Since the Federal Government announced its plan to withdraw subsidy on petroleum products as from January 2012, there has been argument and counter argument over who is likely to benefit from the impending policy. Taiwo Olanrewaju and Tunde Ogunesan examine who the beneficiaries are in their report.IT is no longer news that President Goodluck Jonathan on Tuesday, October 4, 2011 informed the National Assembly about his government's plan to begin the removal of fuel subsidy in 2012.According to the 2012-2015 Medium Term Fiscal Framework (MTFF) and the Fiscal Strategy Paper (FSP) which the President sent to the National Assembly, ' A major component of the policy fiscal consolidation is government' s intent to phase out fuel subsidy, beginning from the 2012 fiscal year.That, the President noted, ' will free up to about N1.2 trillion in savings, part of which can be deployed into providing safety nets for poor segment of the society to ameliorate the effects of subsidy removal.'Nigerian Tribune also gathered that Dr Mrs Ngozi Okonjo-Iweala, the minister of finance, opined that it was only the removal of fuel subsidy that would guarantee the success of the Medium Term Fiscal Framework (MTFF).With the claim that the subsidy would have risen to N1.2trillion by the end of 2011, the federal government insisted that there was no going back on the removal.Apart from the organised labour, who has promised to shut down the country if the government should go ahead with the planned removal, Nigerians see the removal as a tool of the IMF to tele-guide the Nigerian economy; a situation difficult to understand by the average Nigerian who does not see the country's minister of finance and the head of the government's economic team, Dr (Mrs) Okonjo-Iweala, as one of them.Between Tuesday October 4, and the time of going to press, the issue of the removal of fuel subsidy had generated a lot of furore, with individuals, groups, labour leaders and labour groups, threatening to embark on an action or the other.Why remove fuel subsidy at all'Giving reasons why the government embarked on total removal of fuel subsidy, President Goodluck Jonathan said funds saved from the removal would stimulate private sector investments to bridge infrastructure gap and create incentives for investment in refineries and the petroleum industry.Speaking at the opening of a presidential retreat with the private sector on Economic Development and Job Creation at the State House Banquet Hall, Abuja, President Jonathan further explained that the plan to remove petroleum subsidy was still at the proposal stage, saying if it scaled through, the resources hitherto used as subsidy on the importation of petroleum products, would be invested in tangible infrastructure and provision of social safety nets to cushion the impact of the reforms.According to him, discontinuing with the subsidy remained the only responsible way of harnessing revenue for capital stock formation, among others.Jonathan said: ' There are proposals to phase out petroleum subsidies in a deliberate and responsible way that will harness revenues for capital stock formation and leverage on private sector investments in public-private partnerships (PPPs).'But the federal government has cited long term benefit as its main focus. It said the gradual removal of subsidies is a step towards deregulating the sub-sector. Moreover, the level of investment in the sector is inadequate, as the four refineries in the country are over-aged and are only able to produce about 50 per cent of their installed capacity and meet only about 40 per cent of the daily 30 million litres domestic demand for refined petroleum products.Nigerian Tribune's investigation revealed that the drive was to woo investors who could establish refineries in the country and would be encouraged to do so, since they would get returns on their investments.This, has, however, failed to impress the average Nigerian who sees subsidy removal as another poverty enhancing strategy.The federal government said the removal of subsidy in the 2012 fiscal year would enable it to release funds for infrastructure and to create jobs, while overall expenditure next year is likely to rise, according to the document sent to the National Assembly.Subsidising the cost of fuel, mainly diesel, petrol and kerosene, costs the government N1.2 trillion naira ($7.5 billion) in lost revenues but convincing Nigerians on the removal has become a Herculean task. Justifying government's position on the need to remove the subsidy, a task that has always pitched the past governments against the populace, President Goodluck Jonathan and his economic team have a huge assignment.Effects of fuel subsidy removal:With the removal of fuel subsidy would come a number of ripple effects, which, according to many people who had spoken with the Nigerian Tribune, would be far from being palatable to the common man.In the words of Kali Gwegwe, Chief Executive Officer, Nigeria Democracy Watchtower, based in Yenagoa, Bayelsa State, the removal of fuel subsidy would automatically lead to increase in the pump price of fuel, which would also lead to ' increase in transport fares, school fees, house rent, foodstuffs and health care services.'The Nigerian Labour Congress (NLC), Oyo State Chapter Chairman, Comrade Bashir Olanrewaju, however, opined that the proposed fuel subsidy removal was an invitation to anarchy, death, discomfort, anger, anguish and poverty.In his words, the eventual removal of the fuel subsidy would lead to more cases of suicide, depression, mental disorder, divorce and rebellion against the government. He however, wondered if government was willing to use the removed subsidy to attend to the attendant cases.The NLC boss, who spoke with the Nigerian Tribune on phone, noted that the government was not paying any fuel subsidy because if the government claimed to be subsidising price of fuel and it does not reflect in the lives of the masses, then it is as good as not paying the subsidy.'The primary duty of any government is maintainance and order. If the government is paying the subsidy to a body, government should hold such body accountable. If government is aware that a group of Nigerians is only enriching themselves at the expense of the Nigerian masses, then government should get the people prosecuted.'There is no doubt that we like Jonathan, we voted for Jonathan but the removal of fuel subsidy is not part of his campaign promises, so why does he want to inflict this pain on Nigerians''The Labour leader urged President Goodluck Jonathan not to give them the usual story which Abacha and Obasanjo's regimes gave them -the story