NEC says fuel subsidy wastes money meant for economic growth
By Jeph Ajobaju, Chief Copy Editor
Labour has got the support of university workers for its rally against fuel subsidy removal the National Economic Council (NEC) says must be effected by June to free up funds for capital projects, even though such money will be stolen by officials.
Financial corruption is the number disease in Nigeria; it permeates all layers of society. Abuja has a history, deepened in these Muhammadu Buhari years, of officials getting away with fake or padded contracts and outright cash theft.
The fear of the Nigeria Labour Congress (NLC) and of others in civil society is that (a) fuel subsidy removal will have a ripple price hike effect on all goods and services and (b) the money saved from such removal will be stolen by government officials.
University workers protest
Senior Staff Association of Nigerian Universities (SSANU) President Mohammed Ibrahim said branches have been mobilised in line with the directive of the NLC.
He spoke at SSANU National Executive Council meeting held at Obafemi Awolowo University, Ile Ife where he lamented that Abuja does not consider citizens’ pains in making decisions.
“We have it on good authority that about N200 will be added to the N162 or N170 depending on where you are buying as fuel price in Nigeria.
“This the NLC totally rejects and SSANU will participate fully in this protest across Nigeria on the 27th of this month.
“The present Federal Government of Nigeria is not doing any better in its relationship with our labour unions,” Ibrahim said.
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NLC gears up for showdown
NLC President Ayuba Wabba announced on Channels Television on Thursday that the protest against subsidy removal will be held on January 27 as scheduled.
Yet the NEC insisted the same Thursday that subsidy cannot continue beyond June, as relayed in Abuja by Nasarawa Governor Abdullahi Sule after a NEC meeting.
The NEC comprises Governors and is headed by Vice President Yemi Osinbajo.
Per The Nation reporting, Sule made the pitch despite additional warning from former Head of State Abdulsalami Abubakar at a nearby forum in Abuja that petrol subsidy removal will push more Nigerians into poverty.
Sule, who spoke along with Edo Governor Godwin Obaseki, said the decision on what to do next is left with the Nigerian National Petroleum Company (NNPC).
Said he: “If the Minister of Finance [Zainab Ahmed] provides subsidy for six months, you probably can understand part of the reasons for the provision.
“When the NNPC Limited fully takes off, it is at that moment that decisions on subsidy removal will be made.
“I want to make the correction that it is not governors who are making recommendations. It is actually a NEC committee that comprises all the others.
“Already, the Petroleum Industry Act has fully taken charge, and it will not require any recommendation from anybody.”
Cost of subsidy
Obaseki reiterated that Abuja spends about N2 trillion on fuel subsidy yearly, which could have been used for other purposes, adding that the pump price of between N162 and N165 per litre in Nigeria is 100 per cent higher in other countries.
He said the NEC wondered whether that should be allowed to continue in a situation where only 12 of the 36 states consume 60 per cent of subsidy.
Obaseki disclosed that the NNPC has not been able to remit N200 billion into the Federation Account Allocation Committee (FAAC) because of subsidy payment.
His words: “As you are aware, the issue of subsidy has been one matter that NEC has deliberated on for more than a year now.
“There was an ad-hoc committee, which was set up by NEC headed by Governor Nasir El-Rufai of Kaduna State that included members of the executive arm of government.
“The committee worked on recommendations as to what we should do about the cost of PMS [petrol] locally because as you realise, as has been told us, the cost of PMS in Nigeria today is about N162 per litre, whereas every other country surrounding Nigeria is selling the same product at more than 100 per cent of the cost in Nigeria.
“And the country as at last year spent in excess of N2 trillion subsidising petroleum products. That is money that could have gone into building roads, money that could have gone into healthcare and education.
“So, for NEC, the arguments have been put out: Should we continue this regime of spending money we do not have to subsidise the living standards of only mostly those who have vehicles?
“And when NEC looked at some of the analysis last year, we then realised that less than 1/3 of the states of this country consume two-thirds of the subsidy.
“So, the issue of equity also came up. All of these findings were presented to NEC and NEC has had several deliberations. And the deliberations are still ongoing.
“NEC hasn’t come up with any decision yet. I think recommendations have also been made to the President.”
Abubakar objects to subsidy removal
Abubakar warned against increase in the price of petroleum products, saying 80 million Nigerians – about 40 per cent of the population – are caught up in poverty.
He spoke in Abuja at the 19th Daily Trust Dialogue with the theme “2023: The Politics, Economy and Insecurity”.
“On top of all these, fuel prices are expected to rise significantly in the coming months as announced last November by the NNPC.
“When this happens, as the government has planned, it will push many millions deeper into poverty,” he said.
Abubakar noted that young people and women are the demographics most affected by the dire economic situation which, if not carefully managed, can boil over into a national conflagration worse than the #ENDSARS protests last October.
Governors was their hands off
Nigeria Governors’ Forum (NGF) Chairman and Ekiti State Governor Kayode Fayemi reiterated that Governors are not involved in fixing fuel pump price but said they would engage with Labour on the issue.
“For us at the forum, it [petroleum subsidy removal] is a matter that is a going concern. We don’t have a definitive issue on it, because it’s left to the Petroleum Industry Act. It is not for us,” he explained.
“NNPC is now a private company and the company should decide what it wants to do with the price of its product. It shouldn’t really be the business of the governors.
“The forum discussed the issue around petroleum subsidy and concluded to engage the leadership of the … [NLC] and the Trade Union Congress (TUC) on how best to address this issue without causing any disaffection, but with a view to salvaging the Nigerian economy for the Nigerian people at the end of the day.”
Fayemi insisted that Governors did not contribute to the proposal that a litre of fuel should sell for N302 as contained in a report by the NEC.