By Henry Umoru, Victor Ahiuma-Young, Yinka Kolawole & Omeiza Ajayi – Abuja
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said yesterday that the Federal Government has suspended removal of fuel subsidy.
She said the government had made provisions for subsidy in the 2022 budget from January to June this year, adding that government will forward a request to the National Assembly to make additional provisions for fuel subsidy from July this year till a time deemed appropriate for its eventual removal.
According to her, all payments on fuel subsidy ordinarily would cease as from July, 2022.
The minister spoke as the Senate President, Ahmad Lawan, pleaded with the Nigerian Labour Congress, NLC, and Trade Union Congress, TUC, to shelve the planned strike schedule for Thursday nationwide against fuel subsidy removal.The NLC, however, insisted yesterday that the planned strike would go on, saying it will not believe government until the suspension of subsidy was effected.
The union also petitioned the Nigerian Governors’ Forum, NGF, giving reasons for insisting on the scheduled protest.
However, Mrs Ahmed, who disclosed this at a meeting with the Senate President, Ahmad Lawan, at the National Assembly complex in Abuja, observed that in view of the timing which is “problematic”, the Federal Government decided to suspend its plan to go ahead with the removal of subsidy on petroleum products in July, particularly against the backdrop of outcomes from ongoing consultations.
She added that the Federal Government is exploring alternatives to premium motor spirit as well as pushing to step-up the country’s crude oil refining capacity.
Ahmed, in company of the Minister of State for Petroleum Resouces, Mr. Timipre Sylva, disclosed that efforts are also underway by the executive arm of government to forward a request to the National Assembly to make additional provision for fuel subsidy from July this year till a time deemed appropriate for its eventual removal.
Also at the meeting were Senate Leader, Yahaya Abdullahi and the Deputy Whip, Aliyu Sabi Abdullahi, CEO of the Nigerian Midstream and Downstream Regulatory Authority, Farouk Ahmed, Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, and CEO of the Nigerian Upstream Regulatory Commission, Engr. Gbenga Komolafe.Others include the Special Assistant to the President on Natural Resources, Habib Nuhu, Permanent Secretary, Federal Ministry of Finance, Aliyu Shehu Shinkafi, and Permanent Secretary, Ministry of Petroleum Resources, Nasir Sani-Gwarzo.
Mrs Ahmed said: “Let me start by stating the fact that we did make a provision in the 2022 budget for fuel subsidy from January to June. And that suggests that from July, there would be no fuel subsidy.
“This provision was made sequel to the passage of the Petroleum Industry Act, PIA, that has made provision that all products will be deregulated.“Subsequent to the passage of the Act, we went back and amended the Fiscal Framework that was submitted to the National Assembly to incorporate this demand, but after the budget was passed, we have had consultations with a number of stakeholders.
“It became clear that the timing is problematic, that practically, there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and the President clearly does not want to do that.“What we have to do now is to continue with the discussions we are making, in terms of putting in place a number of measures, one of which is the deployment of an alternative to Premium Motor Spirit, PMS, and also the roll-out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote Refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day.
“The increased refining capacity in the country means we will need to import less products. But also as we are discussing right now within the Executive the possibility of amending the budget, we may need to come back to the National Assembly by way of amendment to make additional provision for fuel subsidy from July, 2022, going forward, or to whatever period that is agreed as the right time.
“Also, while we are exploring ways and means through discussions with various stakeholders in the executive as well as the civil societies and labour unions by which we can address this removal in a manner that is graduated and will have as minimal impact on the citizens as possible.
“So, we will come back to make further amendments on the fiscal framework as well as in the 2022 budget.”
Lawan urges NLC, TUC to shelve planned protests, says its unnecessary
Speaking earlier in his welcome address, President of the Senate, Ahmad Lawan, urged the Nigerian Labour Congress, NLC, and the Trade Union Congress, TUC, to abort the planned protests against the Federal Government’s proposed removal of fuel subsidy, saying the move was “totally unnecessary”.
He faulted the timing for the planned removal of subsidy on petroleum products, stating also that in as much as the administration and management of subsidy on petroleum products were flawed, President Muhammadu Buhari’s government believed that sufficient planning must be carried out before its eventual removal.
Lawan, therefore, called on Labour unions, such as the Nigerian Labour Congress, NLC, and the Trade Union Congress, TUC, to shelve the planned protest rallies, adding that the Federal Government had no plan of removing the petroleum subsidy now.
He said: “The position of everyone in government today is that admittedly, subsidy administration and management are flawed because of so many reasons. Admittedly, the burden is huge and massive and there is need at one point to do away with the subsidy. Even though our economy is growing, we still have the challenge of getting things to be better for our people.
