Looting: Buhari's govt squanders N11 trillion on oil subsidy
Muhammadu Buhari

Adebayo Obajemu

Former President Muhammadu Buhari is an interesting study in irony, the irony is more dramatic when viewed against the background of his towering heights in anti corruption posture prior to 2015 when he came to power.

Among other salient issues, he rode to power on the crest of his vehement opposition to his predecessor ex – President Jonathan’s attempt to remove oil subsidy, going to the town with wild exclamation: “Oil subsidy is a fraud! “, and “corruption of the highest order.”

The irony is that as at the time he left power, Buhari had spent N11.75 trillion on a bogus subsidy, with another N2trillion yet to be paid for the first half of 2023, with which the current government of President Tinubu is now saddled

“I think General Buhari should by now feel embarrassed. Here is a man, who was once petroleum Minister in the 70s and whom made much out of criticism of Jonathan on payment of subsidy, saying it was a scam, ending up paying over N11 trillion on subsidy in the eight years he spent in power”, says professor Adeagbo Moritiwon a political scientist.

Dr. Dare Omoge, a political sociologist, also criticised Buhari for squandering tax payers money on subsidy, “yet in his eight years we had the worst of looting by his cronies and officials in the guise of subsidy payment. Today, we can not account for the exact figure of petrol consumed locally in a day as the figures keep changing “, Omoge stated.

Eight years down the line Buhari has left the country with the highest amount spent on subsidizing petrol in Nigeria’s history.

In an oil and gas industry reports conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI), the cost of petrol subsidy from 2015 to 2020 was put conservatively at N1.99 trillion.

A startling reports by the Nigerian National Petroleum Corporation (NNPC), government own oil regulator, to the Federation Accounts Allocation Committee (FAAC), revealed that petrol subsidy cost N1.57 trillion in 2021 alone and another N1.27 trillion between January to May 2022. The Buhari government had a budget of N3 trillion to cover petrol subsidy costs from June 2022 to June 2023.

The criticism has been that Buhari officials might have looted the money as the refineries have remained moribund despite continuous promises, which always remain what it is – mere promises.

Omoge said the administration had actually worsened the woes in the industry, saying that in 2015, when Buhari came to power Nigeria’s four refineries located in Port Harcourt, Warri and Kaduna operated below full capacity. They were producing about six million litres of petrol daily for local consumption.

Buhari assured Nigerians repeatedly that he would soon turn around the fortunes of the refineries. He made this promise through the then Minister of State Petroleum Resources, Dr. Ibe Kachikwu that the refineries would return to full capacity by the end of that year. It never happened.

In 2017, the refineries were partially shut down for maintenance but two years later in 2019 with no headway, the refineries were again grounded.

Buhari had left office with the refineries still under rehabilitation and badly mismanaged. Recall that In 2021, with the loans from the African Development Bank, NNPC announced that it would completely overhaul the Port Harcourt refinery at the cost of $1.5 billion. The refineries in Warri and Kaduna were also under-going similar process, now out of office, the refineries are still moribund

Omoge said Buhari has incurred a huge debt for the incoming government in the guise of subsidy payment and turning around of the refineries.

According to him, “The first language of a politician is deceit and insincerity. Buhari, who was the Petroleum Minister in his own government failed woefully. This is really sad considering the fact that he ought to have garnered much experience given that he had been Petroleum Minister twice, the first time in the 70s.

“Like many of our leaders, they come to office making political statement of doing this, doing that without having adequate knowledge of the rot in the thing they are trying to correct and without consultation with experts, ” he said.

“The man didn’t believe there was a subsidy and they all assumed it was corruption but when they came in and it stared them in the face then they learned and when they learned they now had to make harsh decisions.

“Buhari made one in 2016 when he raised (pump price) from N87 to N126 but he didn’t sustain it. That point in time was the time to allow it to go once and for all but he capped it.

“By capping it and not providing enough foreign exchange for other importers, but allowed only NNPC to become the sole importer of the product in the country, they made the situation worse. That led to the problem they are having now.

“What they have done in the last eight years is to make it worse for the country, make it worse for the incoming administration. They have ballooned the cost and the volume. They failed because they never understood the problem and they made it political”.

Experts support the removal of subsidy, and Omoge, like other experts, condemn the capping of price last week, saying it’s as if government wants to probate and reprobate at the same time.bWhy cap the price again after removing the subsidy, they should have allowed the market to determine the price,” he said.

The reality, though, is that petrol subsidies present an existential threat to Nigeria’s fiscal health.

Recall that under former president Jonathan Petrol consumption hovered between 30 and 35 million litres daily, but under Buhari, as president and petroleum minister, consumption was difficult to pin down. It may be 50 million litres today and by next week it would change creating confusion. At a point last year, the Comptroller General of Customs, Col. Ahmadu Ali, challenged the consumption figure of 92 or even 68 million litres daily bandied by the government, insisting that such figure was preposterous.

The Buhari administration management of oil sector did much damage to the economy when one consider the fact that in 2021, Buhari’s government said it spent N1.77 trillion on petrol subsidies, a 477 percent increase from N307 billion in 2015, whereas in 2022, the NNPC Ltd said the government spent about N3.1 trillion in 2022. By the end of the year, actual figures were over N4 trillion.

All this waste was in the thick of rising poverty, wide gap between the few rich and the overwhelming poor -who were in majority of nearly a ratio 85 percent to 15 percent, according to data from different groups, improving grid electricity, and declining car ownership rates due to the dollar scarcity.

Yet, the country’s petrol imports keep reaching record highs as the neighbouring countries are beginning to see no need for importation of petroleum as smuggled petrol from Nigeria floods their markets.

“Petrol subsidies have been a recurring and controversial public policy issue in our country since the early eighties. However, its current fiscal impact has clearly shown that the policy is unsustainable,” Buhari said in his 2023 budget presentation.
Yet,his government compounded the challenge instead of solving it.

Recall that last July, the federal government estimated that the petrol subsidy would cost N6.7 trillion in 2023 if the government did nothing to stop it .

In her own submission, Buhari’s Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed stated that the federal government of Nigeria spent N18.397 billion on petrol subsidies daily. This translates to expense of N238 per litre of petrol or N18.397 billion daily, as a subsidy.

Subsidies have risen considerably going by Buhari arithmetic, tragically oil production has fallen to the record low levels in history. When he became president, crude oil production was nearing 2 million barrels per day. Today, the country is struggling to raise production to above one million barrels per day.

Now, that the subsidy has been removed, his successor, Tinubu, who came to power in controversial election, will have to grapple with the backlash of oil subsidy removal, and he’s already feeling the hit as Ajaero- led Nigeria Labour Congress has decided to embark on a strike beginning this Wednesday should the new government refuse to return the price to status quo ante to allow for further consultation.

The new government is already feeling the grit of governance in a deeply divided nation.

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