Despite spirited efforts by the Central Bank of Nigeria (CBN) to resolve the lingering crisis occasioned by naira scarcity, Nigerians are yet to feel any respite. Our correspondents report that Nigerians and businesses nationwide are in tatters as they struggle in vain to get elusive new naira notes

Manufacturers lamented yesterday that the lingering scarcity of the new naira notes and acute energy crisis manifesting in the scarcity of fuel and high cost of diesel, gas and Premium Motor Spirit (PMS) or petrol are inflicting heavy pains businesses. Speaking at the 2023 edition of the ‘MAN Reporter of the Year Award/Presidential Media Luncheon’ held in Lagos, President of Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, said manufacturers are facing a very critical time as a result of the scarcity of these essentials.

 Meshioye said, for instance, that the current energy crisis, especially the scarcity of fuel as well as the hardship being experienced by Nigerians in accessing the redesigned naira notes are hindering the proper flow of goods to end users, resulting in huge pile of stock for manufacturers. “It (naira and fuel crisis) is affecting us very badly because at the end of the day, everything we produce has to be consumed in one way or the other, and if consumers don’t have cash to purchase products, then we are going to have a lot of stock, and this implies that a lot of manufacturers’ money is tied down,” Meshioye lamented.

 The MAN president also said when stock piles, it also means that manufacturers’ cash is trapped, even as they pay high interest rates. He also said the situation is affecting investments. “Investment goes to where returns come regularly. No investor wants to play with his money. So, it’s a very big issue in our economy now,” he stated.

 He also lamented that manufacturers are contending with a lot of idle times, which they have to pay for. “So, we are incurring a lot of loses by the fuel scarcity, and that goes on to so many other lines such as currency and energy, currency, which are abstract infrastructure that enables proper manufacturing,” he lamented.  

 Meshioye, while pointing out that “there is no way any scarcity of any essential thing to a consumer will not affect the producer,” however, expressed regrets that it is not yet everybody who can do electronic transactions, coupled with the occasional Internet connection glitches.

 Besides, he said it’s not so easy for one to buy a good and he wants to do a POS transaction at every point. “So, it’s a very big issue in our economy now. So, when you take all these things together, you want to agree with me that we are really facing a very critical time as manufacturers,” Meshioye emphasised.

 Also speaking, MAN Director General, Segun Ajaiyi-Kadir, lamented that because of the prevailing currency and fuel crisis including the acute shortage of forex, manufacturing is becoming an endangered profession. Ajaiyi-Kadir argued that there is no country in the world that has developed or become prosperous without a virile manufacturing sector, insisting, therefore, that manufacturing needed to be prioritised. To soothe the pain inflicted on Nigerians and manufacturers by the shortage of new Naira notes, for instance, Meshioye called on the Central Bank of Nigeria (CBN) to put in place an effective monitoring system to ensure that redesigned notes or money released get to everyone. According to him, an effective monitoring system will also douse tension over allegations of hoarding.

Lagos APC suspends campaign over cash crunch, fuel scarcity

 The Lagos State All Progressives Congress (APC) has announced the suspension of its campaign activities ahead of the forthcoming elections due to fuel scarcity and cash crunch occasioned by the naira redesign. The state Chairman of the party, Pastor Cornelius Ojelabi, made the announcement yesterday in a statement by the party’s Publicity Secretary, Mr Seye Oladejo.

 The party chairman said that the party empathised with the general public, especially the downtrodden who are at the receiving end of the crisis. According to him, it will be insensitive to forge ahead with the various rallies with the situation of things. Ojelabi said that members of APC are not immune against the development, adding that he has been inundated with several complaints. “I joined my voice with those of other well-meaning Nigerians to call for the review of the naira redesign policy to give it a human face and ameliorate the suffering of ordinary Nigerians,” he said.

 The chairman appealed that petroleum products should be made available in order not to jeopardise the preparation for the elections and reduce the negative economic impact. He enjoined all Lagos residents to remain law abiding as all issues would be resolved in due course.

Justice Enenche’s order on redesigned currency is illegal, says Ondo lawyer

Human rights activist and lawyer, Barr. Femi Emmanuel Emodamori, has described as illegal and unconstitutional the order granted by Justice Eleojo Enenche, restraining the CBN and a host of other commercial banks from extending the February 10 deadline for accepting the old N200, N500 and N1000 notes as legal tenders. Emodamori said the order was capable of bringing the judiciary into a monumental public disrepute and clearly constituted a recipe for social instability.

 He said the High Court of the Federal Capital Territory lacked the jurisdiction to grant such Order, based on the clear provision of Section 251(1) (d) and (r) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), which confers such power exclusively on the Federal High Court. The Ondo lawyer, in a statement issued in Akure, said Justice Enenche was not a judge of the Federal High Court and, therefore, lacked the power or jurisdiction to grant the purported order.

