The Emir of Kano, Muhammadu Sanusi (II), says the subsidy regime in the
Nigerian National Petroleum Corporation has compromised the corporation
to the extent that only an angel may be able to run the corporation
honestly.
Sanusi said this during an interview with our correspondent in commemoration of his 4th year on the throne.
Sanusi
was suspended as the Governor of the Central Bank of Nigeria by the
then President Goodluck Jonathan in 2014 after accusing the NNPC of
failing to remit $20bn into the government’s coffers despite high oil
prices.
He had also complained about the lack of transparency at
the nation’s top oil firm occasioned by the dubious payment of petroleum
subsidy.
When asked if he was satisfied with how the NNPC was
being run under the current administration, the emir said no law or
regulation had been put in place to change how things were being done in
the corporation.
The emir said, “I have not seen a change in
laws or regulations that will institutionalise any changes. It is far
more important to put in place the institutional changes that make it
impossible for things to be done.”
While insisting that the
payment of subsidy on petroleum products must be scrapped immediately,
Sanusi said the problem of NNPC was beyond the change of its leadership.
He
added, “It is not about the persons in the NNPC but about whether
anyone can make a system operate honestly when there are such huge
arbitrage opportunities. We need to import angels for that to happen.
“So,
for me these are the issues. It is an economist’s nightmare. Sadly the
very reason this subsidy should be scrapped is probably the reason it
never will be. For those who profiteer from it, it is just too good to
be true.”
The monarch, who described subsidy payment as ineffective, said its continuous payment was a “recipe for bankruptcy”.
The
former CBN governor added, “The petroleum minister has disclosed that
this government has spent N1.4tn already on fuel subsidy and for most of
this period, oil price was between low and moderate.
“You can
imagine how much we will pay as oil price goes up. Imagine if that money
had gone into the power sector or agriculture and education and health.
So for me this government inherited a bad situation but if it continues
with these programmes, the next government will also inherit a bad
situation which is a shame.”
Explaining the manner in which
petroleum subsidy is paid, the emir said when the global price of crude
oil increases, Nigeria fails to benefit because the government increases
the payment on subsidy.
He said, “What we have is not a subsidy.
The Federal Government guarantees Nigerians a maximum price per litre
for fuel. And this is a product we import. And its price is based on
unpredictable underlying commodity prices.
“So what the Federal
Government is saying is look it does not matter what the price of oil is
internationally, what the exchange rate is, what interest rate is, what
shipping clearing and demurrage is, I am so rich that I will ensure you
get fuel at this maximum price and I will pay the difference.
“Meanwhile,
the balance sheet of the Federal Government is not hedged in anyway
against these risks. As a professional risk manager, I have never seen a
policy that is so guaranteed to bankrupt anyone as this policy.”
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