By Okey Ndiribe
The storm is already gath ering once again over the Federal Government’s recent decision to remove subsidy from the price of fuel from next January.

The Nigeria Labour Congress (NLC) held a meeting of its National Administrative Council in Benin last Thursday to consider measures to adopt in responding to the Federal Government’s new resolve to implement a complete deregulation of the downstream sector of the petroleum industry.

President Goodluck Jonathan had in a recent letter he wrote to the National Assembly informed the law-makers about his government’s plan to begin the removal of fuel subsidy next year.

The President in the letter conveying his administration’s Medium Term Economic Framework (MTEF) and a N4.8tn budget for the 2012 fiscal year, stated that , “A major component of the policy of fiscal consolidation is government’s intention to phase out the fuel subsidy, beginning from the 2012 fiscal year.

“This will free up about N1.2tn in savings, part of which can be deployed into providing safety nets for poor segments of the society to ameliorate the effects of the subsidy removal.”

Ever since the letter was presented to the National Assembly, it has generated so much heat across the country. The labour movement and civil society groups opposed to the proposal have been very loud in the rejection of the proposal. The unpopularity of the proposal may have swayed the Senate against it when it was presented before the upper legislative chamber last Wednesday. Indeed, the Jonathan administration may not find the proposal to be a smooth-sail through the National Assembly. he Senate was sharply divided over the issue.

Instead of being favourably swayed by the executive’s proposal, the Senators decided to probe the Nigeria National Petroelum Corporation (NNPC) over the manner the N240 billion which was appropriated by the National Assembly for funding petrol subsidy ballooned to an estimated N1.2 trillion as contained in President Jonathan’s letter to the federal legislature.

The motion calling for NNPC to be probed was sponsored by Senator Abubakar Saraki and 14 others. While moving the motion, Senator Saraki had called on the Senate to investigate the management of the subsidy adding that the mismanagement of the subsidy in 2011 budget would frustrate the funding for 2012 appropriation.

On its own part the leadership of the NLC had already spat fire even before going to Benin.

Top officials of the NLC had vowed to resist the Federal Government’s proposed removal of subsidy from the price of fuel.

Speaking to Saturday Vanguard on the issue , the Acting General Secretary of NLC Comrade Owei Lakemfa had queried the government’s inability to efficiently utilize revenue that had been at its disposal to provide security and other basic needs of Nigerians before asking for more. Owei lambasted the Government for borrowing the same arguments that had been used by past administrations to justify the need for withdrawal of subsidy from petroleum products.

Said he: “The ten plate of the Petroleum Products Pricing and Regulatory Agency (PPPRA) is that the landing cost of fuel includes charges for freight, insurance and other port fees into that of imported fuel which raises the price of the product. They then turn around to say they are subsidizing the price of fuel”

He pointed out that all these charges wouldn’t have arisen if petroleum products were locally refined adding that the Government ought to ensure that petroleum products were locally refined before implementing the deregulation policy in the downstream sector of the oil industry.

According to him: “The argument advanced by Government for the withdrawal of fuel subsidy is the same worn out position that has failed Nigeria in the past”

He accused the Government of allowing itself to be coerced into adopting economic policies of the International Monetary Fund (IMF) and the World Bank which have always been harmful to the interest of the Nigerian masses.

Said he: “It is tragic that 51 years after independence, our Government cannot take decisions independently. They only implement economic policies that are imposed on them by these foreign financial institutions”.

He accused the Government of not consulting other stakeholders including NLC and Nigerian Employers Consultative Assembly (NECA) before making its pronouncement on the proposed plan to withdraw subsidy from fuel adding that the NLC had consistently insisted on minimum conditions that have to be satisfied by government before fuel subsidy could be removed.

According to him: “We have told them that they must fix the refineries so that we can refine our crude oil locally. They must also rehabilitate the railways so that this can facilitate mass transit and ensure that Nigerians would not be too affected by the deregulation policy in the petroleum sector”

Nevertheless, some analysts have opined that the proposal should be carefully considered before a decision is taken on it. For instance, it has been pointed out that what the nation is presently suffering from is largely traceable to long period of non-investment in the sector. For instance, available records indicate that between 1965 and 1989 four refineries were established in the country. But no new refinery has been established since 1989. Meanwhile demand for fuel in the country increase astronomically within the same period.

Apart from that, the refineries were also neglected for a long time. Some analysts believe that it is this protracted neglect that has led to the prevailing situation in the country leading to fuel importation amidst abundance of crude oil in the country.

Indeed, the Government’s proposal has been welcome as the only way forward by some analysts. For instance, Mr Remi Omotosho, a former Director-General of the Lagos Chamber of Commerce and Industry (LCCI) and one-time Executive Director of Unilever Nig. Ltd who spoke to Saturday Vanguard welcomed the Government’s proposal but insisted that it must win the confidence of the people first before it could be implemented.

Sounding philosophical he said both those who are proposing the removal of fuel subsidy and those against it are right.

Said he: “ Those who don’t want the subsidy to be withdrawn are right when you consider their position from the perspective of the Government’s credibility. This is because if we had a situation where in the past what was realized from previous removal of subsidy was used to support the people, I don’t think the opposition against it would be as vehement as it has been. The Government has not lived up to expectation in providing the basic needs of the people, be it in the area of power supply, education or health.

