Deregulation Begins With 2012 Budget Implementation – NNPC

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The group managing director of the Nigerian National Petroleum Corporation (NNPC), Mr. Austen Oniwon, has said that fuel subsidy withdrawal will begin when the 2012 budget implementation takes off.

Oniwon stated this while fielding questions from journalists at the end of the 19th and 20th Annual General Meeting (AGM) of the Pipelines and Products Marketing Company Limited (PPMC), a subsidiary of the NNPC, yesterday in Abuja

But the Nigerian Bar Association (NBA) has again reiterated its position against the federal government’s planned subsidy removal, insisting that it would cripple the economy of the country.

Asked when the subsidy withdrawal will take effect, Oniwon said: “What people should really look at is that, in the 2012 budget proposal, there is no provision for subsidy and if there is no provision for subsidy, it means that it will become illegal for government to pay subsidy.
“I believe that when the implementation of that budget takes-off, deregulation would have taken off.”

He further urged Nigerians to desist from stressing themselves by queuing up at petrol stations due to uncertainties about deregulation, just as he assured that there was ample supply of fuel to last throughout the Yuletide period and beyond.

The NNPC boss further expressed optimism that when deregulation kicks off, the PPMC’s operations would be for the better.
“When deregulation kicks off, the PPMC’s operations will definitely improve, because you will be able to recover your cost. Then, we shall be forced to be more efficient in order to remain a player in the system. I assure you that the PPMC will be more profitable in a deregulated environment,” Oniwon said.

The NBA has meanwhile, warned that “removing subsidy will cripple the economy and Nigerians will suffer while unimaginable socio-political upheavals will erupt, the magnitude not seen anywhere in the world in recent times”.

The NBA also faulted how the subsidy shot up to N1.3trillion with no corresponding increase in the supply of the Petroleum Motor Spirit (PMS), maintaining that throughout the administration of former President Olusegun Obasanjo? to the close of the late President Yar’Adua’s administration, the subsidy did not exceed N300 billion.

The president of the NBA, Joseph Daudu (SAN), who addressed a world press conference at the Nigeria Union of Journalists (NUJ), Kaduna Council, Secretariat yesterday, stated categorically that “the NBA will not support, at this point in time, the removal of petroleum subsidy, which is said to amount to N1.3 trillion”.

Daudu also opined that government needs to adopt exceptional strategy to minimise the effect of corruption, saying that, “With the monster at large in Nigeria, no policy of government will succeed. There must be total re-orientation of the attitude of the people to corruption.”
The NBA recommended, however, that government should evolve or design a seven-year staggered phase removal of the petroleum subsidy, and must, as part of the phased measures, repeal the Petroleum Products Pricing Regulatory Agency (PPPRA) Act.

It also called on the government to implement the deregulation of the downstream sector as conceptualised by former President Olusegun Obasanjo administration, which includes the complete reactivation or turnaround of the four existing refineries, “When they start production to their optimum capacity, their yield will be deducted from the total volume of imported petroleum products and reduce commensurately the volume no longer needed that has been displaced from internal productions,” Daudu stated.

“If government cannot turn around four refineries, is it with the management of N1.3 trillion subsidy bonus annually that it will be trusted to faithfully apply to the achievement of MDGs?”

As part of the alternative to fuel subsidy removal, the NBA also recommended that the government must license, and ensure the commencement of production by, private refineries in order to obviate any need to resort to the importation of petroleum products.

He said: “In order to promote transparency in the petroleum sector, government should in the spirit of the Freedom of Information Act disclose the names of companies and concerns that are currently engaged in the importation and distribution of (petroleum products), the cost of subsidy paid over to these persons and other benefits enjoyed by them such as import duty waivers and tax holidays.”

“The cost and profit made in the Liquefied Natural Gas (LNG) sector over these years must be disclosed by the government,” he added.

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