A Review of the Nigerian Energy Industry

Nigerian state Governors okay removal of fuel subsidy

Daniel Idonor

7 October 2011, Sweetcrude, Abuja —Governors of Nigeria’s 36 states,Thursday, at the National Economic Council, NEC, meeting, backed the recent move by President Goodluck Jonathan to remove the controversial subsidy on petroleum products.

Also yesterday, Minister of Finance and Coordinator of the Economic Management Team, Dr. Ngozi Okonjo-Iweala, prevailed on the governors to drop their earlier decision to scrap the National Sovereign Wealth Fund, SWF, as NEC opted for dialogue between the Federal and state governments.

Addressing State House correspondents after the NEC session which lasted for over six hours, and presided over by Vice- President Namadi Sambo, Chairman of the Governors’ Forum and Rivers State
Governor, Rotimi Amaechi, said the removal of the subsidy was long over- due, as the subsidy had only enriched very few Nigerians.

Gov. Amaechi was joined by governors Peter Obi (Anambra), Liyel Imoke (Cross River), Olusegun Mimiko (Ondo), Abdulaziz Yali (Zamfara) and the Minister of Planning, Dr Shamsudeen Usman.

Amaechi said: “One of the most important issues that we canvassed and decision reached at, was that governors supported the Federal Government’s move to remove subsidy because we believe it is for the interest of this country.

“We will save money for the development of the economy and at the end of the day, we will provide opportunity for the greater number of people.”

He added: “The other issues we discussed were those of education and agriculture and the need to develop agriculture at the state level and necessary support from the Federal Government, the issue of ETF and UBEC and how to get them to support education in the states.

“On SWF, the governors met yesterday and took a position. It is the Federal Government trying to convince the governors to abandon their positions. We are satisfied that it is a conversation we don’t want to escalate. Let’s look at all the issues and when all the issues are on the table and the governors are convinced, we will take a decision. But as of whether a decision has been reached, no decision has been made.”

He noted that “this policy, at the end of the day, i don’t think the governors or the FG can be insensitive to the people that have elected us and put us in office. Don’t forget that this is a civilian government, it is a democratic government that we seek for votes four years after. We must learn to take very difficult decisions”.

“That is what we were elected to do and that decision is to improve on the welfare of our people. So whichever discussion that will escalate the conversation, we are ready for discussion. We are open to discussions and we are open to the fact that there are social safety nets that the federal government is trying to put in place to cushion the effect”.

He explained that “but beyond the fact that the FG is putting up safety nets to cushion the effect, there is also the argument that only a few Nigerians are just gathering money and we are hearing of subsidy. For Christ’s sake, outside the few state capitals in Nigeria, which other place do you have this subsidy operating. I hear some states in the South East are selling fuel for as high as over N100 per litre”.

He argued that “fuel is being smuggled out of the country and the people of Nigeria are suffering and then some elites then pick up the conversation that we are insensitive to the people. Do you think that politicians who will go four years after with this new electoral process will become insensitive to Nigerians? The answer is absolute no. So we wait for the conversation and we will meet them at the point of the debate”.

Ameachi pointed out “the moment you liberalise or deregulate the oil industry, then you will provide opportunities for people to invest in refineries and create employment opportunities; but wondered why nobody has picked up that argument.

“That is why we are saying that all those who said they are opposition, either parties or individuals. The federal government and the governor’s forum are ready to engage them in that discussion any day and anywhere anybody comes up with that, because there are so many benefits that will accrue to the people. Nigerians are dying of hunger on the streets when we can liberalise or deregulate the oil industry and create more employment opportunities”.

He explained that “most people do not know that from crude oil, you can get a number other products that can emanate from there and that is part of other aspects of economic development and nobody has addressed that. When you talk about sensitivity, you must talk realise that this is informing our decision. Beyond the fact that a few of us elites are benefiting from this huge pull of fund that no one can account for. The aim is to create a conducive environment to explore the opportunity”

Engaging NLC
The governor remarked that “there is the need to engage the labour unions and for the people to ask what the state and federal government want to do with the outcome of the removal of the subsidy.
They should ask specifically what will be the benefits of the removal to improve on the lives of the people. If that is the essence of the dialogue, instead of allowing a few people to benefit from it”.

On UBEC, Ameachi said “I think we must comply with the law first and foremost and secondly is the fact that the committee said that there was need to set up processes that will assist the states access this fund on quarterly basis. By which time we would drawn up the plan for social development and then looking at the possibility of amending the law to allow us access the fund”.

SWF dialogue fruitful – Okonjo-Iweala
Fielding questions from Journalists, Dr Okonjo-Iweala disclosed that while the Federal Government has began a fruitful dialogue at NEC, with state governments, President Jonathan has also engaged with governors, to ensure that the sovereign wealth fund, saying that through the dialogue, all gray areas will be smoothed.

“We are discussing and we are having a very fruitful dialogue with the governors on SWF. It is a very serious and important matter. So we need to keep discussing over a period of time so that details about how we do invest, in what would we invest, and how it will be managed will be made clear”, she said.

According to her, “all these are details that need to be made clear and sorted out. What will be the governors structure also need to be cleared. So we are talking about that. Each time, we make some progress in deepening the understanding”.

She said “we will continue to have the dialogue, we will continue to try and make them understand how this will work. Mr President is also dialoguing with the governors and we are working on that and I think we are making progress”.

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