After several unsuccessful attempts by
governments in Nigeria to completely remove fuel subsidy, there seem to be a
silent but persistent crusade by concerned and patriotic Nigerians who are
determined to educate and enlighten them on the benefits of fuel subsidy removal.
By Chukwudi OHIRI
Indications are rife
that the advocacy for the total removal of fuel subsidy and by extension, total
deregulation of the Oil and Gas industry in Nigeria is gaining greater currency
now than it was a couple of years back when President Jonathan allegedly gave
Nigerians a ‘bitter new year gift’ through what analysts termed, a backdoor
approach.
Recall that on January
1, 2012, Nigerians woke up in the wee hours of that fateful day, and rather
than chanting the usual ‘Happy New Year’ slogan, it was ‘Return the Fuel
Subsidy or hell will be let loose’ that rent the air. Lo and behold, many a
Nigerians who went to buy PMS popularly called petrol realized to their
amazement that the pump price of fuel had jumped from the previous N65.00 to
somewhere around N147.00 for inexplicable reasons. Every entreaty by the
government to calm the nerves of the visibly angry Nigerians with what was then
perceived as ‘economic jargon’ which preached that the action was in the
interest of the common masses fell on deaf ears.
True to their threat,
indeed, hell was let lose as Nigerians in their droves took to the streets in
protest of the New Year shocker. For one whole week, the nation was grinded to
a halt as no government or private activity was carried out especially in major
commercial cities across the country. The protest and bare-faced resistance got
to the point of near anarchy. The labour and trade unions spearheaded the quasi
revolution joined by Civil Society, Human Rights activists, the organized
private sector, transport unions, students and indeed, most Nigerians from all
divide. Those who dared profess their support for the federal government were
treated with disdain and as saboteurs and anti-masses and so, even those who
truly understood the economic viability of the action of the government at that
time risked lynching in their advocacy. It was at that time that the
intimidating credential of the likes of Adams Oshiomhole, Governor of Edo
became suspect for standing on the side of the federal government.
For the first time and
like never before, Nigerians were almost united in the struggle from East to
West, North to South. Within the government circles, many were ‘sympathetic’ to
the cause of the ‘ostensibly’ swindled Nigerian masses. In an unusual show of
patriotism, the senate hurriedly called off its recess to persuade the federal
government to rescind her decision. It was this effort, perhaps, and the
diplomatic persuasion of some well meaning Nigerians that paved way for
negotiation between the organized labour (who refused to negotiate until a
reversal is announced) and the federal government (who had threatened that it was
not going back on the fuel subsidy removal). At last, each party had to sheathe
its sword under a yet another ‘no victor, no vanquished’ truce that forced the
federal government to reduce the pomp price of fuel to the present N97.00.
Heated as the argument
for and against the subsidy removal was then, today a lot of grounds have been
shifted. Their seems to be wider
acceptance of idea of removing fuel subsidy and deregulating the Oil and gas
sector now than it was some two years ago.
Only recently, The Forum of Commissioners of Finance of
the 36 states of the federation passed a resolution calling on the federal
government to remove the controversial fuel subsidy. The Chairman of the forum,
Mr. Timothy Odaah, told journalists shortly after their monthly Federation
Account Allocation Committee’s meeting, that the resolution was passed
following irregularities observed in the fuel subsidy regime. Not stopping
there, Odaah, who is also the Commissioner of Finance, Ebonyi State, said the
resolution on the fuel subsidy regime would be sent to the Nigerian Governors’
Forum for transmission to President Goodluck Jonathan for a quick action.
Advancing his
reason for the ‘new’ position, Odaah stated that the payment of fuel subsidy was a
scam against some states, especially the less industrialised ones, as it had
made “the rich to become richer, while the poor
are becoming poorer.” Ironically, he argued that if Nigerians had not protested
against the removal of fuel subsidy in January 2012, most states would have
experienced significant level of development by now.