“A lot of us in this administration believe that the issue of removal of subsidy should be handled with utmost care, especially that sufficient planning needs to be done. Significant arrangements for absorbing the shocks that will come with the removal should be done, that the timing should be such that the impact and consequences will not add to hardship. We all believe in this and the President leads us in this feeling.
“What we are saying is that this is not the time. All of us are of the same opinion and, therefore, there is nothing like confusion or lack of understanding within government circles. We all agree that the subsidy is abused and, therefore, it is a challenge to us as an administration to deal with the abuse, to find appropriate means of stopping it. After this meeting, there will be other ones, all in search of ways and means of ensuring that the ordinary Nigerian does not suffer any hardship, that when the subsidy will be removed eventually, it would be at such a point that the hardship will be very minimal and taken care of by several programmes.
“It is not about NLC, we are talking about every Nigerian. We are concerned beyond the Nigerian Labour Congress. I am taking this opportunity to appeal to the TUC and NLC to shelve this plan to go on strike or demonstration, it is totally unnecessary. There is not going to be removal of subsidy, so there is no need for this. Please, let’s not create unnecessary tension where there should be none. I appeal to them using this medium, to please forget about this January 27, 2022, deadline because there is no need for any deadline. We are supposed to come together and work assiduously to ensure that our country is stable, and our people enjoy the benefits of government programmes and projects, and that whatever decision would be taken will be in the best interest of our people and protecting the most vulnerable among us.”
NLC insists on Thursday’s nationwide protest
Reacting to the development yesterday, the Nigeria Labour Congress, NLC, insisted that the nationwide protest over the proposed fuel subsidy removal would go ahead as planned, saying it was not strike but an avenue to inform workers and masses its view on petrol subsidy and deregulation of the downstream sector of the petroleum industry.Congress said it is not swayed by the report that the Federal Government had shelved its planned subsidy removal and hike in the pump price of premium motor spirit, PMS, otherwise known as petrol.
Speaking to Vanguard, NLC’s General Secretary, Emma Ugboaja, said: “We are not distracted by the report that the Federal Government has shelved its plans to remove subsidy on petrol and increase the pump price of petrol because seeing is believing. We are going ahead with our planned nationwide protest on Thursday.
“The government has all mechanism and means for communication and information. The government has the resources to take advertorials in newspapers, radios, televisions, commission writers, columnists, opinion writers, and so on to propagate their position. All we have is the ability to gather massively for information.
“This protest is not a strike. It is about gathering en masse to inform our members, Nigerian workers and masses, how we feel about subsidy on petrol, increase in the pump price of petrol, total deregulation of the downstream sector of the petroleum industry.
“So, Thursday’s protest will go ahead as planned.”
Not surprising, political decision with economic consequences – Muda Yusuf, CPPE CEO
Also reacting yesterday, Dr Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise, CPPE, said the policy reversal was not surprising, adding that it was based on obvious political considerations but will come with economic consequences.Yusuf, who was former Director-General of Lagos Chamber of commerce and Industry, LCCI, stated: “The capitulation on the subsidy removal did not come as a surprise. There were too many odds against the move.
“There were obvious concerns about the potential political cost to government and the ruling part. There were worries about the social cost given the excruciating poverty in the country. There was also the waning goodwill required by government to enlist the support of the people. The whole subsidy story became a political economy matter. It was moved from the realm of economics and investment to the political realm. The outcome was predictable, especially with impending general elections next year.
“But the economic cost of the capitulation is equally weighty. The truth is that you cannot eat your cake and have it. We should expect the cost of funding the subsidy to be much higher this year because of the surge in crude oil price. If the oil price remains high for most part of the year, the subsidy cost could go as high as N2.5 trillion or even more by the end of the year. This would surely affect funding for critical infrastructure such as roads, railways, healthcare education, and even security.
“The petroleum products smugglers, beneficiaries of the fiscal leakages in the fuel subsidy ecosystem and their collaborators will continue to smile to the banks for the next one and half years. Some states would struggle to pay salaries, especially states that are heavily dependent on federal allocation. Some may have to lay off some of their work force. Many will struggle to meet their financial obligations as sub-nationals.”
APC welcomes suspension of petrol subsidy removal
In its reaction, All Progressives Congress, APC, welcomed the Federal Government’s suspension of the planned removal of subsidy on petroleum products. In a statement issued in Abuja yesterday, National Secretary, Caretaker Extraordinary Convention Planning Committee CECPC of the party, Senator John James Akpanudoedehe, said “the Federal Government took into consideration the fact that the removal of subsidy at this time will heighten inflation and cause undue hardship on the citizenry.”
