Outburst Over Plan To Remove Petroleum Products Subsidy in Nigeria

Dr Goodluck Jonathan

Oct 6, 2011 – Outburst Over Plan To Remove Petroleum Products Subsidy in Nigeria

Outrage yesterday greeted government’s plan to remove subsidy on petroleum products from January.

Labour leaders, opposition parties, prominent citizens describe the plan as misadvised and urged government to change its mind.

In his letter to the National Assembly which spells out government’s financial outlay for three years, President Goodluck Jonathan said: “a major component of the policy of fiscal consolidation is government’s intent to phase out the fuel subsidy, beginning from the 2012 fiscal year. This will free up about N1.2 trillion in savings, part of which can be deployed into providing safety nets for poor segments of the society to ameliorate the effect of the subsidy removal.”

But former Petroleum Minister Prof Tam David-West questioned the existence of subsidy on fuel.

“There is no subsidy on fuel. It is a lie and fraud. God has put crude oil on our soil and Nigeria is the sixth producer of oil in the world. Nigeria produces over two million barrels of crude oil per day and the total capacity of our refineries is 45,000 barrels per day. If our refineries are working 80 to 90 per cent of installed capacity, the country would have enough petroleum products for local consumption and excess to export,” the professor of Virology at the University of Ibadan said yesterday.

David-West urged the President not to attempt the plan, which he described as “a fraud, anti-people and anti-God.”

The Conference of Nigeria Political Parties (CNPP) yesterday vowed to resist government over the proposed removal of fuel subsidy.

It advised the President to drop the idea of fuel subsidy removal adding: “That is abandoning the Washington Consensus economic model and embrace the Nigerian Consensus. The subsisting national consensus is in favour of the prevailing fuel price in the market; indeed some Nigerians query why petroleum products are not as cheap as in Venezuela and other OPEC member countries?

“The puzzle has been why has the successive government since our return to civil rule failed to build new medium refineries in spite of the unprecedented oil receipts? This school maintains that new refineries will not only provide petrol, kerosene and other derivatives; but provide employment to our teeming unemployed youths.”

The CNPP statement was signed by its National Publicity Secretary Osita Okechukwu. It said Nigerians have lost confidence in Jonathan and public officers.

The statement added that Jonathan’s ability to fight corruption is in doubt.

The statement reads: “On the vexed issue of removal of fuel subsidy, the CNPP with uttermost sense of responsibility, highest consideration for the survival of our fledgling democracy and the need to save the little Nigerians benefit from our God endowed oil Resource; candidly appeal to President Goodluck Jonathan to drop the idea of fuel subsidy removal.

“We are not unaware that the fuel subsidy is bleeding blood heavily on our national treasury; however it is our considered view that the Peoples Democratic Party (PDP) -led federal government lacks the moral high ground, credibility and indeed the political will to prudently utilise the savings to provide the safety nets or provide critical infrastructure.

“The intendments of the withdrawal notwithstanding, may we remind President Jonathan that Nigerians have lost confidence in public officers generally and his capacity to wage the war against corruption ; therefore the crisis and social unrest  which will follow the subsidy removal, will outweigh whatever economic considerations or  the intendments of the Economic Team, because of the following reasons:- Nigerians regret that between 1999 and 2010 over $2 billion was spent on the rehabilitation of the four refineries and yet they are producing below 40% of its installed capacity of 445,000 barrels per day.

“Nigerians bemoan a scenario where the PDP led government without any patriotic justification since 1999 abandoned the Nigerian Consensus and adopted the Washington Consensus which abhors government investment; a scenario which breed monumental corruption and made it impossible to utilise our huge oil receipts to build new refineries.