In his confession,
Odaah said: “We looked at subsidy on oil (at that time) as more or less a solution worse than the problem
it is meant to solve. “Looking at it presently, you will discover that it is
not solving the problem, which it is meant to solve. In the first place, the
NLC (Nigeria Labour Congress) and the majority of the Nigerian populace appear
to have been deceived into clamouring for subsidy. “It is a system that robs
Peter to pay Paul by making the rich to grow richer and the poor to go poorer.
Summarizing the
position of the Commissioners of Finance, told reporters that “What we (the
commissioners) are advocating is that the subsidy be removed so that every
state or any member of the federating unit sharing from FAAC will take his own money,
then decide to use it or grant subsidy in a level that it will be able to
afford.” He further warned that if the issue was not urgently addressed, it
would get to a point where the states would have nothing to share from the
Federation Account as their allocations would be wiped out by subsidy claims by
marketers whom he accused of taking advantage of the subsidy regime to engage
in sharp practices.
Delivering a
Keynote address during a Business Clinic organized by the Petroleum Downstream
Group of the Lagos Chamber Of Commerce and Industry (LCCI) with the theme:
Removing Subsidy: the implications on Banks, Downstream & Upstream Sector,
government and the Populace, the Chairman and founder of Starteam Consult,
former president, Nigeria Economic Summit Group (NESG) and former Chairman of
the Manufacturers’ Association of Nigeria, Mazi Sam Ohuabunwa did a critical
expose of the fuel subsidy economics warning that “we either tame this fuel
subsidy now or it will tame us”.
Mazi Ohuabunwa
called for a total deregulation of the oil and gas sector in order to reap the
full benefits in no distant time acknowledging that in the short term, prices
may go up, but would nosedive afterwards because of the likely influx of
players which would trigger off competition to the advantage of the whole
populace as was the case with the telecoms industry.
He revealed that “the
government has unfortunately been wasting over 30 per cent of the annual budget
on subsidy payment as it spends about N1.436 trillion which is about 118
per cent of the budget in 2011 on subsidy payment”. According to him, “this is
not sustainable; the fund would be better used in strategic infrastructure
provision of other critical social infrastructure such as education, health care
and other social safety nets.” The savvy Pharmacist and self-made Economist par
excellence further expounded the advantage of removing fuel subsidy and its
almost assured impact on banks, petroleum downstream & upstream sector,
government and the populace saying that the merits far outweigh the demerits.
For the banks, he
said lending and accruable profit would increase with genuine importers,
investors, manufacturers and even speculators scampering for available funds to
do genuine businesses. This will guarantee less risky lending. The advocacy for
proper funding of Micro, medium and Small Scale Enterprises, MSMEs would become
more realizable leading to explosive boom of that critical area of the economy.
For the upstream
and downstream sectors, Ohuabunwa said as a result of increased activities,
more investments that would create jobs, increase foreign reserves and boost
the economy will spring up. Refineries which licensed investors have refused to
build over the years because of non-profitability will be built as every sector
of the economy including transport will receive a boost. “There will be
increased efficiency, more competitive markets which is a great incentive for
innovations and high return on investment,” he added. Above all, he envision a
more open and transparent market that will lead to a drastic decline in
corruption and “weeding out of fly by night operators” thereby enthroning
corporate values and culture in the economy.
On the part of the
Government, Mazi Ohuabunwa said the government would save trillions of naira
that would be used to develop critical economic and social infrastructure like
roads Bridges, Railways, power, Education, Healthcare, and social safety nets
etc. He enthused that more foreign Direct Investment would flow into the
country thereby improving the value of the currency and diminishing the urge to
borrow, keeping inflation rate at all time low.
The ultimate
beneficiary of the fuel subsidy removal will be the masses who would now have
jobs created for them, better quality of life, regular and better assured
supply of fuel without having to queue for long hours and finally, “everybody
wins except of course, the fly by night operator.
In spite of this
analysis, the audience showed concern over the increasing mistrust between the
government and the citizenry as a result of long years of unfulfilled promises
of the leaders and lack of commitment towards providing palliatives to cushion
the effect of the fuel subsidy removal. Ohuabunwa while castigating the
government for not prosecuting the subsidy ‘thieves’ called on the people to
intensify their advocacy and insisting on holding the leaders accountable at
all times through formal and legitimate means.