 Emodamori queried the legal interest of a political party to procure the Order from a court to ensure the enforcement or continuation of an anti-people policy. According to him, “Hon. Justice Enenche’s Order is a recipe for serious social-economic and political brouhaha that would spare no one and do no good, unless there is an urgent intervention. The people cannot spend their hard-earned old currency to meet basic daily survival needs. They also cannot access the new notes for which they have been told to swap their old ones, have now been restricted to withdrawing only N20,000 of their own money (whether old or new notes) from the banks. Clearly, they are being pushed to the wall. We must act fast to avert the impending disaster being deliberately stirred up by the forces of evil in the land.

 “I am therefore calling on the National Judicial Council to immediately investigate and take appropriate disciplinary measures against Justice Enenche for issuing the unconstitutional, ridiculous and irresponsible ex-parte Order. Nigerian must resist the temptation to embark on any mass uprising

that would destroy our country, although the right to peaceful expression and protest is a fundamental human right.”

Don’t make Nigerians scapegoats, Atiku warns

The PDP presidential standard bearer, Alhaji Atiku Abubakar, has told the Federal Government not to allow Nigerians to be made scapegoats “in the ongoing battle of titans over the redesign of the naira.” Atiku made the appeal in a statement by his media aides in Abuja yesterday. He said that the Federal Government had a duty to swiftly see to it that commercial banks did not constitute themselves into stumbling blocks on “the well-thought out policy of naira redesign.” “It is commendable that the Federal Government has rather preferred to work behind the scenes, based on the intelligence it is believed to have received, regarding suspicions that some presidential candidates may have stashed billions of naira as war-chest for vote-buying.’’

 The former Vice President lamented that there had been widespread anxiety across the country, arising from poor execution of the naira redesign policy by commercial banks in the country. “Businesses and cash-dependent small holder enterprises are all currently in serious distress. This should be addressed urgently to save the economy from collapse.’’

 Atiku said that he had, on Jan. 28, made a crucial intervention on the redesign of the naira, calling on the Federal Government and the CBN to consider adjusting the deadline date to address the challenges being faced by members of the public. He re-stated that the policy is being mismanaged, unlike what obtained in other parts of the world where similar policies were implemented without pains. According to him, millions of Nigerians are being driven into grave desperation and despondency on account of the shortcomings of the execution of the policy. “In recent weeks, social tension has been growing across Nigeria on account of the poor management of the redesign of the naira policy,’’ he said.

It is a threat to national peace, says ADC presidential candidate

Mr Dumebi Kachikwu, African Democratic Congress (ADC) presidential candidate, said the insufficient circulation of the new naira notes posed great threats to the country’s peace. Kachikwu said this in a statement yesterday in Abuja. He said it was disheartening to see Nigerians endure long queues under scorching sun just to withdraw their hard-earned money. According to him, Nigerians are groaning in agony and people are being dehumanised in a bid to obtain the new notes.

 “If this is not bad enough, the most political Central Bank Governor in our nation’s history seeks to plunge our nation into further chaos. How else can one explain this ill-conceived naira redesign policy that ought to strengthen the value of our currency but now threatens our very existence as a nation? My heart broke as I watched the videos of those who stripped naked in banking halls all in a bid to collect their money.

 “How do you speak of cashless banking in a country plagued by epileptic telecom networks and power blackouts? Who is deceiving who when many parts of Northern Nigeria don’t have bank branches and lack the infrastructure to support e-banking. Was this not factored into the CBN Governor’s plan?”

 Kachikwu said that Nigerians did not deserve hardships, especially at a time when fuel was also not available in many parts of the country. He alleged that people queued for hours for fuel only to be told they could not buy. This, he said, was because they did not have cash and the Point of Sale (POS) terminals were not in operation due to unavailability of both the old and the new naira notes. He lamented no money, no food, no power, no jobs, no security, adding that all these were ingredients of anarchy if not well managed. “Our nation is plagued by a Covid-19 induced inflation and recession like most nations but in our own case the managers of our economy have run out of ideas. How do we deal with the corruption at our ports that is at the heart of inflation in an import dependent economy? How do we stem the brain drain and keep our middle class happy and content in a working Nigeria?

 “How do we defend our borders, secure our highways and protect our farmlands and how do we bring the aggrieved Igbos back to an equitable table? How do we repay our loans and balance our budget; how do we recreate the value of our naira and create good paying jobs for tens of millions of Nigerians who are in despair?”