“Nigerians are fully aware that between 1999 to date over $5 trillion was earned from oil and gas sales; yet there are no commensurate results in the provision of critical infrastructure? For example the Federal Government of Nigeria (FGN) between 2004 and 2007 lost $1512.13 billion, because FGN Equity Proceeds in Nigeria Liquefied Natural Gas (NLNG) is not paid into the Federation Account. Only God knows how much we lost since then. {Source Minutes of Federation Accounts Allocations Committee 8 September 2009}

“That the Revenue Mobilisation, Allocation and Fiscal Commission, under Haman Tukur, took the Federal Government and indeed the NNPC to court over fraudulent practices and the withholding of oil proceeds? The same fraudulent activity of NNPC was re-echoed few weeks ago.

“That a Federal Government, which awarded contracts to dualise  – Agege–Ota–Abeokuta, Ilorin-Ibadan, Maiduguri-Kano, Maiduguri-Gombe, Owerri-Onitsha, Lagos-Benin, Benin-Lokoja, Lokoja-Abuja etc roads from 2000 to date and have been unable to complete any; lacks the moral high ground and the requisite antecedents to tax and extract more funds from Nigerians.

“That the Federal Government which spent over $16 billion for the supply of electricity will find it difficult to convince Nigerians that they can manage our resources prudently. Or is it not paradoxical that the same President Jonathan whose campaign was funded largely by the cabal who import refined petroleum products and who knows the leakages in the import chain; will instead of plugging the leakages, impose sufferings on Nigerians, which the fuel price increase will engender, hence double jeopardy?

“The CNPP will join hands with the Nigeria Labour Congress, Trade Union Congress and other progressive patriots to resist the withdrawal and protect the little benefits we drive from our God given Oil Resource

David West said the President should not listen to his Minister of Finance who is behaving as if she is acting the scripts of the IMF and the World Bank.

He insisted that those in government deliberately sabotaged the refineries to pave way for importation of the products which are undertaken by cabals in government.

He added that fresh revelations from the government have shown that about a quarter of Nigeria’s budget goes on importation of petroleum products by the cabal.

He said: “Government is not a commercial enterprise. It is not only about naira and kobo. There is a moral dimension to governance which is more important than the commercial dimension.”

Lagos lawyer Mr Femi Falana condemned the plan. He said: “With $2billion, Government could have built about five refineries, to meet our domestic needs and earn the country some revenue from export. What has happened in the petroleum industry is the first illustration of kalokalo economic system, endorsed by the World Bank , who on two occasions leased Mrs Okonjo Iweala to assist in ensuring that our economy remains in the firm grip of imperialism.

“Let Nigerians not be deceived that by the campaigns that the money realised from the so called removal of subsidy would be channelled towards improving the economy. When Nigerians dashed $12 billion to London and Paris Club to pay our fraudulent debt, we were told that the $1billion set aside annually for servicing the debt would go for infrastructural improvement. Nigerians were also told that incessant increases in the prices of petroleum products products would fetch Government the money that would be saved to provide social services.”

The Nigeria Employers Consultative Association (NECA) also said subsidy withdrawal  will amount to high cost of production  of goods and services. Its Director-General of NECA, Mr Olusegun Oshinowo,   urged Federal Government to  repair the existing refineries in addition to building new ones.

“There is nothing wrong with deregulation, there is nothing wrong in government promoting a policy where a producer will determine the prices he will sell his products, but that of petroleum products is different. Petroleum products affect the lives of Nigerians. We’ve got to be careful. The removal of the so-called subsidy should be premised on the institutionalisation of certain report. We should first make our refineries work. Currently, we are importing fuel, we cannot continue to rely on external source for our fuel. As long as we do that, the price of fuel will be subjected to the vagaries of the international economy, like the price of crude oil, like the possible devaluation of Naira.

“We cannot create a model where a key product in the economy will be subjected to those indeterminable variables that could go up at any point in time. Let Government create an environment where the refineries will work, other investors will be able to establish refineries. The argument that the current regulated atmosphere has prevented investors from coming in does not simply resonate with us. Let us start with the privatisation of the existing refineries.” The Nation