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.