Buhari on Fuel Subsidy & Scarcity Issues: “I Will Try and Find Out What Went Wrong”

President-elect Muhammadu Buhari speaking out about the current fuel issues Nigeria is facing.

Here are excerpts from a recent interview he had with Daily Trust:

One burning issue is fuel subsidy. I believe you are aware of the queues in major cities like Lagos and Abuja. The fuel importers say they are unsure of the direction of the new government in this area. Have you considered maintaining or withdrawing this subsidy or are you questioning whether it didn’t exist at all?

One of the problems I have, other than the military, is the petroleum industry where I served for three and a half years under General Obasanjo. When people start talking about this subsidy I honestly get confused. I will tell you this, and I hope it will answer what you want to know. Back then we had a refinery in Port Harcourt, which was refining 30,000 barrels a day of Nigerian crude.

Later, it was upgraded to refine 100,000 barrels a day. Another refinery was built in Port Harcourt to refine 150,000 barrels per day of Nigerian crude. So, Port Harcourt alone had the capacity to refine 250,000 barrels per day of Nigerian crude.

But when I found myself as the Minister of Petroleum I set up another refinery in Warri for 100, 000 barrels per day of Nigerian crude and the Kaduna refinery a 100, 000 barrels per day. So Nigeria built capacity to refine 450,000 a day.

Four Hundred thousands of which is purely Nigerian crude, but 50,000 was imported. The type of crude could be Venezuelan, which could be a bit heavier. But the lighter ones – kerosene, aviation fuel, diesel, PMS of different grades could be produced from our crude because Nigerian crude is about the best in the world.

If you could recall, after finishing as Minister of Petroleum, I subsequently became Head of State. You remember, I appointed Professor Tam David West as the Minister of Petroleum. When we rounded up bunkers, collected their illegal jetties and allowed jetties for only big firms which were doing production and development in the country, we were shocked that we had too much fuel.

We had to begin to export 100,000 barrels per day. Don’t forget that we didn’t stop at building refineries, we built more than 20 depots during my time, from Port Harcourt to Ilorin, Makurdi, Suleija, Maiduguri and Kano. More than 3,000 pipelines were laid to connect them. A number of stations were also built to take the trailers off the road, save lives and the infrastructure on the road. It is more economical because each trailer uses fuel.

We did all that in this country and we didn’t borrow any money as far as I know. It’s Nigerian money. From each Nigerian crude, whether Akwa Ibom, Bonny Light or whatever it is, you can work out how much products it will give you; how much petrol it will give you; how much diesel it will give you if you want to produce diesel. We could tell how much Nigerian crude cost, the cost of transportation from there to the refinery, the cost of refining, the cost of transportation to the pump stations and maybe 5 per cent go for overhead. I can understand if Nigerians pay for those costs. But somebody is saying he is subsidizing Nigerians. Who is subsidizing who?

But they argue that the price should not be the same in Lagos and Daura, for example?
It has to be the same because it is the Nigerian crude.

But they consider the cost of transportation?
Why didn’t it make any difference when we were around? Why did we build the network of pipelines? Why did we build the network of depots? What can Nigerians benefit from the God-given gift of petroleum? No refinery is built unless there is an in-depth research that there is enough reserve of up to six layers to be produced.

The argument I have heard is that refineries are aged. Mostly, they are performing at less than half of their capacity…?
You can’t defend these corrupt and incompetent people. You can’t defend them. There used to be what they call turn-around-maintenance. You close the refinery in order to overhaul and clean it. What we did: we asked our producers, we need various refined products of this type at this time when the refineries are being cleaned. Take this type of Nigerian crude and bring us the refined products.

What we don’t need, we will calculate and pay you as fees for refining and transportation. If it is more than what the crude can handle, then we take it from the treasury. But you are trying to justify all these frauds by saying the refineries are aged.

Of course, they are actually aged?
They said the refineries are aged. The pipelines are leaking. There is vandalisation. Who ordered the vandalisation?

Does it suggest that you don’t believe in the subsidy? So, you are not going to agree to its continuation in anyway?
I would like to be on ground and find out what really has been going wrong. Why is it that people are doing round-tripping with the Nigerian products and take money from the treasury? Some people are still in court. You know about it. So, I’m not taking anything for granted. But I will try and find out what went wrong.