Intelligence Report Unveils Why Buhari Pulled Back from Fuel Subsidy Removal

A seeming deeper reason why President Muhammadu Buhari pulled back from his administration’s move to remove the controversial fuel subsidy regime has started to filter into the open. Despite the organised labour planned nationwide protest, Senate President Ahmad Lawan succeeded in persuading Buhari to drop the move.

Unarguably, Lawan was the first to give some indication that Buhari was having a rethink about the policy after visiting the Presidential Villa on January 19. He told the media that Buhari had no plans to remove fuel subsidies.

A political risk consultancy, Menas Associates in its Nigeria Politics & Security, a weekly intelligence report on Nigeria is saying that Lawan went to brief Buhari on his constituents’ concerns about the policy because they cannot bear the additional economic burden which will result from the decision if it was implemented at a time when living standards are being severely squeezed.

The intelligence report also said with Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) threatening large nationwide protest just as the election campaign is about to begin, the Buhari administration pulled back from its original plan to remove subsidies on fuel prices this year.

‘’The process to reverse the policy — which, if implemented, would have been one of Buhari’s most significant strategies — started from unfamiliar quarters’’, the report adds.

Continuing, the report equally pointed out that Lawan touted the new Petroleum Industry Act (PIA) as the signpost legislation of the administration and the Presidency appears to have forgotten that one of its principal provisions is that petrol should only be sold at ‘’market-determined prices.’’

According to Menas Associates, the fear of the planned protests by the trade unions, forced Abuja to soft-pedal on its position. On January 22 TUC, an ally of NLC, met and ordered its members across the country to prepare for strike action.

While TUC insisted that the Buhari administration ‘’must’’ revitalise the four state-owned refineries and build new ones before they remove the fuel subsidies, NLC previously also insisted that the planned action will go ahead between January 27 and February 1which would have put further pressure on Abuja.

The administration realises that it cannot afford any protests in a pre-election year even though the cost of not removing the subsidies could rise as high as ₦3,000 billion ($7.22 billion) this year and exacerbate Nigeria’s financial situation.

A divided house in government 

‘’There is an emerging division within the government about whether the decision to remove the subsidies should go ahead in the face of the protests. Those who insist that the economic burden of subsidising the cost of fuel is no longer affordable and that the government cannot delay the decision, include: the Minister of State for Petroleum, Timipre Sylva; the NNPC’s Group Managing Director, Mele Kyari; and the Minister of Finance Zainab Ahmed.

‘’Other ministers in Buhari’s cabinet believe it is too politically risky to remove the subsidies at this time. They would rather that Buhari holds off until next year after the elections are out of the way before going ahead with the decision. For this camp, another year of subsidies would not harm Nigeria’s future while their removal could kill their political careers.

‘’On the other hand, the state governors want the subsidies removed but are too scared to say so publicly. On November 21 a committee — established by the Nigerian Governor’s Forum and headed by Kaduna State’s Nasir el-Rufai — submitted its report which has been seen by Menas Associates and puts the monthly cost of the subsidies at ₦250 billion ($601 million) that month.

‘’The committee recommended that the minimum price of petrol should be around ₦302 ($0.73) per litre and revealed that the NNPC has not been able to meet its commitment to the Federation Account because of the costs of the subsidies.

‘’For political reasons, however, none of the governors except el-Rufai has been willing to openly advocate the removal. Under the umbrella of the National Economic Council (NEC) which is chaired by Vice President Yemi Osinbajo, the governors met on January 21. Part of the discussions centred on the el-Rufai report but the meeting’s communique did not mention the report’s recommendation’’, the report says.

Menas Associates said it was told by sources closed to Osinbajo, ‘’who is known to be nursing an ambition to succeed Buhari in 2023 that he is being careful not to be blamed for any subsidy removal. As head of National Economic Council (NEC) there are concerns among those who want him to run for president that the removal of fuel subsidies will be blamed on him if this is the NEC recommendation.

‘’However, it is not only Osinbajo that is afraid of being linked with the decision. Anyone with political ambitions is currently doing what they can to avoid the subsidy debate which is likely to dominate political discussions this week and, depending on how it is resolved, could shape the 2023 election race. The contest is too close to take a major gamble which is why senior APC officials want Buhari to defer the decision despite the huge financial cost.’’

On January 25 it was reported that the Buhari administration plans to amend its newly-signed Petroleum Industry Act (PIA) and will ask parliament for an 18-month extension to keep its long-standing regime of subsidising imported petrol.

Comments are closed.