‘80% PoS operators out of business,’ say operators

The Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) says over 80 per cent of its members have shut down their operations due to the cash crunch in the country. Speaking with yesterday, Hussein Olanrewaju, national chief aggregating officer of AMMBAN, said the current cash shortage has affected the means of livelihood of point of sale (PoS) operators nationwide.

 “The reality is obvious; agents are treated as other Nigerians even when they act as a mini-bank in catering for the needs of underbanked and unbanked Nigerians. Some agents do go the extra mile to get cash which of course comes with a cost and then push the same cost to their customers. It’s sad and worrisome. AMMBAN has frowned on this illegal act and has warned its members not to be found wanting in such an act.

 “This has made over 80% PoS agents shut down their business across the country and negatively affected their livelihood. Where there used to be 10 agents before, you can hardly find 2 agents operating in the same location now. We have been engaging with the CBN to categorise PoS agents separately so that these excesses are put to an end.”

APC group demands extension of naira swap deadline

The APC Professional Forum has joined the call for President Muhammadu Buhari and the Central Bank of Nigeria (CBN) to further extend the time for the old currency to cease to be legal tender. The forum said the call for time extension became necessary in order not to further overheat the economy with the likelihood of unintended consequences.

 The Board of Trustee (BoT) Chairman of the forum and former Governor of Bauchi state, Malam Isa Yuguda, made the call on behalf of the forum in Abuja yesterday while addressing newsmen. Yuguda said that the current tensed socio-economic environment in the nation occasioned by the twin factors of persistent scarcity of petrol and widespread discontent and difficulties arising from the implementation of the well-intended currency redesign policy of the federal government informed the call for extension. The former Minister of Aviation said while the forum saw nothing wrong with the government’s decision to embark on the currency redesign policy to address the distortions in the economy, he expressed concern about the mode of implementation, which has been inflicting untold hardship on everybody in every part of the country.

 His words: “But in view of the chaos and near anarchy in some parts of the country, we are of the view that the situation may require more efforts and steps in order to address the possibility of major social upheavals as the elasticity of the average citizen is stretched to a breaking point. It is our considered view that the timing of the implementation of this laudable policy should be urgently reviewed. We call on President Buhari to consider all options including but not limited to a further extension of the time for the old currency to cease to be legal tender so as not to further overheat the economy with the likelihood of unintended consequences.”

Bauchi petty traders cry out over losses

Some petty traders in Bauchi have expressed worry over the losses they currently incur in their daily transactions. A cross-section of the people blamed the development on the scarcity of the new naira notes. They said that the difficulties faced in accessing the new notes drastically affected business generally in the area.

 Mrs Fatima Danjuma, a soya bean cake maker, said she was finding it difficult to make enough sales to fend for her family. She said that businesses had stagnated in the state. Danjuma said: “I have N4,000 as my capital and paid N400 as Point of Sale (POS) charge after visiting four POS operators. I don’t have enough money to buy firewood to make enough soya bean cake to meet my customers’ demand.”

 A firewood seller, Mrs Halima Turaki, said that she made her purchases via her daughter’s account because she did not have enough cash. According to her, inability to access the naira notes had affected her business. “The naira swap has made business difficult because the lower denomination is scarce, so prospective buyers usually go to other sellers due to the lack of change.”

Also, a local drink dealer, Mrs Victoria Andrew, said that it was becoming hard for her to exhaust her daily production due to a drastic fall in patronage. “It is unfortunate that I now record unsold daily because of the scarcity of the new naira notes and attendant low sales,” Andrew said.

She blamed the situation on the lack of lower denominations had affected daily sales, leading to great losses. An ice block seller, Mr Faizu Mohammed, said that the present weather condition in the state makes for brisk business but regretted that the cash policy had caused a major setback in her business. “Our product is sold in lower denominations, so we lose money daily because people don’t even have cash to buy and providing them change is another serious problem,” she said.

Umahi backs Buhari over new naira note

The Ebonyi State Governor, Chief David Umahi yesterday joined other critical stakeholders in Nigerian project to back President Mohammedu Buhari over the redesign of the country’s currency notes. Governor Umahi made his position known during the APC governorship campaign rally yesterday.

 The Chairman, South East Governor’s Forum, who expressed concern over the economic hardship witnessed in the country following the redesign of the new notes assured the President that there won’t be any protest against the policy in the state. He urged the people of the country to be patient with the President adding that in few days to come, the suffering and hardship witnessed by the people will be resolved. “President Buhari has worked so much for this country; he is a man with a clean heart. He is a man fighting the people that are oppressing the masses and I want to appeal to our people to be patient with him. We will support the President in the new naira redesign. In few days Nigerians will be happy with his decision.

