Muhammadu Sanusi II, the Emir of Kano, has stated that the Nigerian National Petroleum Corporation has been compromised, due to the subsidy regime, to the point where only an angel would be able to run the corporation honestly.
He made the comments during an interview with Punch to commemorate his 4th year on the throne.
It should be recalled that in 2014, Sanusi, a former governor of the Central Bank of Nigeria, had accused the oil corporation of failing to remit $20bn into the government’s coffers despite high oil prices; a move which led to his suspension as CBN governor by former President Goodluck Jonathan.
Reacting to a question about if he was satisfied with the way the NNPC was being run under the Buhari administration, the monarch said no changes had been put in place.
In his words: “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.”
Sanusi pointed out that the NNPC’s problem was beyond a change of its leadership, and insisted that the payment of subsidy on petroleum products must be scrapped immediately.
He said: “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.”
He said the subsidy regime is a recipe for bankruptcy; adding: “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.”
Sanusi explained that when oil prices rise, the federal government also increases subsidy payments; thus, Nigeria fails to benefit from the increased revenue.
He stated: “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.”