Ahead of President Buhari’s planned
official announcement of fuel subsidy removal, investigations by SIGNAL
have revealed that Nigeria has been secretly exchanging its crude oil
for refined petroleum products to the detriment of revenue accruing from
sale of crude oil.
Top government sources in the petroleum
sector who did not want to be named disclosed the details to SIGNAL on
Monday. According to the sources, rather than generate revenue through
the sale of its crude oil, the Nigerian government is now importing and
paying for imported fuel with Nigeria’s crude oil.
While the practice of crude oil swaps
for refined petrol is not entirely new, the development, which was
reportedly induced by government’s efforts at closing the gaps created
by the inability of oil marketers to import fuel, is said to have kept
the federation account in an unprecedented deficit.
“We are in a big mess, a really big
crisis. Nigeria has no money. The federal government is now officially
broke. What is happening now is that our raw crude oil is now being
swapped for refined petrol. So we are practically not selling our crude
oil right now. We are exchanging our crude oil for refined petrol in a
trade by barter arrangement. The implication is that the federation
account is in deficit. There’s no money in the federation account
because we are not selling our crude”, one of the sources told SIGNAL.
An oil marketer who spoke with our
reporter on Monday on condition of anonymity blamed the oil market
crisis on shortage of dollars. “It’s not viable for us, business is not
working. Most of us have stopped importing fuel because we can’t get
dollars to trade, and even if you want to buy dollars at black market
rate, it’s not sustainable. Now the government wants to carry the
responsibility on their shoulders, but what has been the result? It’s
not working. The fuel queues have refused to disappear. We told them to
deregulate, but they wouldn’t listen” the source said in frustration.
Nigeria’s current stream of revenue
according to government sources now depends majorly on customs and
excise as well as VAT. This is even as observers continue to advocate
for deregulation of the downstream sector as a practical step towards
resolving the demand and supply challenges of refined petrol in the
country.
“That is why they will have no option
but to deregulate. The problem now is that the Minister of State for
Petroleum Ibe Kachikwu is reluctant to announce removal of subsidy,
because of the fear that it can backfire with the Nigerian public
considering the timing. The removal was supposed to have been announced
last Friday but Kachikwu is now pushing it to the Vice President, Yemi
Osinbajo who is also reluctant to make the announcement. President
Buhari himself is off to London leaving both Kachikwu and Osinabjo to
manage any untidy situation that may arise from the announcement of fuel
subsidy removal”, a top government source who did not want to be named
told SIGNAL.
SIGNAL exclusively reported on Saturday, President Buhari’s planned official announcement of subsidy removal.
It will be recalled that in July 2015,
President Buhari dismissed calls for his government to remove fuel
subsidy. According to him, “I have received many literature on the need
to remove subsidies, but much of it has no depth”.
“When you touch the price of petroleum
products, that has the effect of triggering price rises on
transportation, food and rents. That is for those who earn salaries, but
there are many who are jobless and will be affected by it,” President
Buhari said.
President Buhari also said that the lack
of security, sabotage, vandalism, corruption and mismanagement, not
necessarily subsidies, are the most serious problems of Nigeria’s oil
sector.
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