The organised private sector has thrown its weight behind
the call on the Federal Government to remove fuel subsidy.
National Vice President, Nigerian Association of Chambers of
Commerce, Industry, Mines and Agriculture, NACCIMA, Mr. Billy Harry, yesterday,
supported the scrapping of subsidy on petroleum products, saying subsidy has
failed to benefit ordinary Nigerians over the years.
Also, the Director General, Lagos Chamber of Commerce and
Industry, Mr. Muda Yusuf in a statement said: “The biggest hole in the finances
of government in the country today is related to subsidy payments. There are
two components of this. The first is the actual subsidy, which is the
differential between the pump price and the landing and other costs of fuel.
The second (and more disturbing component) is the corruption inherent in the
fuel subsidy regime.
“For several years, the economy suffered severe bleeding
from this phenomenon. Although it is not clear whether there has been any
policy pronouncement on whether or not to retain the subsidy regime, the truth
is that it is not sustainable. It is in the overall interest of the economy and
citizens for it to be discontinued.”
Speaking in the same vein, Dr Godwin Ichimi, a Research
Fellow at the Nigerian Institute of International Affairs, NIIA, disclosed that
fuel subsidy is not economically sustainable, especially with the activities of
a “callous cartel.”
According to him, in the analysis of fuel subsidy removal,
the question that should be asked is: how will the removal impact the average
Nigerian and what will be the benefit to Nigerians?
But the Nigeria Labour Congress and Trade Union Congress,
however, warned President Muhammadu Buhari that their members will resist any
attempt to remove fuel subsidy.
The leaderships of the Trade Union Congress, TUC, and the
Nigeria Labour Congress, NLC, told Vanguard, yesterday, that any attempt
by the President Buhari-led government to remove subsidy will lead to a serious
unrest in the country.
Complete deregulation of oil and gas sector
Stating the position of the private sector, Mudal said: “The
budget provision for PMS subsidy in 2014 was N971.14 billion while the figure
for kerosene subsidy was not disclosed. In the 2015 draft budget from the
executive, the provision for PMS subsidy was N200 billion while that of
kerosene was N91.03 billion. Evidently, the numbers would be much more than
this even before the first half of the year.
“One of the critical elements of the oil and gas sector
reform, particularly the downstream sector,” according to Mudal, “is the
complete deregulation of the sector. This will create a number of advantages
for the economy.
“It will free resources for investment in critical
infrastructures such as power, roads, the rail systems, health sector,
education sector etc. The deficiency in all of these infrastructure areas are
phenomenal. Fixing infrastructure will greatly improve productivity and
efficiency in the economy and impact positively on the welfare of the people.
“It will boost private investment in the downstream oil
sector especially in petroleum product refining. This will ultimately reduce
importation of petroleum products and ease the pressure on the foreign exchange
market as well as foreign reserves.
“It will eliminate the rampant patronage, rent seeking
activities and corruption that currently characterise the downstream oil
sector. It will create more jobs for the teeming youths of the country in the
downstream oil sector as investment in the sector improves.
“Having said that, it is desirable for a clear policy
pronouncement to be made in order to give a clear direction to investors. There
is still so much policy uncertainty with regard to the downstream oil sector
and this is creating lots of problems for investors.”
Hidden agenda
According to Harry, who is also the Chairman, National Oil
and Gas Trade Group, the subsidy regime had served as a hidden agenda by some
unscrupulous individuals to further enrich themselves.
He said: “Let us clearly define what the petroleum product
in Nigeria should be, how much it should be sold, refined and how much it
should be sold to the ordinary Nigerians on the streets. Now this clearly will
define where we are.
“If you look at the last few years, we have bought petrol
for as high as N250 per litre, and you wonder, who are the people causing this?
The President and his team in the Presidential Villa have a Total filling
station that is packed with petrol for them at no price. There is just no
benefit for the ordinary Nigerian.
“In the period of scarcity, it is the ordinary Nigerian that
suffers and this is, therefore, draining scarce resources that ordinarily
should be put into growing the economy in the small and micro businesses.
“Think about it, if you needed 1,000 litres to run your
light in say for one month and you have already bought fuel for say N250 per
litre, that means you have spent N250,000 which could have already bought some
little machines, make a bakery or do something that could make an impact in the
economy by feeding Nigerians and also creating wealth and employment.”
Transparency in Nigeria’s oil and gas sector
He further called for transparency in the Nigeria’s oil and
gas sector, stating that the country should consider extending the subsidy
programme in the agriculture sector to the oil and gas sector and other sectors
of the economy.
