Economy
Labour, Senate tackle Federal government over planned removal of oil subsidy.
— the whole arrangement is comical and queer—Ayuba Wabba
—We have no budgetary provision for N5,000 monthly stipend for 40million Nigerians—Adeola Solomon
Eyewitness reporter
The Nigerian Senate and the Labour movement are set on a collision course with the Federal government over the planned removal of subsidy on Premium Motor Spirit(PMS) otherwise called petrol.
The Group Managing Director of the Nigerian National Petroleum Corporation(NNPC), Malam Mele Kyari, has said that petrol will be sold at between N320 to N340 per litre from early 2022 as the Federal government will exit the subsidy regime on petrol following the full deregulation of the downstream sector of the industry.
However, the Nigerian Labour Congress(NLC) has reiterated its rejection of what it described as ”deregulation based on import-driven model”.
In the press statement signed by the President of the NLC, Ayuba Wabba, the labour movement described the whole arrangement of subsidy removal and the planned palliative as ‘queer and comical” and a monologue of the federal government with neo-colonial powers.
“The response of the Nigeria Labour Congress is that what we are hearing is the conversation of the Federal government with neo-liberal international monetary institutions.
“The conversation between the government and the people of Nigeria, especially workers under the auspices of the trade union movement on the matter of fuel subsidy, was adjourned sine die so many months ago.
“Given the nationwide panic that has trailed the disclosure of the monologue within the corridors of government and foreign interests, the Nigeria Labour Congress wishes to posit that it continues to maintain its rejection of deregulation based on import driven model.
“It is difficult to convince Nigerian workers why our dear country is the only country among the OPEC member countries that cannot produce its own refined petroleum products and thus adopts the neo-liberal import production model of refined petroleum products.
“We wish to reiterate our persuasion that the only benefit of deregulation based on the import-driven model is that Nigerian consumers will infinitely continue to pay high prices for refined petroleum products.
“This situation will definitely be compounded by the astronomical devaluation of the naira, which currently goes for N560 to 1US$ in the parallel market.”
NLC said that any attempt to compare the price of petrol in Nigeria to other countries would be set on a faulty premise and such comparison would be like comparing apples with mangoes.
“The contemplation by the government to increase the price of petrol by more than 200 per cent is a perfect recipe for an aggravated pile of hyper-inflation and astronomical increase in the price of goods and services.
“This will open a wide door to unintended social consequences such as degeneration of the current insecurity crises and possibly citizens’ revolt. This is not an outcome that any sane Nigeria wishes for.
“The argument that the complete surrender of the price of petrol to market forces would normalise the curve of demand and supply as is being wrongly attributed to the current market realities with cooking gas, diesel, and kerosene is very obtuse.
“The truth is that these commodities which Nigeria can easily produce have been priced out of the reach of most Nigerian families with the majority of our people resorting to tree felling and charcoal for their energy needs.
“Finally, we wish to warn that the bait by the government to pay 40 million Nigerians N5000 as a palliative to cushion the effect of the astronomical increase in the price of petrol is comical, to say the least.
“The total amount involved in this queer initiative is far more than the money government claims to spend currently on fuel subsidy.
“Apart from our concerns on the transparency of the disbursement given previous experiences with such schemes, we are wondering if the government is not trying to rob Nigerians to pay Nigerians? Why pay me N5000 and then subject me to perpetual suffering?”
According to Congress, the government’s decision to remove the petrol subsidy is “cloudy”.
“Clearly, government thoughts on the so-called removal of fuel subsidy is cloudy and appears to be a ‘penny wise-pound foolish’ gamble.
“It is clear that the palliative offered by the government will not cure the cancer that will befall the mass of our people who suffer the double jeopardy of hype-inflation while their salaries remain fixed.
