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Economy without fuel subsidy: Matters arising

By Udeme Clement

There is no doubt that the sudden removal of the controversial fuel subsidy in the beginning of the first quarter of 2012, after years of debates on the issue and corruption surrounding the subsidy, is unsettling to most Nigerians. The removal, which commenced by January 1 when most people were still in the mood of celebration for the new year, has created so much tension in the system.

While the Federal Government emphasised that subsidy must be jettisoned to pave the way for tangible economic growth and development, Labour said government must fulfil certain conditions in terms of infrastructure development and provision of public goods to prevent poverty that has already taken its toll on the people.

When Sunday Business visited petrol stations within Lagos and Ogun states, it was observed that some retail outlets were not dispensing the petrol at all, while others sold for between N150 and N145 per litre, as against the initial pump price of N65. Only NNPC service outlets sold a little below N145. There were discrepancies in the system. For instance, the NNPC service station at Oregun dispensed for N138 per litre with long queues from the station premises to the major road.

Outlets of African Petroleum (AP) along Ikorodu Road sold for N145, while some AP outlets along Oshodi Apapa Road dispensed for N150. Total, Oando, Mobil outlets in Lagos sold for N140. MRS outlets in Akute and Olambe areas of Ifo local government area of Ogun State sold for N150 per litre. Most NIPCO stations visited were closed. Most filling stations within Surulere were not selling at all. Also some smaller outlets in Akute dispensed at N160 with additional N5 per litre for those buying into Jerrycan.

Also, the multiplier effect is biting hard in the transport sector as fares doubled. For instance, a distance from Oshodi to Apapa, formerly N150 now goes for N300, from Ojota to Ojeulagba previously N100 now goes for between N200 and N250 depending on the size of the vehicle, from Ikorodu to Ojota formerly N100 now goes for N200 and from Oshodi to Sango, formerly N150 now goes for N300 and above.

The issue of subsidy removal took a new dimension in December last year when President Goodluck Jonathan presented budget 2012 to the National Assembly without allocation for subsidy. Prior to the presentation of the budget, government suggested that petrol may be sold for N120 per litre from January 1, 2012 as against N65 per litre, but later moved the date to April 1, due to opposition from the people.

Statistics show that, in 2009, government spent about N1.5 trillion on subsidy on petroleum products. This implies that what government pays on petrol subsidy alone every year is about N700 billion and when other petroleum products are added, it amounts to N1.5 trillion, which is almost like a capital budget for the economy.

In 2011, the amount spent on subsidy was estimated at N3.4 trillion. It was further revealed that the money paid on subsidy went into wrong hands and the impression that the masses as well as oil marketers benefited from the money was errorneous, even as some stakeholders advised that the money be channelled into local production to increase local capacity utilisation in the petroleum sector of the economy.

Accordingly, Labour maintained that instant abolition of subsidy with low purchasing power of the masses, high level of poverty and prevalent unemployment in the country may cause confusion in the system.

It was suggested that government should first develop infrastructure, after which a systematic approach may be adopted in abolishing the subsidy and the money be re-directed into local production, so that more refineries can be built to boost production capacity to meet demands in the country. Stakeholders spoke on the issue of the fuel subsidy removal.

Labour must continue to protect the interest of workers-President, Nigerian Labour Congress (NLC)-Comrade Abdulwaheed: “Our duty in NLC is to protect the interest of workers and that is what we must continue to do. We are still discussing with relevant stakeholders in the sector and will continue to fight on the side of the masses.

The masses deserve better treatment from government and not policies that will further impoverish them.  We are opposed to subsidy removal and no amount of intimidation will deter Nigerians from reclaiming their country.

Government earlier invited Labour to a follow-up discussion on the issue of fuel subsidy removal only for it to abort the process by removing the subsidy suddenly.  Also, government said it was consulting with Nigerians and relevant stakeholders on the issue of subsidy only for it to announce a new fuel price.

Government also said that if the subsidy is to be removed, it will take effect from April 1, 2012 only for it to carry out same on January 1, 2012. We will issue a clear directive on the date and how a nationwide strikes and mass rallies will be carried out.

Government has failed Nigerians on subsidy removal-South-West chairman, National Union of Petroleum and Natural Gas Workers (NUPENG), Alhaji Tokunbo Korodo: The sudden removal of fuel subsidy without proper agreement with the people and labour shows that government had failed Nigerians. We must see the action of government as a battle against all Nigerians and not labour alone. We are not in support of removal of subsidy with the level of poverty in the country and our opposition remained unchanged.

Subsidy removal is unacceptable- Chairman, Petroleum Tanker Drivers (PTD) in Lagos , Comrade Mudashiru Ayinde Azeez: Our position is the position of NLC and NUPENG. We gave government conditions and government should endeavour to meet those conditions before subsidy removal. Why should government remove subsidy with the state of bad roads in the country?  We will comply with the directive from NLC and will withdraw our vehicles from the roads if government refuses to listen to the people.

Subsidy removal is uncalled for and we will not accept it in any form. Our roads are bad and the people are already facing untold hardship and the government is not doing anything to alleviate their sufferings. We must join hands with NLC and other Nigerians to resist the action of government on subsidy.




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