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CNPP vows to truncate subsidy removal

By Our Reporter
The registered opposition political parties in the country yesterday vowed to join forces with the Nigeria Labour Congress, NLC, Trade Union Congress, TUC and other progressive patriots to resist the proposed withdrawal of fuel subsidy by the Federal Government. The parties which vehemently opposed the idea in a statement issued in Abuja, said they will do everything humanly possible “to protect the little benefits we drive from our God given Oil Resource.”

Operating under the platform of Conference of Nigerian Political Parties, CNPP, they agreed that not only the idea was alien, but said the Peoples Democratic Party, PDP, led Federal Government lacked the moral high ground, credibility and indeed the political will to prudently utilize the savings to provide the safety nets or provide critical infrastructure. The statement signed by the CNPP’s National Publicity Secretary, Mr. Osita Okechukwu, said: “On the vexed issue of removal of Fuel Subsidy, the CNPP, with uttermost sense of responsibility, highest consideration for the survival of our fledgling democracy and the need to save the little Nigerians benefit from our God endowed Oil Resource; candidly appeal to President Goodluck Jonathan to drop the idea of Fuel Subsidy Removal – that is abandon the Washington Consensus economic model and embrace the Nigerian Consensus.

“The subsisting national consensus is in favour of the prevailing fuel price in the market; indeed some Nigerians query why petroleum products are not as cheap as in Venezuela and other OPEC member countries? The puzzle has been why successive governments since our return to civil rule failed to build new medium refineries inspite of the unprecedented oil receipts. This school maintains that new refineries will not only provide petrol, kerosene and other derivatives; but provide employment to our teeming unemployed youths. We are not unaware that the Fuel Subsidy is bleeding blood heavily on our national treasury; however it is our considered view that the Peoples Democratic Party {PDP} led Federal Government lacks the moral high ground, credibility and indeed the political will to prudently utilize the savings to neither neither provide the safety nets nor provide critical infrastructure.”

Mr Ituah Ighodalo, Partner, SIAO Nigeria speaking to Vanguard said: “Fuel subsidy has caused a lot of distortion in our economy and even though petrol is relatively cheap it has led to a lot of misallocation of resources and greatly enriched only a few.

“My opinion is that it should be removed and let every one compete fairly. The price of products might go up and fuel inflation but it will stabilise and there will be efficiency. What Government should also do is make sure there is constant power supply, as this will reduce demand for diesel and fix our refineries while actively encouraging private sector participation in refining.

Mr. Seye Adetunmbi, Chief Responsibility Officer, Value Investing Nigeria on his part said: “The short-term effect may make the already impoverished masses worse off, likewise the already tasked/challenged manufacturing sector and may cause hike in inflation.

“The extent to which this short-term challenges may go or endure will depend on the judicious/prudent use and application of the money saved from the removed subsidy.

“In essence, it should be a bold step in the right direction towards impacting the economy positively in the long run, provided there will be probity in the public sector when the resources are channeled to salvage the infrastructural problems facing the nation.

“By implication, one’s fear is wont the poor masses be worse off in the final analysis. However, if it is executed and managed prudently by blocking the leakages peculiar to the Nigerian factor, then it may be what the economy needs to look up.”

It’s welcome dvelopment

Mr. David Adonri, Chief Executive Officer, Lambeth Trust and Investment Company Limited said: “It is a welcome development that the Federal Government of Nigeria has finally summoned the political will to remove petroleum subsidy. This is an audacious step towards total deregulation of the Energy industry.

”Like the telecoms industry post deregulation market, determined prices will create the enabling incentive for private capital formation to flourish in the Energy industry. Eventually, market mechanism will drive prices to competitive levels beneficial to consumers as currently witnessed in the telecoms industry.

“Petroleum subsidy has been a failed attempt at subsidizing consumption in an economy begging for subsidy on production. Whereas, it is through production that wealth is created and productive employment generated. If in 1980s, the Military regime had deregulated the Power, Energy, Metallurgical and telecoms industries as advised by IMF, the inefficiency of state monopolies in those industries would not have forced the country’s light industrial production into deceleration.

”Due to institutionalized corruption attendant to public finance in Nigeria, it has failed woefully to catalyze capital formation in the energy industry. This will be redressed when the industry is deregulated, paving the way for capital formation through private equity type finance.

Removal of petroleum subsidy is just a step towards eliminating the structural imbalances in the economy. Sustainable macroeconomic transformation will occur only when the Federal Government privatizes all state enterprises that still occupy the commanding heights of the economy. The economy can no longer continue to endure under their inefficiencies.