 “We know we can’t go to the banks to withdraw money, we know the money is very scarce in Ebonyi, we know that the ATMs has all dried up and we have informed Mr. President and Mr. President is already addressing the issue. Buhari is a man that loves the people; he is a man that hates to see the people suffering. I urge all the gladiators to allow him to finish the good work that God called him to do in Nigeria.”

After weeks of public uproar over scarcity of new naira notes, the Central Bank of Nigeria (CBN) bowed to public pressure by extending the deadline for exchange of old naira notes to February 10. In this analysis, Deputy Editor EMMANUEL OLADESU takes a look at the merits and demerits of the new policy and concludes that the timing of the laudable policy may ultimately determine the success or otherwise of the naira redesign exercise.

Never has panic been unleashed on Nigerians by a Central Bank meant to serve the country as the bankers’ bank, lender of last resort and regulator of monetary policy.

Some arguments have been canvassed for the urgent and sudden naira change. The redesign is not expected to improve the ‘quality’ of the naira or make it strong in relation to dollar and pound sterling. That is impossible unless Nigeria imbibes the economic virtue of production as against its absolute dependence on importation of what it even has capacity to produce at home.

 The CBN of Godwin Emefiele apparently cited security reason, which is beyond the ken and comprehension of the common man. The bank, as the inexplicable explanation goes, is targeting hoarders of illicit money and financiers of terror. But, the effect is also borne by the common man, who under the malevolent economy, eats from hand to mouth. He is deprived the use of money; his own unit of accounting and store of value. He is not a bank user. But, he is now expected within days to embrace the option of e-banking, which is strange to him and his little business.

 Also, it was argued that the change was meant to reduce corruption. Some politicians were said to be ‘banking’ money at home in anticipation of election. The CBN governor never offered clarification. But, since campaign posters, buses and campaign souvenirs bearing his name have been cited in the public and he has not really denied political involvement, he is likely, as a politician in disguise, to have insight into what other politicians plan to do with their huge money on poll day.

 Yet, those who also think that the Central Bank may be mischievous cannot be dismissed with a wave of the hand. A political motive has been insinuated. Echoing this line of thought, a citizen who was interviewed by the Channels Television at the weekend alleged that the move was to de-market and sabotage the ruling All Progressives Party. He said two situations have been created: fuel scarcity and new currency scarcity, which will make voters to think that the APC-led government is inflicting pains on the people, who may, in a fit of anger, decide to turn their back and vote for the opposition party during the election.

The timing of the currency redesign, according to observers, was bad. Old notes were to be returned latest today, until reason prevailed.

Old notes were to cease as legal tender. Yet, the ATMs refused to emit new notes. There was uproar. In some places, commercial activities were paralysed.

Yesterday, many could not attend church services in urban centres. Church offerings in old notes were said to be rejected. Also, transporters rejected the old notes, oblivious of the fact that the deadline had been extended for 10 days. It was double tragedy. Even, if they had the new notes, fuel was not available.

 In the North, governors responded to the complaints of residents, particularly in the rural areas, to set up pseudo-banks or currency collection centres to assist hapless people and assure them that they will get new notes later.  CBN was adamant for weeks until it now bowed to pressures yesterday after a lot of pleas to Emefiele and President Muhammadu Buhari. The deadline has now been shifted to February 10.

 At the Abeokuta rally of the All Progressives Congress (APC), the presidential standard bearer, Asiwaju Bola Ahmed Tinubu, cried foul, saying that fifth columnists were on the prowl. In his view, unscrupulous elements were exploiting the fuel scarcity and currency redesign that had flopped to embarrass the president and de-market APC. 

Tinubu said: “They are using fuel scarcity to distract Nigerians. I assure you, it will be a thing of the past. They are hoarding fuel and new naira notes to frustrate Nigerians. They don’t want the election…They think they can bamboozle us or confuse us with fuel scarcity. We shall bring the fuel price down. They didn’t want this election, but they have failed.”

 Many APC leaders believe complaints about the hardship encountered by Nigerians in getting the new notes did not get to the President. Also, it was felt that the CBN governor was, perhaps, not telling Buhari the clear picture as he kept dismissing reports that the January 31 initial deadline was not feasible. The whole country was upset, making governors, traditional rulers, the Nigerian Bar Association (NBA) and unions to cry out that Nigerians, who majorly are Buhari’s focus and priority, were being suffocated by the dreadful policy.

In utter sensitivity to popular yearning, Buhari asked Emefiele to pull the break. A statement by his media aide, Garba Shehu, said CBN has been asked to come up with initiatives to ameliorate the hardship being faced by the common man.

