Subsidies will not be removed until refineries are operational under the next administration, says Sylva

President Muhammadu Buhari’s administration will not be able to complete the repairs to the comatose refineries, and the next government would be expected to do so.

Timipre Sylva, Minister of State for Petroleum Resources, stated this on NTA’s Good Morning Nigeria show on Tuesday.

The Trade Union Congress, on the other hand, reiterated its warning to the Federal Government not to remove fuel subsidies until domestic crude oil refining begins.

The Independent Petroleum Marketers Association of Nigeria, for its part, warned that unless refineries were repaired, fuel prices would rise.

Earlier on the NTA, the minister said he was hopeful that the Buhari regime would be able to complete 60 percent of the repair of the two Port Harcourt refineries before leaving office while the ones at Warri and Kaduna would take much longer.

Sylva said, “We agreed from the very beginning that the completion date will overflow into the next administration but we agreed that there are milestones. We expect that by the end of this year, in Port Harcourt, we expect to achieve at least 60 percent of the capacity production from Port Harcourt.

“We are hoping that by the end of next year, the rehabilitation will have been completed. Of course, Warri and Kaduna started after Port Harcourt refineries and of course, it is going to progress at a slower pace.

“But I believe that at the end of the year, all the refineries – Port Harcourt, Warri, and Kaduna – will be operating at a certain capacity. I cannot tell you what capacity it will be operating by the time we leave but they will all be at least partially functional and we expect that since governance is a continuum, the next government will take up from wherever we stop and get it to the finishing line.”

The minister maintained that subsidy removal was the best way to attract investments into the oil sector and fight petrol theft but said Buhari wanted to protect Nigerians who were already suffering.

Sylva stated, “We are still very much committed to subsidy removal. It is just the timing that we are saying ok. Let us re-jig the timing. If it was six months, let us be given a longer time. Every other aspect of the Petroleum Industry Act is moving on.”

The minister described as unfortunate the N3tn petrol subsidy budget for 2022.

He said the money could have been used to achieve more important things that would have a direct impact on the lives of Nigerians.

“Look at it. N3tn is budgeted. You can imagine if this N3tn was budgeted for something else. Do you know what that means for the country? Who is going to benefit from this?” he asked.

Sylva said in countries like Kuwait and Saudi Arabia, the petrol subsidy had been scrapped.

He argued that even when the refineries are working, they will continue to operate at a loss unless subsidy payment and price regulation stops.

The minister said by the time the Dangote refinery is inaugurated and Nigeria completes the repair of the government-owned refineries, Nigeria should be producing about one million barrels of refined crude oil per day.

He, however, said the Dangote refinery would not crash the price of petrol significantly because it would be selling petrol at an international price.

“Dangote yes started his refinery under a subsidy regime. But if you notice, it was carefully planned as an export refinery and that is why it is in a free zone. It is by his port because he is not refining to sell at a loss as the other refineries were designed to do.

“He designed his to sell at a profit internationally mostly. If we are to buy from him, we will also buy at the international market (rate). The only saving that we will make is the cost of freight. So, that is Dangote’s own model. It would not function under a subsidy regime. So, it is agreed that no refinery in the world can survive in a subsidy regime,” Sylva added.

Reacting to the minister’s statement, oil marketers said it was unfortunate that the policies of the government had remained unstable, adding that stakeholders were dismayed by the minister’s comment.

Without repairing refineries, fuel price hike imminent – Marketers

“Stakeholders are frowning upon such statements and are dismayed by this because the policies of the government are not stable. Implementation is always another different thing,” the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, stated.

He told one of our correspondents that the statement showed that the government was not ready to push for the implementation of its policies in the oil sector.

Chinedu said, “I once told you that if care is not taken petrol will sell above N200/liter soon and people were calling me, including government officials, to ask what the basis of my claim was.

“And I told them that once our naira suffers, it will be very difficult for us to continue to subsidize petrol. And it is this same ideology and policy of the government at every point in time that we are suffering.

“When the government is not ready to push policies, they will want to implement something that is being done on the periphery, something that they are only doing on a PowerPoint display.”

Ukadike added, “After putting over N100bn on Port Harcourt refinery, up till now that plant has not produced one drop of petrol, diesel, or kerosene. And we are all depending on the importation of petroleum products.

“How will the country survive like this? So we the stakeholders are just in a state of dismay. Even on the issue of subsidy, the government is just going forward and backward on it.”