Govt, civil society, differ still on fuel subsidy

NPAN-4Okonjo-Iweala, Alison-Madueke, Sanusi list gains

Agbakoba, Falana oppose policy

Oshiomhole, TUC  seek sanction

THE debate on the planned removal of fuel subsidy became keener yesterday as officials of government and leaders of civil society   took their arguments to a public forum.

At the end of almost five hours of a robust debate, the proponents and opponents yielded no ground for a compromise.

The town hall meeting was organised by the Newspaper Proprietors Association of Nigeria (NPAN) in Lagos. The Finance Minister,  Dr. Ngozi Okonjo-Iweala and Minister of Petroleum Resources, Mrs. Deziani Alison-Madueke, articulated the position of the government while former President of the Nigerian Bar Association (NBA) and activist lawyer, Mr. Femi Falana, were among others that opposed the policy.

Okonjo-Iweala agreed that citizens’ cynicism and lack of trust in the government were the reasons for the elongated debate on subsidy removal, insisting that the government was sincere with its policies.

While presenting facts on subsidies, Mrs. Okonjo-Iweala, who is also the Co-ordinating Minister for the Economy, said that deregulation meant limited intervention in certain prices by the government as it would allow for more transparency in the sector.

She said: “It also allows for free entry and exit for those who want to operate in the sector, as we have examples of other sectors, which deregulated and liberalised like the telecommunications sector. In 2000 and 2001, our telephone company, NITEL, has 450,000 phone lines that was supplying the entire country of 150 million people.

“Today, Nigeria can boast of 80 million GSM lines. So, if we have left the sector the way it was, companies will not come and invest and most of Nigerians will not have access to mobile phones.

“Another example is aviation, when it was only one airline existing in Nigeria (Nigeria Airways), then, you had to struggle to buy a ticket, but today, we have so many of them in Nigeria.”

Giving reasons why government wanted to remove subsidy, she added that it was a financial burden on the country, stating that from 2006 to 2011, the country had spent about N3.7 trillion as subsidy.

“In 2011 alone, we have spent N1.34 trillion and by the end of this year, we would have spent N1.43 trillion on subsidy.

“This matters because it is eating deep into our resources, 30 per cent of total Federal Government expenditure and 118 per cent of the capital, which means 18 per cent higher on the amount of money we spend on capital expenditure and four per cent of national income.”

She pointed out that subsidy had also been increasing over the years, stating that between last year and this year, it almost doubled.

“One of the reasons for this is that the amount of PMS (or petrol) that we consumed has increased substantially from about 30 million litres we are now consuming to 40 million litres per day.

“The price of oil from 2010 and 2011 increased from about $81 per barrel to $113 today. And there was also some previously unpaid subsidy that is carried over for kerosene making the figure to largely double.

“Subsidy meets a lot of smuggling activities and frauds in the industry because people divert the products to neighbouring countries. They are happy for us to continue with subsidy. Should we be using our resources to subsidise neighbouring countries?” she questioned.

Alison-Madueke said that in order to transform the economy, in line with the Vision 20-2020 objectives, critical infrastructure in the power, road, transportation, water and downstream petroleum sectors would be executed.

She said efforts were on also to ensure that Nigerian refining capacity was boosted.

Her words:  “To bring the refineries to full capacity, we have engaged the original builders of the refineries to do the repairs, and we are hoping that they would hit their full capacity in the next 24 months, starting with Port Harcourt and Warri refineries.”

She assured that the potential impact of the discontinuation of the subsidy regime on the poor could be mitigated through properly targeted safety net programmes including public works and employment schemes, maternal and child health, mass transit programmes and vocational training and skill acquisition schemes, under the government’s Subsidy Reinvestment and Empowerment Programme (SURE programme.)

But former NBA president, Olisa Agbakoba, noted that Nigerians were not against subsidy removal but the concern was whether the masses would benefit from the policy, since government had over the years made similar policies and failed to deliver on necessary infrastructure required to give improved living condition to Nigerians.

