The federal government has said it is not right to remove Nigeria’s costly fuel subsidy now, noting that many other nations were introducing measures to help citizens cope with high oil energy prices.
Information Minister, Lai Mohammed disclosed this while speaking with Reuters during the signing ceremony of the Joint Declaration between Germany and Nigeria to transfer the ownership of the Benin bronzes, in Berlin, Germany.
He said: “When you consider the chaos, the social disharmony and … instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so.”
Nigeria’s crude oil production has also fallen short of government targets, with N600 billion in revenue lost to crude oil theft in the first quarter of this year, according to the sector regulator.
Mohammed said a new petroleum industry law that allocates money to oil-producing communities would stop attacks and blamed the European Union’s climate change policies for stifling investment in the sector.
“We believe that climate change is real and important for emission control, but there is a bit of double standard in the EU policy regarding climate change,” he said.
Oil theft, threat to Nigeria’s revenue base
The President, Lagos Chamber of Commerce and Industry (LCCI), Asiwaju Michael Olawale-Cole at the LCCI Public-Private Dialogue session on Oil Theft and Artisanal Modular Refineries said that several indigenous oil firms contend with rising operational expenses driven mostly by personnel, maintenance, and security costs.
He added that there are also concerns about the culpability of the nation’s security agencies, noting that barges of oil cannot be stolen and moved on the coastal waters without the collaboration of some powerful stakeholders.
According to him, Nigeria is losing crude oil at the level of about 91per cent of output. Nigeria, he also said, lost $3.2billion in crude oil theft between January 2021 and February 2022, as revealed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the LCCI Oil Producers Trade Section and the Independent Petroleum Producers Group (IPPG).
“This puts the figure at about N1.36trillion when converted to naira with the official rate of N416.25 to the dollar exchange rate. In the first quarter of 2022, oil theft was worth N434billion. This menace has prevented Nigeria from meeting its crude oil output capacity.
“Out of about 141million barrels produced in the first quarter, about nine million barrels were lost to crude oil theft. This menace has become a national disaster and a critical threat to the nation’s revenue base. Various reports confirm that the Bonny Terminal Network, Forcados Terminal Network, and Brass Terminal Network are major routes for this organized crime.”
The chamber again called for the removal of fuel subsidies and full deregulation of the petroleum downstream sector to attract required investments into the sector; noting that no investor would want to invest in an industry where they cannot recover their cost of production.