 The turn of events has brought to the fore the wisdom in trying to make such a profound policy operational in 90 days. The objectives of the policy may be laudable, but same cannot be said about making it effective in so short a time. Obviously, CBN did not lean on past experience. The currency had been redesigned before in the 70s, 80s and even in this dispensation with minimal stress. The wisdom that permitted the apex bank  to accomplish that seamless change in the past now appears to be lacking.

 How was a similar task done in other climes?  The example of the UK is instructive. In 2020, Britain introduced new £20 and £50 bills. But the old notes remained legal tenders until September 2022, two years thereafter. Both old and new existed and they served as legal tender. Britain is a country with high level of financial inclusion. But, in Nigeria, with low financial inclusion, the CBN believes such a thing can be done in just three months.

 The CBN has said it wanted to make it difficult for kidnappers to collect ransom from families of victims. It is also said that the CBN wants to make it difficult for politicians to bribe voters during the elections. These may be some kind of great ideas. But shouldn’t the naira redesign have affected the N1,000 and N500 bills, which are mostly used for these purposes ? Why change the smaller denominations of N200, N100 and N50? Shouldn’t these smaller denominations have flooded the system to discourage cash transactions? Also, was it meticulously planned? Did the CBN think through the new measure before selling it to President Buhari? How many economic experts were consulted?

 To analysts, the policy may have been shrouded in secrecy. For example, initially, the minister of finance said she was kept in the dark. Also, the governors said they were not consulted. It was doubtful if the all-important matter was brought to the Federal Executive Council for deliberation. The CBN governor was left all alone as if the policy is meant for him and his circle of friends alone. Many believe that the social, economic and political implications of such a fundamental policy ought to have been considered. The tension in the land these past weeks would have been avoided.

 More worrisome, even to observers, is the implications for the ruling party campaigning with the slogan of continuity.

The politics of the move stares both the ruling and opposition parties in the face. When Tinubu criticised the implementation of the move, the PDP criticised him. Tinubu’s statement was twisted by the PDP to convey the false impression of a friction between the President and the presidential candidate. The PDP, in a statement by its campaign spokesman, Kola Ologbondiyan, said Tinubu was trying to hoodwink Nigerians into thinking he is different from the government.

 He said: “It is unfortunate that Tinubu is trying to hoodwink Nigerians by seeking to exonerate himself and blame others in the Buhari led-APC administration for the biting fuel scarcity in the country when in reality he is known to be behind the insensitive and anti-people policies that have brought so much calamity to our country, including the current persistent fuel scarcity. How can Asiwaju Tinubu accuse an administration he had been a part of since 2015 of trying to sabotage the 2023 elections, except he is making revelations to Nigerians about their plans?

 “It is imperative to state that Nigerians, who are prepared to trek distances to cast their votes are the patriots who have been at the butt of pains which the government Asiwaju Tinubu installed has foisted on them.”

 The APC promptly replied the tirade. In a statement titled: “Fuel and new naira notes scarcity: Fifth Columnists working in cahoots with PDP,” APC campaign Director of Media and Publicity, Bayo Onanuga, accused the leaders of the opposition party of working in cahoots with fifth columnists in the system to inflict avoidable pains on our hapless people for political end.

Flaying the PDP for twisting Tibubu’s remarks, he said: “No sooner Asiwaju Bola Ahmed Tinubu empathised with the Nigerian people facing the dual crises of fuel and new naira notes scarcity, than the opposition PDP and the Atiku camp issued a knee-jerk response, derailing from the issues, distorting Asiwaju’s statement and trying, in vain, to create a wedge between our presidential candidate and President Muhammadu Buhari.”

 Onanuga clarified that Tinubu, during APC campaign rally at Abeokuta, did not mention, blame or accuse President Buhari for the current challenges in the country, stressing that he was only directing government’s attention to the sabotage being carried out by some fifth columnists in the system, possibly working in cahoots with the PDP. Onanuga said: “The CBN officials, including Governor Godwin Emefiele, have said many times that enough new naira notes have been supplied to the banks; yet our people complain that they have not been able to get the new notes.  In recent days, many ATMs are either not working or when working they are dispensing the old notes, just a few days to the January 31 deadline.

 “Similarly, Asiwaju Tinubu is aware of the salutary efforts by President Buhari to end the fuel queues, by chairing a 14-man panel. Yet the queues and agony continue. For a presidential candidate, who cares about the suffering of our people, he has a duty to warn government that its efforts to make life better for Nigerians are being sabotaged on several fronts. Our presidential candidate only re-echoed what is well known and acknowledged, even by President Buhari himself at different fora: That there are Fifth Columnists  in and outside of government who often throw spanners in the works against good intentions and programmes of the government.