of people ganging against the government as a result of its insistence to remove the fuel subsidy.'In the 11 to 12 years of democracy in Nigeria, has anything positive happened to our infrastructure' Our educational system, water, road, electricity, are they better than the pre-1999 era''We have crude oil and refineries. Is it too much for Nigeria to make fuel available for the masses at affordable price' Why can't government check smuggling, man and police our very porous borders, get petroleum marketers registered' If Libya is doing it, why can't Nigeria do it''I have always told people not to compare Nigeria with Europe. Why should our president succumb to the International Monetary Fund (LMF) rule of 'Let your people suffer'', Comrade Olanrewaju asked.In an interview with the Nigerian Tribune, Osaro Obobaifoh, a financial analyst, warned the government to get the fundamentals right before removing the subsidy as the removal might not impact on the economy.'Government only wants to implement IMF suggestions but it should take a second look at the country's peculiarities', Obobaifoh urged.Governor Abdul'aziz Abubakar Yari of Zamfara State said the removal would put an end to the enrichment of a few people through the huge sum deducted by the NNPC, which he put at N1.3trillion in 2011.He however suggested that the subsidy should be used to build refineries.Meanwhile, Senator Suleiman Adokwe, Chairman, Senate Service Committee and former member, Petroleum Resources Committee (Downstream) said that what mattered most was how to manage the subsidy.'I heard that the subsidy is getting into wrong hands and not to the people who need it. NNPC's activities are shrouded in so much secrecy and nobody knows what is going on there.'It is a fundamental error that NNPC's activities are not open and its budget, not subjected to scrutiny by the National Assembly. The military made the NNPC Act in such a way that they are answerable only to Mr. President.'NNPC owes some duties to the public. NNPC Act should be amended to make it responsive to Nigerians. Its budget, total revenue and expenditure should be properly scrutinised.'In spite of the subsidy, the pump price of fuel is still exorbitant in the North-East and the North-West. We really need to know how the subsidy is being managed. If we know how it's being managed, there may be no need to take it off.'The labour unions, human rights activists and other social and pressure groups have been mobilising against the January take off of the scheme. But for the first time in the nation's history, the government is garnering support from the National Assembly and the private sector.The Nigerian Labour Congress, NLC has demonstrated what the government would likely face if the subsidy is eventually removed.Apparently not happy with the support the bill got at the National Assembly, the labour unions in Nigeria,the Nigeria Labour Congress (NLC), and the Trade Union Congress (TUC) have called on the 7th National Assembly to do away with the passive attitude of the 6th National Assembly towards the revelations of the NEITI Audit reports and bring the corruption in the oil sector under the searchlights and prevent the further burdening of the Nigerian masses in the name of subsidy removal. The two labour unions have vowed to resist any attempt to remove the subsidy. They believe that the implications of the removal of the subsidy from petroleum products transcend what the government is saying.It also warned the state governors who were said to have requested the removal of subsidy as a pre-condition to pay the new minimum wage. The labour unions were surprised that the governors forum which had among it a former labour leader could have taken such a stand. It was also gathered that the private sector was planning to use some former union members as tools in educating members of the public on the benefits of the removal of subsidy.Before now, discussing a bill such as the removal of subsidy would have got a chorus, 'no' response from the National Assembly, but when the issue was raised, it almost divided the house. From the Senate President, David Mark, who blamed the controversy on the cabals in the petroleum industry and vowed that the Senate would uncover those that short-changed Nigerians in the process.'My belief is that there is a cartel within the petroleum industry and whatever they do is just exclusive to them. Ninety per cent of people outside do not know. We must find out how much is spent on subsidy, who are the beneficiaries' Has subsidy benefitted us' These are salient points and we cannot run away from them,' he said.Moving the motion for investigation into the management of subsidy in 2011, Senator Abubakar Saraki (PDP-Kwara), contended that the mismanagement of subsidy in 2011 budget would frustrate funding for 2012 appropriation.'In furtherance of the implementation of the fuel subsidy in 2011 appropriation, the sum of N240 billion (N20 billion monthly) is budgeted. Of the N20 billion monthly allocated, N11.2billion was allocated for domestic fuel subsidy (NNPC) and N8.8 billion for domestic subsidy (market) as stated in the Appropriation Act 2011.'Although, N20 billion was set aside for subsidy on a monthly basis in the Appropriation Act 2011, in August 2011, the total figure expended was N165bn of which the NNPC was N88 billion and Independent Marketers was N77.7 billion.'In the first three months of the year, both the NNPC and the Independent Marketers did not exceed N62 billion monthly but within the last three months, figures have ranged between N150 billion and N186 billion.'With this trend, by the year-end, we will have a fuel subsidy bill of over N1.2 trillion as against the N240 billion budgeted in the Appropriation Act. The implementation of 2011 Appropriation Act will surely be in troubled waters if a variation of N1.2 trillion arises as a result of the level of expenditure incurred on fuel subsidy so far.'Other senators in support of the motion questioned the rationale for retaining subsidy when it was to the detriment of the people.However, they raised questions on whether the subsidy had brought down the prices of petroleum products. While this was coming from the government quarters, the organised private sector led by the CEO, Dangote Group of companies,Alhaji Aliko Dangote, said it seemed the time was ripe for subsidy removal in Nigeria.The general consensus, however, is that the removal of the fuel subsidy would bring the Nigerian masses a lot of untold hardships as it would have a ripple effect on all sectors of the economy and all spheres of life .
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