According to him, programmes and policies of government are meant to benefit the people, and if the timing of the planned subsidy removal will cause hardship on citizens, then a review was necessary.
“We commend President Muhammadu Buhari for always putting the welfare and well being of Nigerians first as he has serially displayed in the implementation of programmes and policies of this administration.
“In line with the new Petroleum Industry Act (PIA), the Federal Government is already putting in place measures, particulary boosting our local refining capacities to reduce the country’s reliance on expensive import of refined petroleum products. This will in due course usher in the eventual and full deregulation of the country’s petroleum sector.
“Finally, the APC commends the cordial and healthy relations between the Executive and the 9th National Assembly which has ensured good governance. Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed and the Senate President, Ahmad Lawan on the suspension of the planned subsidy removal,” the statement read.
NLC petitions govs, gives reasons for protest
Meanwhile, leaders of Nigeria Labour Congress, NLC, yesterday petitioned the 36 state governors, informing them of Thursday planned nationwide protest against government’s planned removal of subsidy on petrol and further increase in the pump price of petrol.
In a six-page petition by the President and General Secretary of NLC, Ayuba Wabba and Emanuel Ugboaja, respectively, the union detailed the controversy surrounding subsidy removal dating back to 1999, culminating in the current imbroglio between government and labour after Nigerian workers, through their elected representatives, signed an agreement with the Federal Government on September 28, 2020, to freeze further increases in the pump price of petrol.
It lamented that following the prompting of the International Monetary Fund, IMF, and the World Bank, after a few weeks of interaction with government on this critical national matter, government suddenly adjourned further discussions sine die.
According to the union, the situation has remained the same for nearly two years now as government treats inquiries and promptings by organized labour with levity, disdain and contempt. NLC urged the governors to prevail on the federal government to jettison planned subsidy removal, among other demands.
The petition read: “The Federal Government should demonstrate seriousness and commitment to overhauling our local refineries as a lasting panacea to mass importation of refined petroleum products, importation pricing model, and a host of lost opportunities, official corruption and self-inflicted dislocations occasioned by mass importation of refined petroleum products into Nigeria.
“Governments at all levels in Nigeria should take immediate steps to improve governance and public accountability in order to regain the confidence of Nigerians that the cardinal constitutional mandate of guaranteeing the welfare and security of Nigerians has not been traded off. Nigerian workers understand that government pays out significant amount of money as petrol subsidy.
“Nigerian workers also appreciate the fact that the monies spent on petrol subsidy would be totally unnecessary if government is alive to its responsibilities of proper management of critical national assets, especially our local refineries.
“It is the mismanagement of our four public oil refineries over the years by successive governments that has opened the floodgates of mass importation of refined petroleum products and consequently, unfurled incessant increases in the prices of refined petroleum products in Nigeria.
“The fact is very clear, there is no way a country can control the price of what it does not produce.
“For a critical national security product like petrol and other refined petroleum derivatives, the situation is akin to handing over our national sovereignty to other climes. There is no better description of neo-colonialism and toxic neo-liberalism than this.
“The situation has remained the same for nearly two years now as government treats inquiries and promptings by the organized labour with levity, disdain and contempt.
“This is why Nigerian workers were completely taken aback by the sudden proposal by government to increase the pump price of petrol. Coincidentally and curiously, the declaration by the Nigerian government to increase the pump price of petrol came a few days after the same demand was made by the World Bank and the International Monetary Fund.
“Clearly, the Nigerian government is more interested in listening to foreign vested interests than engaging with the Nigerian people.
“Organized Labour in Nigeria as a responsible social partner, is willing and ready to work with government to find enduring solutions to the crisis in Nigeria’s downstream petroleum sector and other areas of challenge in governance.
“It would be a great relief for organized labour if government meets us halfway in this regard.
“The current protest holding nationwide on January 27, 2022 ,is only geared at alerting government on the sufferings that Nigerians are going through and the additional insufferable trauma that Nigerians would be subjected to if the government goes ahead with the hike in the price of refined petroleum products.
“From our foregoing submissions, there is no reason Nigeria, like other nations of the world, should not utilize the comparative advantage of crude oil which is our domineering foreign exchange earner as a strategic national asset for improving the lots of the Nigerian workers and the ordinary citizens of our great country.
“We plead that Your Excellency should use your position as a member of the National Economic Council, NEC, to convey our foregoing persuasions and demands to the Federal Government.
“We also warn that Nigerian workers would have no other choice than to down tools once the government goes ahead to force another round of petrol price increment on Nigerians. Nigerians have suffered enough.”