Supporting the
position of Mazi Ohuabunwa but at a different forum, the former Group Managing
Director of the NNPC, Engr. Andrew Yakubu, told newsmen that only the removal
of subsidy from petroleum products would attract investors to the downstream
sub sector of the industry argueing that subsidy was creating distortion that
scare investors.
Unfortunately,
Nigeria Labour Congress, NLC don’t seem to buy into the econometrics and
permutations of proponents of total removal of fuel subsidy. At its 57th annual general meeting
held recently in Lagos, the Nigeria Employers’ Consultative Association, NECA
toed a parallel line with NLC insisting that the continued sustenance of fuel
subsidy regime will be very harmful to the economy and national development in
the long run. But NLC stood its ground insisting that it was sustainable and
would help Nigerians to cope with current harsh economic realities.
Speaking through
its national President, Mr. Abduwaheed Omar, NLC pointed out that Nigeria had no
business importing petroleum products, lamenting that the problem had been
government’s lack of the political will to ensure products were refined
locally. He alleged that subsidy was being used by government officials to
deceive Nigerians revealing that about N1.3 trillion was being spent annually
for subsidy. According to him, “it is not correct to say that in 2010, 2011,
2012, 2013 and 2014, about N1. 3 trillion was spent annually for subsidy. What
is provided for in the budget is N260 billion”. The implication of this allegation
is that somewhere along the value chain of subsidy payment, figures are either
inflated to enrich certain pockets or such figures are merely cooked up to
justify the proposal to remove subsidy. Omar insisted that N260 billion which
should be the actual figure expended on fuel subsidy “is not too much for
government to spend for Nigerians to benefit from God given resources”. He
stressed that “subsidy is sustainable. What is not sustainable is corruption”.
He called on all Nigerians to “join hands to fight the corruption therein”. “With
the level of poverty in the country, the Nigerian people need the subsidy and
it is sustainable,” he added.
This analysis by the
NLC helmsman seems to be at variance with the analysis advanced by Mazi Sam
Ohuabunwa who is not just an insider in the subsidy administration, but an indirect
recipient, or rather, administrator of the SUREP funds as a member of the board of the
Subsidy Reinvestment and Empowerment Programme (SURE-P). While acknowledging
that there is much more than the eyes can see in the subsidy regime, he asked
“is it not better that the subsidy be removed to stop the thieves rather
continue the cry without any help coming forth”.
He revealed to Mightier Than Sword in an exclusive interview that in two years of SURE-P’s
existence, it has received about N360bn out of which about N80 billion was
rolled over from unspent allocation of 2013. He disclosed to Mightier Than Sword that SURE-P spent about N280bn
within the period under review mentioning the East-West Road, the rail line
running from Kano to Lagos and a litany of other intervention projects as being
done by SURE-P with N280 billion which is only the federal government’s share
of the proceeds from the partial subsidy removal since 2012. The importance of
this explanation is that NLC may not have its facts right on the issue of fuel
subsidy allocation in the budget. He clarified that the federal government gets
about 41%, States get 51% while ecology gets about 5% of the total proceeds
from the partial fuel subsidy money. He said he could only account for the
federal government’s share as he is yet to know what States are doing with
their own share of the funds. For him, the amount allocated to fuel subsidy in
the budget is above N1 Trillion annually and he had this to say: “Imagine if
the over N1tr that was spent on subsidy is released for this kind of work,
Nigeria will get the best of services.”
OBJ investigations
revealed that as at April 2014, the sum of N959.8bn has been allocated by the
Federation Accounts Allocation Committee for Subsidy Re-investment and Empowerment
Programme implementation. The Findings revealed that on a monthly basis, the
sum of N35.549bn was deducted from the gross collectible revenue by FAAC and
paid into the SURE-P account domiciled with the Central Bank of Nigeria from which
Federal Government receives 41 per cent of the subsidy savings, the state and
local governments share 54 per cent, while the remaining five per cent is
reserved for ecological challenges.
