Fuel Subsidies: Nigeria Has Forfeited Infrastructure Investment Worth Trillions, Says NNPCL

Nigerian National Petroleum Corporation Limited (NNPCL) announced on Thursday that the country's protracted fuel subsidy regime has prevented massive infrastructural development for Nigerians.

According to information provided by the NNPCL, the money used to pay for fuel subsidies could build 7,500 km of roads at a cost of N400 million each, as well as 37 tertiary hospitals with 120 beds that would cost N32 billion annually each.

At a workshop in Abuja to raise awareness of the NNPCL operations, Lawal Musa, Senior Business Advisor to the GCEO, NNPCL, made this announcement.

Musa said that the Federal Government spent as much as N4.8 trillion annually on gasoline subsidies at the expense of Nigerians' well-being in a presentation titled "Petroleum Industry Act (PIA) and the Nigerian Economy".

According to an analysis of the opportunity cost of subsidy spending, deregulation may, among other things, result in the construction of 500,000 new homes and the education and skill-up of two million Nigerian students.

In four years, he said, Nigeria might receive N12 trillion from it, while the amount of Premium Motor Spirit (PMS) recovered annually would increase to N3 trillion.

He stated that the expense of gasoline subsidies outweighed their direct advantages, especially for the general public.

He added that deregulation could build and equip 2,400 hospitals in 774 LGAs and provide Nigerians access to an additional 27,000 megawatts of power.

“Nigeria is the largest producer of crude oil in Africa, possessing 28 per cent of Africa’s reserve, with petroleum contributing significantly to the country’s economy.

“The benefits derived have over the years been eroded due to the amount paid on subsidy, a regime has been fuelling the vicious circle of poverty in the country,’’ he said.

Musa added that despite the average cost of $2.7 per litre globally, which amounted to up to N570 per litre, Nigeria sold PMS (fuel) for the lowest price among most West African countries.

Verifiable PMS demand information, in his opinion, is essential for national planning and energy security.

The new firm was created as a commercial company to be run like any other private company in the country, in accordance with the provisions of the PIA 2021, according to Oritsemeyiwa Eyesan, the Chief Strategy and Sustainability Officer, NNPCL.

Eyesan stated that three fundamental values, integrity, excellence, and sustainability, served as the foundation for NNPCL's operations, which were represented by Vincent Ogbu, her business advisor.

She said that when PIA was signed into law, the Nigerian petroleum industry's institutional, regulatory, and fiscal frameworks were completely revised.

Also, a structured method to monitoring host community development and investments was offered.

She added that it was crucial that the PIA required the old NNPC to be incorporated and created NNPCL as a completely commercial business.

“Under the Act, NNPCL is to conduct affairs without recourse to government fund.

"The new NNPCL is being owned by 200 million Nigerians with Ministries of Finance and Petroleum Resources as major shareholders,’’ she said.

Garbadeen Muhammad, the chief communications officer for the NNPCL Group, had earlier stated that the NNPC was involving students as crucial stakeholders in the new organisation, which belonged to more than 200 million Nigerians, including Nigerian students.

According to Muhammad, the purpose of the annual engagement was to inform students and CSOs about the NNPCL as a newly incorporated business under the Company and Allied Matters Act.

Usman Barambu, the National President of NANS, also spoke and praised the NNPC for the informational workshop that had provided the students with knowledge of the new organisational structure and business practises of the oil corporation.

Barambu encouraged the business to make sure that fuel was available, address the nation's fuel shortage, and create work possibilities for regular Nigerian graduates.

Olayemi Success, Chief Convener of the Civil Society for Justice and Equity, demanded that the government eliminate the fuel subsidy and use the money instead to boost the educational system.