By Dele Sobowale

Part 1 in this series ended with the rationale for discontinuing subsidies. The secod part will summarise the key objectives of the SURE Programme. Then it will start with the in-depth analysis of the programme and leave it to Nigerians to decide if the programme is convincing.

PROGRAMME OBJECTIVES

13. The objectives of the proposed Subsidy Reinvestment and Empowerment Programme are: 1. To mitigate the immediate impact of the petroleum subsidy discontinuation on the population, but particularly for the poor and vulnerable segments…

2. To accelerate economic transformation through investments in critical infrastructure projects…  3. To lay a foundation for the successful development of a national safety net programme that is better targeted at the poor and most vulnerable on a continuous basis.

That part of the document ended by making the following declaration. “This document therefore focuses on the portion of these resources that the Federal Government is responsible for administering. The following components of the national programme will be implemented over the next 3 to 4 years”.

PROGRAMMES LISTED IN THE SURE DOCUMENT 1. Maternal and Child Health Services: to be established nationwide with 3 million pregnant women as potential beneficiaries; mobilization of [unspecified] thousands of female community and village health workers.

2. Public Works/Women and Youth Employment Programme: designed “to provide temporary employment [underlining mine] to youth in labour intensive public works; the “direct women and youth employment intervention will target….youth from the poorest populations”; “these women and youth shall receive payments based on the amount of work put in”; “the level of remuneration …will ensure the self-selection of only the poor”.

3.Urban Mass Transit Scheme: “objective of this scheme is to increase mass transit availability”; “the project will involve the provision of zero-interest loans to establishes transport operators…

4.Vocational Training Schemes: “There will be vocational training centres in all the states in the country and FCT. 5.Road Infrastructure Projects: “The roads that are to be completed under this programme will cover a total distance of 1,326 km. From our analysis, [unspecified] thousands of jobs will be created”.

6.Rail Transport Projects: “This component of the programme will entail the rehabilitation and restoration od our abandoned railway infrastructure and the construction of new standard gauge railway lines, thereby providing alternative means of transportation of people and goods across the country…The following specific rail routes will be completed under this [SURE] programme… Total: 3,877 km.

7.Water and Agriculture Projects: “This programme component will harness Nigeria’s abundant water resources ….through sustainable food production and water conservation..

8.Irrigation Projects: The revitisation of the irrigation projects will increase local production of rice by over 400,000 tons per year and other food crops, thereby reducing importation of food into Nigeria…[19 Irrigation projects were listed covering 28,850 hectacres and envisaged to increase output by 422,000 tons per year].

9.Urban Water Supply Projects: “The Rural and Urban Supply Projects will upon completion, increase the level of water supply available to about 10 million people [or 7% of the population]. It will also increase the national access to water supply from the current levels of 58% to about 75% [an increase of 17% meaning 24.65 million people]. NOTE: 22 water projects were listed.

10.Selected Power Projects: This component will contribute towards the power sector reforms by improving the generation capacity through hydro and coal power plants…. The programme will provide counterpart funding for the construction of the large Manbilla hydropower project that will generate an additional 2,600 Megawatts of electric power..[it] will also provide funding to complete..17 Small and medium …projects with a cumulative capacity of 140.275 [one hundred and forty point two hundred and seventy five] MW…The programme will provide [unspecified] counterpart funding for PPPs with the private sector for the development of Coal Power projects in Enugu, Benue, Kogi and Gombe…to generate 1,000MWs of power.

11. Petroleum/NNPC Projects: The main objective of this component is to restore and improve domestic refining capacity and prevent shortfalls in supply of petroleum products…

Three new refineries will be built under counterpart funding arrangement with the private sector in Bayelsa (100,000 bbls/day); Kogi (100,000 bbls/day) and Lagos (200,000 bbls/day)…[Unspecified] thousands of workers will be employed at each of these locations. The refineries will be completed 3 years after contract award [underlining mine]. Upon completion the refineries will contribute about 30 million litres of PMS to the domestic market, thereby making Nigeria a net exporter of value added petroleum products.