He said: “There is no need for subsidy to stay; it should be
removed. Let petroleum marketers import products genuinely or go into refining
agreement with the Federal Government with clearly defined transparent cost of
crude oil sold, transportation and logistics for refining and actual landing
price that will be affordable by Nigerians.
“I am not saying that they should regulate the price but I
am saying that the process by which crude oil is exported or sold or refined or
product imported should be put on a very clear platter of transparency.”
NLC, TUC vow to resist subsidy removal
Meanwhile, the organised labour has told President Buhari
not to accept the recommendation of the Transition Committee that advised him
to remove subsidy from the petroleum products and promised to resist any such
policy from the government.
The leaderships of the Trade Union Congress, TUC, and the
Nigeria Labour Congress, NLC, yesterday, told VanguardNews that any attempt
by the President Buhari-led government to remove subsidy will lead to a serious
unrest in the country.
The National President of TUC, Comrade Bobboi Kaigama, in a
telephone interview with VanguardNews in Abuja said the recommendation was
not going to work out and that any abrupt policy will lead to a serious unrest.
He said: “It is not going to be tenable with the labour and
Nigerian masses. If they want to remove subsidy abruptly, there will be serious
unrest.”
He said what the government should do is to set up a panel
for forensic audit of the oil subsidy, and not to allow what he described as
‘few criminals” to hold the country to ransom.
He said removing subsidy would amount to punishing Nigerians
because of the activities of few cabals within the oil and gas sector, adding
that even if the government finally decided to withdraw the subsidy, there must
be an agreement and the palliative put in place to cushion the effects on the
workers in the sector.
“Any attempt to withdraw subsidy, Nigeria workers will come
out,” Kaigama stated.
Also commenting, the factional National President of the
NLC, Comrade Ayuba Wabba, said it will be an ill advice to the president to
remove subsidy.
Wabba said: “I also hope that it is not these same cabals
that have held all of us to ransom that are bringing these recommendations,
because those cabals have also been responsible for sponsoring people to
elective positions.
“These are facts we are aware of. In fact, they are the
major donors to campaign purse. I hope it is not this same cabals that are also
canvassing at this point in time.
“Whatever you do to increase the price, it will be at a cost
to ordinary Nigerians. Many Nigerians today cannot have three square meals at
their table, it will be additional hardship on them if the essence of removing
subsidy is to increase the price.
“But if on the contrary removing subsidy will not increase
the price, I think we will be in for it. But the major point is that we will
not support any policy that will further make Nigerians suffer for it.”
On if the government decides to go ahead to implement the
recommendation, Wabba said: “Certainly, we will engage the process because
removing it without taking into cognisance those issues we have raised, those
concerns we have raised, where Nigerians will then suffer more and pay more,
certainly people will react and certainly labour will go with the majority of
the masses in reacting to this.”
Issue of subsidy has implications
He explained that the issue of fuel subsidy has a lot of implications
especially economic implication as all businesses being small enterprises were
being driven by individuals through their own personal efforts because the
national grid was not functioning effectively.
He said: “Therefore, once you increase the price of
petroleum product through a process of deregulation, you are allowing marketers
to determine prices at their whims and caprices.
“This has happened almost two weeks ago where they decided
on their own, to hold all of us to ransom and we have seen the consequences on
the economy of our country even on our national security. Because the national
security of the country at that point was also threatened.
“I will remember as an organised labour, we made our
positions very clear, that first, let us address the inherent corruption in the
system. You must do the first thing first, we are not saying you cannot look at
the issue of deregulation, but first, let us look at the issue of inherent
corruption which has been established.
“It is obvious that the issue of corruption in the oil and
gas sector has been established from the last episode of 2012 where the
government unilaterally tried to withdraw the subside or what they termed as
partial withdrawal of subsidy which is also a flute.
“With the recent happenings of the last one month, you
should also know that it is not a one jacket approach issue. Diesel has been
fully deregulated, but in the last one month when marketers ganged up and came
up with the issue of wanting to be paid subsidy, the issue of diesel was also
affected.
“In fact, diesel price skyrocketed from about N146 per
litter to over N200. Diesel has been fully deregulated and therefore it is a
clear example that we cannot at this point in time, contemplate removing subsidy
hook, line and sinker without looking at the implications.
“So, as an organised labour, certainly, we are not going to
succumb to those polices that will have serious implication on our economy as a
country. In fact, the implication will better be imagined if those issues come
to play and they have come to play just in a month back.
“It is equally an eye opening to us, recently IPMAN
addressed a press conference to say that the entire process of the subsidy
issue is a fraud and therefore they also gave options.