 “How does an advisory genuinely made by Asiwaju Tinubu to protect and create goodwill for the government of his party become an attack? It can only be so in the jaundiced view of the PDP. It is in this light we found amusing the directionless Atiku Campaign’s bagful of mischief in their hurriedly put together press statement meant to gain shameful mileage from the suffering of Nigerians. PDP and Atiku should remember not to get high on their own smoke. No political blackmail and an attempt to create a conflict between Tinubu and his long-term ally, President Muhammadu Buhari can succeed.”

 Also berating PDP for misinformation and fake news, Tinubu, at a rally in Zamfara, said nobody can come between him and Buhari. He said: “I have supported President Buhari, even before his first day in office. I will continue to be his supporter and friend after his last day in office.”

 However, unknown to the PDP, Tinubu spoke the minds of many Nigerians in Abeokuta. His comment resonated well with the people. Realising this and possibly having been told by saboteurs and fifth columnists in government that an extension was in the offing, PDP presidential candidate Alhaji Atiku Abubakar, who had blamed Tinubu, ate his words and asked that the deadline be extended. He feared that Nigerians will remember that Tinubu spoke for them, but he now wanted to be captured as being on the right side of history. But can Nigerians be deceived?

However, APC Presidential Campaign Council (PCC) yesterday commended CBN and  Emefiele  for listening to the voice of well meaning Nigerians on the exigency  of extending the deadline.

Onanuga said APC welcomed the 10 day extension of deadline and the additional seven days of grace. He said the window will  enable Nigerians, especially those remote areas, to have more time to change their old notes and avert the panic.

Onanuga commended Buhari for approving this extension and for his leadership and statesmanship. He also praised Tinubu for his forthrightness in addressing the concerns of Nigerians in Abeokuta.

 He said:”Asiwaju Tinubu didn’t take the easy road by shying away from what would have caused serious inconvenience for our teeming masses. Asiwaju showed leadership and compassion for the welfare of Nigerians, at the most appropriate time.”

Ahead of the federal government’s plan to embrace a fully deregulated petroleum industry, especially the phasing out of Premium Motor Spirit (petrol) subsidy support, operators, regulators and other stakeholders are bracing up for the massive change the new policy will usher in: gradually adjusting to the new price regime, anticipating domestic refining, and eyeing gas as a cleaner and cheaper alternative. JOHN OFIKHENUA reports.

With some months to the full deregulation of the petroleum sector, stakeholders in the industry are already upbeat that things will change significantly. One of the expectations, stakeholders enthused, is that the new policy direction will certainly usher in some level of independence and local content participation.

 But exactly what difference would the deregulation bring to bear in the energy business? It presupposes an industry that is simply at the mercy of demand and supply. Thus, there will be the primacy of price mechanism over the perennial government regulation. It means that the Petroleum Industry Act (PIA), which was given birth to in August 2021, will now be the instrument driving both upstream and downstream operators and regulators. This comes with a lot of implications – both positive and otherwise.

 From the downstream perspective, there has been a countdown to the ‘doomsday’ of removal of the Petroleum Support Scheme (otherwise known as petrol subsidy). There has been investment apathy for the refining and importation of the Premium Motor Spirit (petrol) because of its subsidy. Chiefly among the excuses is that with the subsidy in place, there cannot be a cost reflective pump price that should incentivise the investors.

 A new petrol market, however, now stares the stakeholders in the face. This is so because the 18 months for which President Muhammadu Buhari suspended the implementation of the PIA shall soon elapse. It would be recalled that on 22nd of January 2022, the President halted the implementation of the law for 18 months, indicating that by mid-2023, the enforcement will take off. Besides, the Minister of Finance, Zainab Ahmed, has explicitly repeated it that the government will wind down its payment of the subsidy mid this year. It indicates the end of the respite that the populace enjoys from the government intervention. Its negative impact is what the citizenry will now learn to cope with.

 For subsidy to go, the government requires the political will to say enough is enough, having postponed the doomsday for several years. A reliable source from the Ministry of Petroleum Resources, who dropped this hint, noted that no government would take the risk of removing subsidy in election year. The source, who preferred to be anonymous because he was not authorised to speak on the topic, said full deregulation is already in progress with different marketers selling petrol at their own prices across the country. He added that since the government can no longer bear the burden of subsidy, upon its removal in July, consumers must pay for the actual pump price if they must fuel their vehicles and equipment.

 The source said: “From what you are seeing, deregulation is already taking place. The law is already taking its own course. You can see that the government is trying to stop the subsidy payment. The market is going to be driven by the forces of demand and supply. That is what will be the clear determinant of price. 