Organised Labou sticks to position

But organized labour stuck to NLC’s anti-removal position, saying that its position remains the same. “We are strongly opposed to any hike in fuel prices in the name of subsidy removal and indeed any new policy that will further impoverish Nigerians. We are opposed to any new policy that will undermine the new minimum wage. Whether you call that policy subsidy removal or fuel price increase, we have opposed it before and we are going to strongly oppose it again.

“Do not forget that we have done all our studies on this and have a comprehensive report on it. We believe strongly that Petroleum sector just like any other sector needs a holistic restructuring. We must move from importation of petroleum products as the sixth largest producer of oil to value-adding activities of refining our crude oil.

“We must move from import to refining of petroleum products. We must move from servicing other refineries abroad to building our own refineries. We are even encouraged that President Jonathan said in a broadcast speech that Nigeria is going to build more refineries while reviving the old ones. This is what the president should concentrate on. This is what he was elected to do. “He never campaigned that when he gets to office within one year, he will increase prices and inflict more hardship on Nigerians. The country is already tensed with physical insecurity, we have challenges of physical insecurity and we should not add economic insecurity, we should not add income insecurity. Because more inflation and eroded income mean economic insecurity, angry workers, angry masses that pay more for transportation, for food cannot be patience with any government. I know that NLC under the leadership of Comrade Abdulwaheed Omar has made NLC’s position known and as affiliate of NLC, we are committed to that NLC position.

“We are already down economically. As a matter of fact, it is the Nigerians that are subsidizing the government. We subsidise by buying generators to power our houses and factories, we buy diesel at deregulated prices, we subsidise by building our boreholes and wells in the absence of public water supply, we subsidise by looking for money to pay school fees for our children because of absence of public schools, we subsidise by getting private security because for whatever reason, the Nigerian Policemen are not coping with the challenges of insecurity. We are the people who need sympathy because we are the people subsidizing the government. The only way government will pay for our subsidy as the case maybe, is to make sure the government does not add additional burden on us through fuel price increases.

“President Jonathan is talking about transformation agenda, you cannot transform if you do not have a new transformed idea. This is the same old debate that we have been having in the past 20 years which has put Nigeria in this precarious situation. In 1987 when IBB started this madness of fuel price increase, we were buying fuel at about 50 kobo per litre, today the price is N65.00. Look at the increases, yet they are still telling us subsidy is still there. I think there is something that is completely wrong. President Jonathan should govern the country and not to rely on market forces. To govern means that we must remove all the leakages in the distribution of the petroleum products. What are the leakages? Check the templates of the fuel price now, three quarter of the money they are passing on the masses and the poor workers, has nothing to with the price of petroleum product.

“They talk about demurrage which importers have factored into the price, they ask you and I to pay. They will import and delay clearing and do business with customs to incur demurrage and pass the price on us. There is also banking charges, they also charge haulage fees and pass on to the consumers. How can a country so endowed put tankers on the road to move products from Apapa to Maiduguri when you have railway that is not working? Government must lower cost. Nigeria cannot be competitive and be part of the 20 leading economies in the World by 2020 with the high cost of business. Fuel price increase will lead to higher cost, it will lead to more factory closures because companies have to pay more, they will pay more for production and transportation among others because we do not have other means of transportation. Not only that, workers that they have employed must also ask for more pay at a time they that have not implemented the existing pay.

“The politics of this whole thing is also in the best interest of President Jonathan, he should not bring any issue that he never campaigned for to us. Nigerians gave him mandate. He said he will fix refineries, he will make petroleum product available and cheaper, he will build roads among other promises, he never told us that when he gets there he will remove subsidy or increase prices. To do so will be a violation of the mandate we have given to him and it will be an abuse of trust. The burden is on him because he is the one that was elected. The others who call themselves ministers, they are just appointed and they are not accountable to anybody or facing the electorate. So, elected people should never short change us when they get to office. They should keep to the mandate which they promised us.


NUPENG kicks


Also commenting, President of the National Union of Petroleum and Natural Gas Workers, NUPENG, Comrade Achese Igwe said: “The conditions for full deregulation have not been met by the Government.

The NUPENG President who dismissed the claim that deregulation will not lead to higher prices of the product, insisted that deregulation would definitely lead to higher prices. “The Workshop noted the Federal Government’s subtle campaign for a full deregulation of the downstream petroleum sector. It, however, reiterated a standing resolution that certain irreducible minimum must be put in place before a total deregulation of the downstream petroleum sector will be acceptable to PENGASSAN and the Nigerian masses.”

Some of the requirements before the total deregulation of the downstream sector by the Federal Government included; socio-economic relief measures to assuage the impact of import driven deregulation with affirmative enabling policy to stimulate local production within a defined timeframe, affirmative arrangement for the provision of affordable mass transit buses, rail systems and water transportation, and effective maintenance and repair of roads for affordable alternative means of transportation of people and goods.”


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