“If insiders who are also part of this racketeering who have
also benefited at this point in time will come and give us this credible
information, I think that is what government needs to look into.
“Our first option is let us clean up the system and also
show that people are going to refund money because it is very clear from the
episode of 2012 that a lot of people have been paid money they have not worked
for.
“People just helped themselves and they got money that they
have not worked for. So, the first thing is let us draw a line and clean up the
system and even understand the economics of importation of the product.
“How much does it cost to import refined product that is
even in the interim because as a long term measure, NLC has canvassed over
years that successive government must be able to have the capacity to develop
and build our refineries so that we can be able to refine our products for our
domestic use.
“Is it not an irony that over 30 decades when these very
important commodity and resources have been discovered that we have not made
any efforts to try to have capacity internally for domestic use.”
Removal’ll reduce borrowing — Adonri
Speaking in the same vein, Mr. David Adonri, Chief Executive
Officer, Highcap Securities Limited, said: “The amount of money used by the
Federal Government for fuel subsidy every year is almost equal to amount
borrowed.
“Removal of the subsidy will materially reduce borrowing and
could lead to fiscal consolidation. As a result, interest rate will decline,
leading to boom in the productive economy. Any consumption subsidy at this
stage of development is bad economic policy.”
Put palliatives in place before removal — Akpan
Also, Professor Oto-Abasi Akpan, Head of Department, History
and International Relations, Akwa Ibom State University, in a text message to Vanguard,
said: “The removal of subsidy is more than apt; I had advocated that since
2011.
“But before the removal, there has to be in place cushioning
mechanisms, otherwise it would be disastrous. Long term effects would be low
prices of fuel as a result of competition and high productivity.”
Subsidy no longer economically sustainable —
Ichimi
On his part, Dr Godwin Ichimi, a Research Fellow at the
Nigerian Institute of International Affairs, NIIA, said fuel subsidy is not
economically sustainable, especially with the activities of a “callous cartel.”
According to him, in the analysis of fuel subsidy removal,
the question that should be asked is: how will the removal impact the average
Nigerian and what will be the benefit to Nigerians?
He said: “What are the social safety nets that would be put
in place to cushion the attendant hike in the standard of living of Nigeria? To
me, if the government remove subsidy and tinker with some of the country’s
macro-economic indices, this will ensure a win-win for everyone.
“However, with President Buhari’s credentials, I am hopeful
that in removing the subsidy, he will ensure that the revenues saved are
ploughed back into growing the economy and ensuring that citizens benefits.
“It is also hoped that the Buhari administration will block
all the leakages while a myriad of safety nets should be put in place to
cushion the effect of the increase in petroleum products prices and other
commodities on the lives of ordinary Nigerians.”
Enugu residents call for overhaul of refineries
A cross section of Enugu residents on their part called for
proper overhaul of the refineries before the proposed removal of oil subsidy.
Some of the residents, who spoke with the News Agency of Nigeria (NAN) in
Enugu, yesterday, decried the current state of refineries in the country. A
civil servant, Mr Emeka Nebo, advised the government to ensure that the
refineries were functional before the removal of subsidy on petroleum products.
“If at all the government is insisting on removing oil
subsidy, all our refineries must be put in good shape so as to serve the people
effectively. I strongly believe that if the Warri, Port-Harcourt, and Kaduna
refineries are working as they ought to, we will not be complaining about fuel
scarcity,” he said.
Another civil servant, Mr Donald Odenigbo, urged the
government to be ready to increase workers’ salaries as soon as it removed the
subsidy. “You cannot remove oil subsidy without increasing salaries of workers
to cushion the negative effect.
“There is no palliative measure than that, because prices of
everything in this country will definitely increase,” he said.
Mrs Phina Nwosu, a lawyer, said that the government should
not discuss anything on subsidy removal because it would pose a serious threat
to the people.
“Government should not discuss removal of oil subsidy now
because it will increase the suffering of the people. The past administration
wanted to do that but it received knocks from labour and the opposition. Why
now?” she queried.
Nwosu joined the call on the Federal Government to urgently
put the refineries in order for sustainability. A petroleum dealer, Mr Solomon
Amalu, said that he believed that the removal of oil subsidy would make fuel
available in every filling station.
Uju Okoye, a student complained that removal of oil subsidy
would amount to increase in prices of goods and services. According to her, if
it is done, school fees, prices of books, transportation, food and everything
will increase astronomically and people will suffer.
“I am calling on all Nigerians to get ready for hard times,”
she said.
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