Subsidy funds ‘ll be mismanaged, says Kukah

Matthew-Kukah‘Petrol should sell for N39.30 per litre’

THE Federal Government’s plan to remove subsidy from petroleum products is still hard sell to Nigerians. Even its promise to appoint credible Nigerians to manage the funds accruing from the stoppage of the scheme is not accepted without reservations.

Among eminent Nigerians, whose views count on national issues that have raised doubts over the ability and readiness of the government to do the right thing with the accruing funds is the Catholic Bishop of Sokoto Diocese (comprising Katsina, Zamfara, Kebbi and Sokoto states), Matthew Hassan Kukah.

Kukah told journalists at his Sokoto residence on Tuesday’s evening that while the removal of oil subsidy could “make political and economic sense, it lacked moral sense.”

The fiery cleric released the dart, when he said he does not believe that the money from the removal of subsidy would not be stolen just like the proceeds from the excess crude oil.

He said although the President has assured that credible people would be appointed to manage the money, “credibility no longer has meaning in Nigeria because many supposedly credible people are at the helm of affairs in many government institutions such as the Nigerian National Petroleum Corporation (NNPC), Millennium Development Goals (MDGs), Education Trust Fund (ETF), and Universal Basic Education Commission (UBEC) which are not making any headway.”

The fuel subsidy posture of the government has also been punctured by an oil expert, Dr. Izielen Agbon, who said there is enough official falsehood about the policy.

Flaunting rude facts, Agbon said true cost of a litre of petrol is N39.30 and not N139, or less that the government throws on Nigerians to justify the removal of “subsidy” from April 1 or whatever date in the New Year?

In his calculation, Agbon, who has been a major player in the United States oil industry for decades, said there is no fuel subsidy in Nigeria, instead the people are over paying for the product. But the Minister of Water Resources, Mrs. Sarah Ochekpe, does not accept this argument. She told journalists in Jos, Plateau State that the removal of fuel subsidy had become a necessity because to continue with it would amount to Nigeria heading for bankruptcy.

The minister admitted that there would be hardship at the initial stage of the withdrawal of the subsidy the gains would bring succour to the people.

Kukah lamented that the nation is “infested with bandits” with people going into government only to feather their nest, adding that the issue of fuel subsidy was not new but faulted the way it was presented to the public first as “removal of fuel subsidy and later as deregulation.”

According to him, there are doubts if the removal of subsidy would yield the desired results unless “the cabal that has been benefiting has vanished into hell.”

The bishop observed that Nigeria has always been faced with challenges and that everything wrong with the country now could be traced to corruption.

To him, corruption like poison has crept into every facet of national life including the church and the media.

Describing the situation as very worrisome, he said even crooks have made spiritual arrangement for themselves by building churches and mosques.

He disagreed that the bombings, killings and other crises in the country were being orchestrated by those who predicted that Nigeria would break up in 2015.

Kukah said he does not subscribe to the conspiracy theory because 90 per cent of those commenting on the American report have not read it.

The cleric said it does not require any prophet of doom to know that any nation or anyone, who continues on a wrong road, cannot get to the real destination.

He said governance in Nigeria is being carried out through native doctors, powerful pastors and sorcerers, which have replaced the science of think-tank.

He urged Nigeria to pay attention to some level of intellectual contributions otherwise the country would continue to “treat leprosy with paracetamol.”

On the Christmas Day explosions in Abuja and other states, Kukah he was tired and sick of silence but declared that 99.9 per cent of Nigerian Muslims did not support the attacks.

He lamented that rather than look for a way out of the Boko Haram problem some people recommended prayers but pointed out that the places of prayer are now becoming targets and unsafe.

Kukah said that Nigerians always defined themselves in the narrow confines of Christians and Muslims whereas what is happening is the evidence of the weakness of the state and has nothing top do with religion.

The Bishop explained that the social contract has never worked in Nigeria and that Boko Haram is the symptom of the disease and not the disease itself, adding that the sect’s struggle has not been properly diagnosed because it is 99 per cent political and has nothing to do with science.

To Ochekpe, retaining fuel subsidy would amount to developing other countries’ economies, adding that in nations which Nigeria supplies fuel, the product is cheaper at the black market than at filling stations.

“The issue of petroleum subsidy is familiar to Nigerians. Over the years, subsidy on petroleum products has been subjected to progressive subsidy reduction as a matter of socioeconomic necessity whereby the price of diesel is completely deregulated to zero subsidy level. However, Premium Motor Spirit (PMS) and House Hold Kerosene (HHK) are still being subsidized despite the unsustainability and eminent threat to the economic health of the country.

“The Federal Government is, therefore, desirous of discontinuing subsidies on prices of petroleum products because this poses a huge financial burden on the government, disproportionately benefits the wealthy, is inefficient and diverts resources from potential investments in critical infrastructure,” Ochekpe said.

Agbon, who has spent over 30 years in the industry and the academia, Agbon, insists that the true cost of a litre of locally refined or imported petrol is between N34.36 and N39.30 in that order. No more!

Agbon’s calculations, which took into account profit margins, transportation, refining and all other possible costs of producing a litre of fuel, came to the conclusion that the government is either not sincere or ignorant of the true figures of the cost of selling a litre of fuel on the streets.

According to him, the government’s argument that a litre of petrol should be sold at the international price of $3.35 or N139, the same cost on the streets of New York, is fallacious because a gallon of gasoline (four litres), which sells for $3.52 in New York cannot be sold in Nigeria for the same price because the government wants Nigerians to buy crude already allocated for local consumption at the international cost.

Agbon said: “What is the true cost of a litre of petrol in Nigeria?  The Nigerian government has set aside 445,000 barrels per day throughput for meeting domestic refinery products demands. These volumes are not for export. They are public goods reserved for internal consumption. We will limit our analysis to this volume of crude oil. At the refinery gate in Port Harcourt, the cost of a barrel of Qua Iboe crude oil is made up of the finding /development cost ($3.5/bbl) and a production/storage /transportation cost of $1.50 per barrel. Thus, at $5 per barrel, we can get Nigerian Qua Iboe crude to the refining gates at Port Harcourt and Warri. One barrel is 42 gallons or 159 litres.

“The price of one barrel of petrol at the depot gate is the sum of the cost of crude oil, the refining cost and the pipeline transportation cost. Refining costs are at $12.6 per barrel and pipeline distribution costs are $1.50 per barrel. The distribution margins (retailers, transporters, dealers, bridging funds, administrative charges etc) are N15.49/litre or $15.69 per barrel. The true cost of one litre of petrol at the Mobil Filling Station in Port Harcourt or anywhere else in Nigeria is therefore ($5+$12.6+$1.5+$15.7) or $34.8 per barrel. This is equal to N34.36 per litre compared to the official price of N65 per litre.”

Agbon looked at several other variables before arriving at his figures. He says: “If the true price of 38.2 per cent of our petrol supply from our local refinery is N34.36/litre and the remaining 61.8 per cent has a true price of N42.36 per litre, then the average true price is (0.382*34.36+0.618*42.36) or N39.30 per litre. The official price is N65 per litre and the true price of petrol in Nigeria is N39.30 per litre (even with our moribund refineries and imports).”