A Review of the Nigerian Energy Industry

Fuel subsidy must go, Jonathan dares Labour

Henry Umoru

16 December 2011, Sweetcrude, ABUJA – President Goodluck Jonathan said Thursday that if Nigeria as a country must make progress, the government must take the bold step and remove subsidy on petroleum products.

President Jonathan emphasized the need to deviate from the past and embrace proactive measures that would help to achieve the transformation agenda, just as he regretted that after about 53 years of exporting crude oil, Nigeria has failed to transform into a hub for the petrochemical industry.

Speaking at the National Mirror Newspapers Maiden Annual Lecture held at the Nicon Luxury Hotel, Abuja, the President stressed that the removal of subsidy and deregulation of the oil sector has become very imperative against the backdrop that the government had experimented with deregulation in other sectors of the economy like the telecommunications industry and it worked, adding, “you cannot eat your cake and have it.”

What gain for Nigerians — Senate

Meanwhile, the Senate has urged the Federal Government to give a comprehensive explanation to Nigerians as to what they stand to gain as benefits if the subsidy is removed.

The position of the Senate was made known through the Senate Committee Chairman on Media and Public Affairs, PDP, Abia Central, Senator Enyinnaya Abaribe who noted that while the Senate would support all people-oriented policies of the administration, the Federal Government must, “in the spirit of transparency let Nigerians know what they stand to gain from this initiative.”

President Jonathan’s insistence on removal of subsidy came barely forty-eight hours after the umbrella body of Nigerian workers, the Nigeria Labour Congress (NLC) issued a statement threatening to call out all workers to prepare for protest against the removal of fuel subsidy. NLC described the 2012 budget estimates presented to the National Assembly on Tuesday by President Goodluck Jonathan as “a disaster waiting to happen.”

It will be recalled that the President was silent on the issue of subsidy removal while presenting the N4.749 trillion budget with a deficit of N1.105 trillion to the joint session of the National Assembly.

Represented at the Mirror Anniversary with the theme, “Africa and the Challenges of the 21st Century” by the Minister of Information, Labaran Maku, President Jonathan said, “In the last couple of months, there has been a very huge debate in the media as to the direction of Nigerian economy and how we can properly manage it for the future interest of our people.

“One of the issues that are being hotly contested now is the issue of the deregulation of the Nigerian economy. I wish to reemphasise that our country can not go on as usual. Mr President promised on his swearing in that he will do things correctly and take those pragmatic measures that will correct the deficiencies of the past and consolidate on the progresses the nation has made since 1999.

‘’One of the areas our nation has continued to depend on and which has stunted the progress of the economy is the issue of the deregulation of the down stream sector of our oil industry. Since 1958 our nation has been exporting crude oil; after 53 years there is a need to look back and see how this sector has made progress and impacted on the life of our people. Today, government is taking a clear look at this. If the original vision was to transform that sector, in 53 years our nation should be able to become the hub of petro-chemical industry, exporting finished product to Africa.

“Because after 53 years we have no excuse to say that we continue to have crude oil without adding any value to it. Today, Niger delta should be a place where young Nigerians should be moving to seek employment because of the associated industries that ought to grow along with the discovery of oil; this has not been the case. So we are faced with a situation in which the nation has discovered a sole resource and depended in selling this sole resource to the rest of the world that is making three, four times the money they buy from us.

Time for transformation

“It was David Ricardo, a British economist, in the last century that said that in terms of historic advantage, that we Africans are better positioned to export raw materials to Europe while Europe will manufacture and send finished product to us. That theory lasted through the era of colonial rule. Now after 50 years of nation hood, Mr. President believed that the time has come for us to get to true essence of economic management by ensuring that we open up each sector for transformation.

“The real issue about deregulation is all about subsidy because there is no nation that can succeed without deregulation in the life of the society, in one way or the other. What the government has been arguing is that this year alone we have spent N1.3trillion in subsidizing petroleum product. This is about one third of our annual budget.”

Present at the occasion were legal luminaries, captains of industry, traditional rulers, media chiefs, journalists as well as former, external affairs minister, Ojo Maduekwe, who represented former President Olusegun Obasanjo as chairman of the occasion; Minister of State, Federal Capital Territory Administration (FCTA), Oloye Olajumoke Akinjide, former Inspector-General of Police, Sunday Ehindero, representative of the Oni of Ife, the Obawara of Iwara Ife, among others.

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