“If you go to some (petrol) filling stations in Abuja, they are selling at different prices. If you want to sell at the official pump price, nobody will supply you petrol. The landing cost is way far than what the government was paying. The government is just managing with the dwindling oil and gas revenues. So, sustaining subsidy is not possible. So, full deregulation will be determined by the forces of demand and supply. You heard what the Minister of Finance said that by July this year, government will distance itself from subsidy payment. From what we are seeing now, deregulation is going on its own. When government does not pay subsidy and you want fuel to come, the consumers will be forced to pay for the differentials. It is going away on its own.”

Despite the pronouncements, a Senior Legislative Aide, Olabode Sowunmi, also described the situation as a very phenomenal development that needs the federal government’s political will to accomplish. According to Sowunmi, who is an aide to the Senate President, Ahmed Lawan, this is not government’s first target at full deregulation. Allaying fears that deregulation is not necessarily price hike, he explained that it means leaving the trading of petroleum products to the forces of demand and supply.

 “It should be understood that this is not the first time that the government is announcing full deregulation. We need to keep in perspective that full deregulation doesn’t just mean price increase. It means the mechanics for trading in the finished products are left to the forces of demand and supply,” he said.

 Sowunmi called for sensitisation of the consumers on the workability of petroleum price deregulation. He depicted it as national exercise that concerns all.   His words: “On the part of the consumers, it’s our responsibility to understand how petroleum price deregulation works.  People think it doesn’t concern them but what they don’t know is that these things they say don’t concern them is the difference between a more challenging economic reality and otherwise.”

 He said the deregulation is a shared responsibility, noting that, “Yes government will do their job.  However, the citizenry should take their responsibility as well.”

 Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) revealed that upon the deregulation and operation of private refineries, the marketers will source products from the Nigerian National Petroleum Company (NNPC Retails). Its President, Alhaji Debo Ahmed, who spoke with The Nation on phone, noted that the marketers may choose to import their own products if they can establish their own depot.

 Asked how the marketers will source products from Dangote Refinery? He said “We will be getting products from NNPC retails. Unless we too are able to have our depot, we can as well import the product. So we are under the apron of NNPC retail where we will be taking products. NNPC Trading too will be importing. So, when they import, any marketers who want to buy from them will buy from them. Those marketers who can import will import.”

 Commenting on the current state of the petrol market, Ahmed said nothing has really changed about product availability. He stressed that there was scarcity of petrol, urging the NNPC to increase its supply. Expressing the helplessness of his association in the supply chain, Ahmed claimed that IPMAN members are merely middlemen. He added that the market is still the same old story. “There is no enough product. The government has not come out to give us product. They are not engaging marketers, although they closed down some depots that are under selling. But closing them down is not enough because there is no enough to sell. NNPC is the only importer and the only one that can give the private depots. We are just the link in the chain of distribution.”

 In the wake of the New Year in which investors and other players in the industry anticipate the in-country refining, the major transporters of petroleum products are already set with their plans. For instance, the Nigerian Association of Road Transport Owners (NARTO) is quietly waiting to understudy the emerging trend in the bid to key into it. On this note, the National President, Alhaji Yusuf Lawal Othman, told The Nation at the weekend that the members will examine how both the federal government and the consumers of the petroleum products will respond to the new market regime.

 At the very minimum, however, NARTO has projected to take advantage of the market liberalisation to expand its operations. Othman revealed that the members could replace their existing truck or overhaul them in order to cope with the haulage of the expected petroleum products supply glut. According to him, “In this year 2023, we expect towards June that the refineries across the country: Port Harcourt, Warri, and probably Dangote Refinery will come on stream. This means that there will be reduction in importation of petroleum products and off course, there will be activities of the trucks moving to the refineries and major depots across the country. That is also part of our projection.

 “And in order to ensure hitch-free operation for the smooth supply of petroleum products, we need to sensitise some our members on these plans and projections and also to inform them that there is need to replace or repair the existing trucks in order to meet the demand. By and large, we will monitor and see the response of the populace of the country as well as what the government will do as far as the full deregulation is concerned. It means that when there is full deregulation, there may be some changes in the mode of operation of trucks across the country. So these are some of the projections for the year and we plan to be actively involved.”

 Ahead of the new regime, however, is the optimism that domestic refining will drive the free petrol market regime. It is one of the factors precedent to the stoppage of the subsidy, according to the Nigeria Labour Congress and Trade Union Congress. Consequently, last month, the Nigerian Content Development Monitoring Board (NCDMB) revealed that Nigeria will harvest petroleum products from three new local modular refineries in 2023. In addition, the board noted that in partnership with Ibigwe Modular Refinery, which has been operational for two years, it is ready to increase from its 500,000 barrels per day capacity. Both the Ibigwe and other local refineries have added more capacity.