He said:  “Why should I have a generator in my house in Ikoyi? Why should I have a borehole?” He said that government had never done anything for him since he was born, instead he did everything for himself.

He, therefore, urged the government to a make a drastic move that would prove to Nigerians that it was   sincere with the policy. “Government should show a sign that they are ready. If you want to put a burden on us, show us the one you are carrying,” he said.

The Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi decried the insinuation that government was trying to exploit the masses through the removal of subsidy.  He noted that the policy would not cause inflation whatsoever, going by the framework put in place by government.

He said that the continuation of subsidy was like subsidizing corruption and subsidising employment abroad. “We need to shut the opportunities for corruption. I am not a proponent for removal of subsidy, but I am a proponent for removal of rent,” he said.

Sanusi noted that Nigeria could not continue to subsidise because it would impose huge debt on successive governments, which would later affect the economy.

Vice President, Nigeria Labour Congress (NLC), Isa Aremu said there was already a problem with the policy. He lamented that there was so much inefficiency in the system, and that it was bad enough that the country was importing, but even worse that the country could not import and deliver the product due to its own inefficiency. He added that by the fuel subsidy removal, the government wants Nigerians to pay for its own inefficiency.

Aremu said that the removal of subsidy was not the best solution to the economic decay.

“The telecoms sector is equally not working, we are not manufacturing handsets, and the money we are making is being transferred to South Africa. We have not gotten the real value in the sector and it cannot be our model,” he said.

According to Ben Murray Bruce, Chief Executive Officer of Silverbird Group, Nigerians do not trust government because the latter does not practise what it preaches.

He gave a condition for subsidy removal. He said that government should subsidise the transport sector with N50 billion yearly, it should allocate $2 billion for five years to cater for the roads from the $10 billion spent yearly, N500 billion intervention fund, another $500 million for the infrastructure and trucks.

“If you do that, we have a deal and we will support subsidy removal,” he said.

Falana, who also totally objected to the policy said similar policies had been made by previous governments, but the infrastructure were not there after Nigerians had made sacrifices.   “We are here today hearing the same story,” he said.

He, however, lauded the Minister of Petroleum for the re-organisation in the Petroleum Products Pricing and Regulatory Agency (PPPRA), noting that the number of importers had drastically reduced.

Besides, he said that there were laws that had taken care of the lapses which government was complaining about, but that the laws were not enforced. He therefore urged government to go back to those laws and make PPPRA do its job.

The Governor of Edo State, Adams Oshiomhole, who claimed to always stand on the part of the masses, urged government not to do what people could not afford.

“Let government move on the direction they have chosen but as a people, we have the right to insist that every naira gained from this policy should not be used for the comfort of the few. This government does not have any option, if it does not take this decision, Nigeria will crash and everybody will be in problem,” he said.

Oshiomhole also condemned the role played by the local auditing firms in the subsidy saga. He urged the Federal Government to invite foreign auditing firms to intervene in the issue, since the local audit firms had lost credibility.

The former President of the NLC said government should investigate and arrest the gangs in the Nigerian National Petroleum Corporation (NNPC) who embezzled money meant for turnaround maintenance of refineries, and that   the cabals in the petroleum sector should be punished.

The Trade Union President, Peter Esele, alleged that some people in government were behind the cabals, urging government to fish them out for proper prosecution.

He noted that there were loopholes in the PPPRA template due to some padded margins, while the Pipeline Product Marketing Company (PPMC), was another firm engrossed in auditing challenges.

Besides, the Petroleum and Natural Gas Senior Staff of Nigeria (PENGASSAN) has urged the Federal Government to institute a panel to probe the alleged fraudulent acts of some oil and gas companies, which illegally benefited from subsidy of the downstream sector.

Reacting to a report by the KPMG, an internationally-recognised accounting and auditing firm, the union said that all the firms involved and those behind them should be punished for committing the crime.

PENGASSAN President, Mr. Babatunde Ogun, said for the Federal Government to gain the confidence and trust of the Nigerian people, it must embrace transparency by conducting further investigations with a view to bring those behind the fraud to book.

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