12. ICT Projects: This initiative can potentially generate 70,000 new jobs across the country and create another 350,000 spin off jobs over the next 4 to 5 years..

13. CONCLUSION: The proposed SubsidyReinvestment Programme…will not only lead to the transformation of public infrastructure in Nigeria, but will also ensure the gainful employment of millions of Nigerians who were hitherto unemployed. This will enhance the socioeconomic wellbeing of our people.

NB. That is the total summary of the SURE Project; certainly nothing significant has been left out. Nigerians can determine for themselves if the project is credible.

WILL THE PROGRAMME WORK AS DOCUMENTED? “Wise skepticism is the first attribute of a good critic”. James Russell Lowell, 1819-1891.

The answer to the question is: probably not – for reasons which will be explained below. TRUST.

The representatives of the Federal Government and the President had placed so much emphasis on “trust”, requesting Nigerians to suspend their cynicism. But, those asking to be trusted must also place all their cards on the table – face up. Unfortunately, that is not the case. Among the consequences of subsidy removal which were glibly lumped together as “the potential impact of the discontinuation of subsidy regime on the poor [which] can be mitigated are the following:

1.Inflationary Spiral which might reach as high as 25%; making nonsense of the single digit inflation projected for 2012 and beyond.

2.Reduced aggregate demand for goods and services, not just by the poor, but by the essential middle class as well.

3.Declining capacity utilization resulting from (b) above.

4.Increased unemployment across the income levels in the country. If the representatives of government were and will be honest with us, they know that there is single instance in history when a 100% rise in fuel prices did not produce these results. If they didn’t know that, then they have demonstrated individual and group incompetence. If they knew and deliberately failed to spell out those imminent outcomes, they have forfeited the trust of their fellow citizens ab initio. The best guess is that government has worked out the inflationary impact of the astronomic rise in fuel prices; they are keeping it a secret from the people.

2. MISLEADING FIGURES AND POLITICIANS’ PROMISES. Because economics is a game of numbers, the first thing every economic or financial analyst does is to quickly evaluate the figures to determine if they stand up to scrutiny. Specifically, in this case, the critical question is: will N478.49 billion per annum or N1.914 trillion for four years, be sufficient to fund all the programmes listed by the Federal Government? Surely, Dr Ngozi Okonjo-Iweala knows the answer to that – and it does her reputation no good.

The fact is N1.914 trillion, even if available, will hardly complete the 338kilometre East-West Road and the 1,326 kilometres of other roads in other zones programmed under SURE. Even if no single kobo is stolen, and nobody will bet a kobo on that. Fact is, N1.94 trillion is certainly insufficient to construct 1,664 kilometres of roads in Nigeria. But, we might be jumping the gun. It might be better to address, seriatim, the projects as listed in the document. But first we point to an assumption inherent in the proposal which might not be totally valid. In fact, given the government’s own statements on fuel subsidy, 2011 is the first year it will reach N1.4 trillion; it had been around N250 billion per annum in previous years. So 2011 can be regarded as an odd year. The entire document falls apart if subsidy returns to N250 billion per annum.

The assumption made by government, of course is that crude oil prices will remain as high as they are at the present time. Given the imminent recession in Europe, Japan and the slow growth in the United States, Dr Okonjo-Iweala and colleagues are taking a gamble with our lives which could backfire. But, under the best foreseeable circumstances, government cannot possibly save enough from fuel subsidy removal to fulfill all of the promises contained in the SURE document.

Listed below and summarized are all the projects the SURE programme aims to fund; excluding those specifically entrusted to the Niger Delta Development Commission, NDDC. None has a cost attached to it – deliberately; because a quick look at the roads projects alone will reveal that N478 billion will certainly not fund those projects alone.

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