 The board’s General Manager, Corporate Communications & Zonal Coordination, Dr. Ginah O. Ginah, disclosed this at a two-day Nigerian Content Capacity Building workshop in Abuja. His words: “Our modular refinery in partnership with a reputable Nigerian firm has been running for two years in Imo State. And today, they want to increase the capacity of that refinery. The same thing we have done for the modular refinery. By the way, this year, we are expecting about three of them to also start production. Some of them have added capacity.” 

 He said while Vice-President Yemi Osinbajo was appealing to Nigerians about the need to stop illegal refineries with the promise that the federal government would replace the refineries in all the locations to give them employment, the NCDMB was already partnering with indigenous investors to develop modular refineries. Ginah said: “I remember when VP Osinbajo was going up and down talking about the need to stop the local refining even though it started in the United States and the environment does not allow them here.

 “So while he was doing that and promising that the Federal Government would come up with refineries in all those locations in the Niger Delta modular refineries so that they will now get proper employment. Before he finished all those grammar, we have started our refinery in Ibekwe in Imo State.”

 Ginah noted that similarly, the board has been enforcing the federal government gas initiative. The Board, according to him, is also working with Duport Midstream to establish an Energy Park at Egbokor, Edo State. He noted that the “park would include a 40 million standard cubic feet per day gas processing plant, 2,500 barrels per day modular refinery and 20 megawatts power plants.” He revealed that the plant was already 90 per cent complete, stressing that it is supposed to be running by now.

 Although the Minister of State for Petroleum Resources, Timipre Sylva, has always considered the development of the Compressed Natural Gas (CNG) as the basic supplement for the expensive petrol, not much was heard about it development since 2020. Aside the net zero campaign from which Nigeria was to later adopt gas as its transition energy, the nation was already embarking on its implementation of gas expansion and penetration unnoticed. President Muhammadu Buhari declared 2021 – 2030 as Nigeria’s Decade of Gas and announced the federal government’s determination to fully exploit the nation’s abundant gas resources to accelerate the development of the economy.

 But Ginah explained that the particular facility in Egbokor, Edo State, has a unit dedicated to CNG. He added that that “CNG is the gas that is used for our autos, the ones we want to change from petroleum driven to gas to the Compressed Natural Gas is being produced in this facility that is mentioned.” The General Manager claimed it will now become cheaper fuelling vehicles with the CNG because it is a cleaner gas that comes without soot. He said the board dedicated the facility to produce CNG in the bid to implement the government’s auto has policy.

 The General Manager said: “So, that means we now have facility dedicated to produce CNG to push the Federal Government auto policy. That is moving from petrol powered vehicles to gas powered vehicles. Now gas powered vehicles will be cheaper to maintain; the gas itself will be cheaper. The gas-powered vehicles will be cheaper because it will not be leaving black soot on your engine. The gas is very clean, and when it burns, it is only water vapour you will be seeing from your exhaust.”

 Ginah disclosed that further some of the NCDMB gas-based projects include the partnership with Rungas to produce 1.2million LPG Composite cylinders per annum in Bayelsa and Lagos states and our collaboration with NEDO Gas Processing Company in Kwale, Delta State, for the establishment of 80 million standard cubic feet per day gas Processing Plant and a 300 million standard cubic feet per day Gas Gathering hub. The General Manager said the Board has already partnered the NNPC to invest in Brass Fertilizer and establish 10,000 tonnes per day Methanol Production plant at Odioama, Brass, Bayelsa State, “Just as we are investing with Triansel Gas Limited in Koko, Delta State, to establish a 5,000 Metric Tons per day LPG Storage and Loading Terminal Facility.”

 Continuing, he noted that the gas penetration drive has been extended to the north. His words: “Up North, we supported Butane Energy Limited to establish LPG Bottling Plants and Depots in Abuja and 10 Northern States, just as we are investing with MOB Integrated Services for the construction of the 500 Million Tons Inland LPG terminal in Dikko, Niger State.”

 The project, he said, will include the construction of a cylinder refurbishment plant, procurement of 80,000bottles of LPG cylinders and acquisition of distribution assets. The General Manager said another important partnership is with Southfield Petroleum to establish 200 million metric standard cubic feet of gas processing plant at Utorogu, Delta State. The project, according to him, will produce 123,000 million tons per annum of LPG, about 10 per cent of current LPG demand nationwide.

 Similarly, Ginah noted that the Board is collaborating with Amal Technologies to set up a plant in Abuja to produce Smart Gas/Smoke Detector Alarm devices. Phasing out petrol subsidy will certainly come with tears. But the puzzle: How will domestic refineries and gas plants meet Nigerians’ demand at affordable rates?