He continued: “Government has been talking to us about economic growth that is not seen. There is a disconnection between what the Government is saying and that the people are seeing on the ground. So, if that credibility gap is closed, the people would listen about arguments for economic advancement.”

He also posited that on the other hand, the Government which has been asking for the withdrawal of subsidy from petrol is also right adding that this is only to the extent that whatever is realized from that exercise is ploughed back into the economy for the benefit of Nigerians.

Said he: “Right now as we are talking, there is no subsidy on diesel; subsidy on diesel has been withdrawn about three years ago. So if you go to some filling stations in Lagos, you would find some of them selling a litre of diesel for N145 while others are selling for N155; the market is now the regulator of the price.

The industrialists have been buying diesel to run their generators due to lack of power have been carrying on; this is part of why our operational costs are so high. But what can we do?”

He said what he thinks the Government ought to do is to explain to the people in a credible manner, the advantages that would accrue to them as a result of the withdrawal of fuel subsidy.

“As far as I can see one of the advantages is that more investors would come in. When the telecommunications sector was deregulated, private investors came in and today many of them are there. Some of them include Airtel, Glo, MTN, Etisalat and many others. They have performed well and now every Nigerian is carrying a mobile telephone in his pocket. My washer-man and even the butcher all have their telephone lines. If subsidy is withdrawn and private licenses are issued to investors, oil blocks should also be allocated to them from which they can mine” he said

He maintained that private investors should not be made to rely on NNPC for the supply of crude oil. Said he: “What I think would happen is that local refineries would work and as a result they would provide employment for thousands of Nigerians. Secondly, the cost of petrol and all other by-products of crude oil may not necessarily hit the roof. This is because they would operate in a more efficient manner producing locally.”

He argued that one of the reasons why the price of fuel is so high in the country was that “we export our crude oil to Europe or Brazil for refining; in order to do this we have to pay for the cost of freight; then when the refined product is ready, we have to import it and pay for the cost of freight once again. When you add the cost of freight on export of crude oil and importation of finished products, the total cost becomes astronomical.”

He reasoned that if crude oil is refined locally, the cost of freight both ways would be eliminated adding that more employment would also be generated.

He further stated that Small and Medium Enterprises could leverage on the fact that refining of crude oil is now done locally adding that there are people who are engaged in one type of production or the other at their backyards.

According to him: “If the Government can put the N1.3 trillion it is currently spending to subsidise the price of petrol into rehabilitating the educational or health sector, or pick about two or three roads for rehabilitation, they can then point to these achievements and say to the people that these are the things we have been able to achieve with the money withdrawn from subsidy. We must move from the era of ear-marking to eye-marking. The people must see with their own eyes what has been achieved with subsidy that has been withdrawn.”

Responding to NLC’s position that the refineries should be repaired before fuel subsidy could be removed he said he opposed the idea of allowing the refineries to be fixed and operated by the same people adding that he would rather support that the refineries be sold to private investors before they are fixed

Said he: “As an Executive Director at Unilever, I was on the board of that company for about 11 years. I worked in the Logistics unit of the company for 15 out of my 28 years of service. I was closely connected to the refineries; I know that they never worked. They always worked epileptically. There were a lot of vested interests in the government circles that never allowed the refineries to work efficiently. So if you fix the refineries and you ask the same people to run them, they would not operate for one month before something would get spoilt again. Go and check the history of the refineries.”

He maintained that only private investors could manage the refineries efficiently.

“ If the private investors take over the refineries, they would not take fixed prices for petroleum products. They would allow the market to regulate prices for them” he said.

By Tina Anthony, Dutse

Proposed removal of oil subsidy will add pains to Nigerian – Former IPMAN boss

The former North West zonal chairman of Independent petroleum marketers of Association of Nigeria, Alhaji Sani Yau Babura has advise the federal government to yet to the popular demand of the masses, saying removing the subsidy will further pains to Nigerians

Alhaji Yau noted that those adding the federal government from the corridors of powers have no idea how the common Nigerians are surviving in every part of the country, adding that implementing the advice will be too harsh to the majority of the citizens of this country’s.

“The federal government must to allow themselves to adopt ill proposal by some few government officials to remove fuel subsidy under the present situation where Nigeria nationwide depend on fuel to run their small businesses in the absence of electricity”, he warned.

According to him, removing subsidy in the face of the present hardship being experienced daily by Nigerians, will also make nonsense of the new minimum wage approved by the Federal government because it is just like giving something with the right hand and taking it back with the left considering that the percentage of working Nigeria are below 20percent.

He then called on the federal government to consider repairing and even establishing modern refineries instead of causing the Nigerians common man more pains, ‘ I suggest that government should work toward reducing importation of petroleum product which the nation is endowed with”, he added.

“it is a shame that over the years, the federal government hailed to repair our obsolete oil refineries, instead they chose to threaten the poor masses for their failures’, I believe we our existing refineries are refurbished they can produce at maximum capacity and reduce the high rate of embarrassing importation of what we have in abundance’.

He also noted that government effort in checkmating the activities of oil -bunkerers should be double and address because it will help government in curtailing waste and loses record through activities of oil-bunkery in this country, adding that removing the subsidy is not the solution to te problems in the oil sector.

“Since the Federal Government has acknowledged that there is corruption in fuel distribution chain and it knows those responsible for it, it should go after them rather than pass the burden on suffering Nigerians”.