“As we had done several times, we call on the Federal Government to consider various options that can help Nigeria navigate out of the quagmire constructed by the failure of successive governments to embrace developmental governance and accountable leadership. Some of the viable options that can help include:
“Insulate the domestic consumers from the market pressure brought about by the free fall of the naira by arranging with contiguous refineries not far from Nigeria to swap crude oil with refined petroleum products;
“Accelerate work on the rehabilitation of Nigeria’s four major refineries which are all currently operating at near-zero installed capacity; and
“Establish empirical data on the quantity of refined petroleum products consumed daily by Nigerians.
“It is unfortunate that this record remains a myth and a huge crater for all manner of official sleaze and leakages in the downstream petroleum sub-sector of Nigeria’s oil and gas industry.”, the NLC declared in its reaction.
However, the Senate Committee on Finance has questioned the rationale behind the government palliative to cushion the effect of removal of subsidy.
It would be recalled that the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the federal government will pay a N5000 monthly stipend to 40million vulnerable Nigerians to alleviate the impact of the subsidy removal.
But the Chairman of the Senate Committee on Finance, Adeola Olamilekan Solomon, said there was no provision for monthly N5000 transport grant to 40 million poor Nigerians in the 2022 budget currently being considered by the National Assembly.
He disclosed that the 2022 budget proposal contains fuel subsidy, but no provision for the proposed N5000 transport grant, which amounts to N2.4 trillion annually.
Solomon stated this while speaking with newsmen after presenting his panel’s report on the 2022 budget to the Appropriations Committee. He said before the executive could embark on such intervention, a proposal to that effect must be sent to the National Assembly for approval.
“The Minister of Finance, Budget and National Planning was quoted to have said that 40 million Nigerians would be paid N5000 as transportation allowance in lieu of the fuel subsidy.
”I don’t want to go into details for now. I believe that if such a proposal is to come to pass, a document to that effect must be sent to National Assembly for us to see how possible it is and how do we identify the 40 million Nigerians that are going to benefit.
”There are still a lot of issues to be deliberated upon and looked into if eventually, this will come to pass. How do we raise this money to pay these 40 million Nigerians because I know that even the federal government revenues are from this so-called oil and other sources.
”We don’t have anywhere in the budget where 40 million Nigerians will collect N5000 monthly as transportation allowance totalling N2.4 trillion.
”I know that there must be a budgetary provision for this for us (National Assembly) to consider. That is why I said it is still news out there until it is formally sent to the National Assembly for either a virement to the budget or reordering of the budget,”he said.
Mrs Zainab has claimed that the Federal government could no longer bear the burden of monthly subsidy payment of N250billion which translates to N3trillion annually but will pay N5000 monthly to 40million poor Nigerians which translates to N2.4 trillion yearly, a logic which the NLC described as queer.
Economy
Nigeria’s Oil exports face threat as US- Israel attack on Iran escalates, Strait of Hormuz blockade imminent
It links the Arabian/Persian Gulf, or just the Gulf, with the Gulf of Oman and the Arabian Sea beyond.
It is 33km (21 miles) wide at its narrowest point, with the shipping lane just 3km (2 miles) wide in either direction, making it vulnerable to attack.
Despite its narrow width, the channel accommodates the world’s largest crude carriers.
According to the US Energy Information Administration (EIA), about 20 million barrels of oil, worth about $500bn in annual global energy trade, transited through the Strait of Hormuz each day in 2024.The crude oil passing through the strait originates from Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE.
The strait also plays a critical role in the liquefied natural gas (LNG) trade.
On Saturday, February 28th, 2026, an official from the European Union told the Reuters news agency that vessels crossing the strait have been receiving very high frequency (VHF) transmissions from Iran’s elite Islamic Revolutionary Guard Corps (IRGC), saying “no ship is allowed to pass the Strait of Hormuz”.However, the EU official added, Iran has not officially closed the strait.
“Our ships will stay put for several days,” a top executive at a major trading desk told Reuters on condition of anonymity. Countries like Greece have also advised their vessels to avoid transiting through the waterway.
