil theft which has seen Africa’s largest economy lose 20% of its daily crude production to oil thieves and pipeline vandals.

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On power, the aspirants have all spoken. So what are they saying?

According to Thisday, Mr. Peter Obi said the country can build up their power generation to 20,000 mw in 5 years. On his return from a three-day trip to Egypt, has said he went to Egypt to understudy the country’s power and educational system in order to implement same in Nigeria, if voted into power in 2023.

Obi who granted a radio interview in Nigeria, shortly after he returned to the country, said he was pleased with the development in the power and education sectors in Egypt, insisting that from what he learnt in Egypt, he was convinced that if implemented in Nigeria, the county would be able to increase its power generation, distribution and transmission from the current state to over 20,000 megawatts within a space of five years.

According to Obi, “Past leaders are always blaming their predecessors for their inability to perform creditably. A truly elected leader is not supposed to complain, but to take charge to solve challenges.

“A leader must learn new things in order to have fresh ideas that will help him deliver on his promises to the people, and that was the reason I went to Egypt to understudy their educational and power generation and distribution system. The world over, Egypt, Vietnam and China are leading in power generation and distribution.”

Obi further said: “Egypt, within a space of five years moved their power from about 20,000 megawatts to 58,000 megawatts as of today.

“In the 60s, Nigeria was generating over 1,000 megawatts and 50 years down the line, Nigeria cannot generate more than 4,000 megawatts of electricity, which is a challenge for Nigeria. So we need to learn from Egypt how they have been able to manage and grow their electricity generation and distribution, and that was one of the reasons I visited Egypt.

“When I got to Egypt, I was taken round its power facilities and I met the companies handling their electricity project, those in the power sector and those who financed the electricity project in Egypt. From what I saw I am convinced that Nigeria can also increase power generation, distribution and transmission from the current stage to over 20,000 megawatts in a space of five years.”

Atiku Abubakar, candidate for the Peoples Democratic Party, expressed desire to achieve 25,000MW through a mix of non-renewable energy (hydro, solar, nuclear) and other thermal fuels (coal, biofuel) in addition to natural gas.

He also noted that the country should refine 2 million bpd by 2027, an action he says which will reduce government spending on fuel subsidies.

Bola Ahmed Tinubu, the presidential candidate of the All Progressive Congress (APC), in a statement promised to build 15,000 megawatts of power generation if elected as the next president of Nigeria in the 2023 presidential election, which he says will be done through more “government borrowing” and private partnerships.

“My administration would combine government funding, borrowing, public-private partnership, private sector financing and concession to initiate a medium and long-term financial model for the BANN (Build A New Nigeria) initiative.

“I will embark on a renewed action-oriented focus and take immediate and urgent action on resolving existing challenges of power generation plants, gas purchasing, pricing, transmission, and distribution. My administration’s critical goal is to have 15,000 megawatts distributable to all categories of consumers nationwide to ensure 24/7 sustainable supply within the next four years.”

“My administration will build an efficient, fast-growing, and well-diversified emerging economy with a real GDP growth averaging 12% annually for the next four years, translating into millions of new jobs during this period.”

Meanwhile, Tinubu while speaking at the at a mega rally ahead of Saturdays’ governorship election, in Osogbo, Osun State Capital described opposition parties as parties in the country as “mushroom parties”.

“Don’t mind PDP and other mushroom parties; they will labour till they die. God will not make you labourers.”

The statement, many have said is a play down of Labour’s Party Presidential Candidate, Peter Obi, other have said it is direct attack at the Obi’s supporters known as Obidients. While some have said he has no economic plan or agenda for the country as he only preaches party and not the country.

Recall that CEM reported that Chapel Hill Denham alleged that 15.64 million litres of petrol is smuggled daily on an average to neighbouring countries.

Also, the CEM also reported on the warning of Nigerian Upstream Petroleum Regulatory Commission, starting that due to crude oil theft, Nigeria lost a staggering $1 billion in revenue in the first quarter of 2022.

This will further put subsidy payment in danger especially in a time where ASUU is breathing down the neck of the federal government with an extensive four month old strike. Electricity generation and power grid failures, rising insecurity and others have seem to overwhelm the government, subsidy may have been expensive for the government to continue.

Although the federal government does not agree as detailed in a report by CEM, where the Minister of Information and Culture, Lai Mohammed, in an interview with Reuters noted it will be chaotic for the Federal Government to remove fuel subsidy.

He added that many other nations are introducing measures to help citizens cope with high oil energy prices.

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