Any instability in this important maritime route could rattle economic stability worldwide.
The strait handles both oil and gas exports and imports.
Kuwait and the UAE import supplies sourced outside the Gulf, including shipments from the United States and West Africa.
The EIA estimated that in 2024, 84 percent of crude oil and condensate shipments transiting the strait headed to Asian markets.
A similar pattern appears in the gas trade, with 83 percent of LNG volumes moving through the Strait of Hormuz destined for Asian destinations.
China, India, Japan and South Korea accounted for a combined 69 percent intake of all crude oil and condensate flows through the strait last year. Their factories, transport networks and power grids depend on uninterrupted Gulf energy.
A spike in oil prices will impact countries such as China, India and several Southeast Asian nations.
How would the Strait’s closure impact oil prices?
According to Iranian state media, the country’s Supreme National Security Council must make the final decision to close the strait, and it has to be ratified by the government.But energy traders have been on high alert in recent weeks amid escalating tensions in the region – home to one of the largest reserves of oil and gas in the world.
Muyu Xu, senior crude oil analyst at Kpler, told reporters that since the war began on Saturday, there has been a sharp drop in vessel traffic through the strait.
“At the same time, the number of vessels idling on either side – in the Gulf of Oman and the Gulf – has surged, as shipowners grow increasingly concerned about maritime security risks following Tehran’s warning of a potential navigation closure,” he said.
“The Strait of Hormuz is critical to the global energy market, as roughly 30 percent of the world’s seaborne crude oil transits the waterway.
” In addition, nearly 20 percent of global jet fuel and about 16 percent of gasoline and naphtha flows also pass through the Strait,” Muyu said.
“On Sunday, March 1st, 2026, an oil tanker was struck off the coast of Oman, signalling a clear escalation of the conflict and a shift in targets from purely military facilities to energy assets.”
Shipping data showed that at least 150 tankers, including crude oil and liquefied natural gas vessels, have dropped anchor in open Gulf waters beyond the Strait of Hormuz.
The tankers were clustered in open waters off the coasts of major Gulf oil producers, including Iraq and Saudi Arabia, as well as LNG giant Qatar, according to the Reuters news agency estimates based on ship-tracking data from the MarineTraffic platform.
Moreover, on Sunday, March 1st, 2026,the United Kingdom Maritime Trade Operations (UKMTO) said it is aware of “significant military activity” in the Strait and said it has received a report of an incident two nautical miles north of Oman’s Kumzar, located in the Strait of Hormuz.
Muyu from Kpler said a broad range of energy infrastructure is now under threat. “This is expected to sharply intensify the oil price rally and could keep prices elevated for a sustained period, potentially longer than during last June’s conflict.”
Ali Vaez, director of the Iran project at the International Crisis Group, told Al Jazeera, “Closure of the Strait of Hormuz would disrupt roughly a fifth of globally traded oil overnight – and prices wouldn’t just spike, they would gap violently upward on fear alone.”
“The shock would reverberate far beyond energy markets, tightening financial conditions, fuelling inflation, and pushing fragile economies closer to recession in a matter of weeks,” he added.
When the US and Israel bombed Iran last June, there was no direct disruption to maritime activity in the region.
What does it mean for the global economy?
Any disruption to energy flows through Hormuz will also impact the global economy, driving up fuel and factory costs.Hamad Hussain, a climate and commodities economist at the United Kingdom-based firm Capital Economics, said that for the global economy, a sustained rise in oil prices would add upward pressure to inflation.
“If crude oil prices were to rise to $100 per barrel and remain at those levels for a while, that could add 0.6-0.7 percent to global inflation,” he said, noting that this would also lead to an increase in natural gas prices.
“This could slow the pace of monetary easing by major central banks, particularly in emerging markets, where policymakers tend to be more sensitive to swings in commodity prices,” he added.
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