What Nigerian Govt must do before subsidy removal

*Speakers at NPAN Town Hall Meeting list conditions

23 December 2011, Sweetcrude, LAGOS – Given the heated debates that have characterised the Nigerian government’s planned removal of fuel subsidy beginning from next year, there were intellectual fireworks at Thursday’s Town Hall meeting organsied by the Newspapers Proprietors Association of Nigeria (NPAN), on the issue.

The Agip Recital Hall of the MUSON Centre, Onikan Lagos was literarily lit up with socio-economic, intellectual and ideological reasons why or not subsidy must be removed and why implementation date should be postponed when a high-powered Federal Government team led by Co-ordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala squared up against a Labour and Civil Society Organisation (CSO) team anchored by Nigeria Labour Congress (NLC) Vice President, Comrade Isa Aremu.

Moderated by the Publisher of Thisday Newspapers, Mr Nduka Obaigbena with leading media practitioners such as Nosa Igiebor, Frank Aigbogun, Mohammed Haruna and John Momoh as panellists, the government team, which also had Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi and Petroleum Minister, Mrs Diezani Allison-Madueke, kick-started the debate with details on why the government could no longer afford fuel subsidy and pleaded with Nigerians for understanding to save the country.

Constitutional lawyer and rights activist, Mr Olisa Agbakoba (SAN) began the Labour and CSO counter, which also had activist lawyer, Mr Femi Falana, media guru, Mr Ben Murray-Bruce and Trade Union Congress (TUC) President, Mr. Peter Esele. Noting that conceptually, nothing was wrong with fuel subsidy removal, Agbakoba wondered why the government was in a hurry to implement the policy with little or nothing on ground and whether the policy could not wait for 12 months.

As speaker after speaker marshaled their points, the hall was obviously divided into: Those for subsidy removal and others for oil subsidy retention. Each salient point made by contributors was accompanied by cheers or jeers from the audience.

Subsidy removal’ll save Nigeria N1.12trn in 2012 –Okonjo-Iweala
Making a case for subsidy removal, Okonjo-Iweala, urged the citizenry not to despair and trust their government to deliver this time in spite of past broken promises, saying the policy will bring about a significant reduction in government borrowing and save the country N1.12 trillion, next year.

If retained, she disclosed the government would borrow heavily to fund subsidy and recurrent budget next year.

According to her, N3.7 trillion was used to fund fuel subsidy between 2006 and 2011 and N1.348 trillion between January and October, 2011, which she said amounted to 30 per cent of total budget, 118 per cent of Capital project and 4.18 per cent of GDP.

The minister also cited cost of fuel in other oil producing and non-oil producing countries, saying that with the exception of Algeria and Libya, the country’s fuel price was the cheapest in Africa.

She said: “Last year, we borrowed about N852 billion to finance the deficit in the budget. In 2012, we will be forced to borrow about N1.12 trillion, almost the total of our capital budget. It is not healthy that we should be borrowing money for capital and recurrent expenditure,” she said.

She said that in order to assure Nigerians that the funds saved from subsidy removal would be judiciously utilized, the government was setting up a programme and a committee of credible and eminent Nigerians that will bring about transparency in the management of the resources and effective implementation of designated projects.

“The major issue is the lack of trust. Under the leadership of the Vice President, a programme has been developed on how the resources are to be used, in a way that every Nigerian can monitor and assess for themselves the way government is utilizing the resources saved from fuel subsidy removal. The government is setting up a committee comprising eminent Nigerians. This is to demonstrate to Nigerians that the savings made will be used for the benefit of all Nigerians and for the intended purposes.

The committee will oversee the fund and the programme. Instead of Nigerians asking the president, this committee will tell Nigerians what the funds are being used for and how the programme is being run.”

People should give us the chance to build this country. We have to rebuild this trust that has been broken and we have to rebuild it by starting with issues that are difficult. We know this issue of fuel subsidy is a difficult one. We need to prove a point, we need to help the poorest of the society to survive. We are willing to work with Labour and everyone to move this country forward.”

FG must lead by example – Agbakoba
However, former President of the Nigeria Bar Association, NBA, Mr. Olisa Agbakoba (SAN) maintained that for fuel subsidy to be removed, which he said would place more burden on the shoulders of the citizenry, the Federal government should show Nigerians the burden it would carry.

He said: “I have nothing against the removal of fuel subsidy. Conceptually, there is nothing wrong with subsidy. But how can we ensure that subsidy removal will benefit Nigerians. Why must we remove subsidy tomorrow? Why can’t we say we will remove it in a year’s time? Some people have talked about government being sanitized. When you want to put a burden on us, show us the one you are carrying.”

Why we must open up the sector – Alison-Madueke
Speaking, the Petroluem minister, asked the likes of Agbakoba to give the government chance to do something for them by supporting deregulation.

She said that clamour for fixing of refineries before the policy would kick-off would not yield dividends because the government had been on the task in the last 10 years without success. She also said new refineries could also not be built because there was no return on investment.

However, the minister, who articulated other subsidies the government was funding in the area of agriculture and on-going people-oriented projects, said the government had invited the original builders of the nation’s four refineries to do the Turnaround Maintenance (TAM) and getting them working upto 90 per cent capacity within 12 to 24 months.

Labour must be factored into govt’s policies – Isa Aremu
On his part, Aremu berated the government for failing to dialogue with Nigerians on the policy.

His words: “There is already a problem with this policy. Our fear is that the planned removal of the fuel subsidy will not be a win-win situation for the people. The challenge is that the drivers of this policy should make the deregulation process a win-win situation for Nigerians because it is hard enough that we are importing fuel, and it is even worse that the products cannot be distributed across the country. The reality on ground is that Nigerians have not known the market forces responsible for the declining economy.”

“I believe that the Federal Government needs to dialogue with the people of Nigeria because petroleum is an important product to be compared with other sectors that have so far been deregulated.

We have been too ideological about the deregulation process and it is important that we must be pragmatic about it. For me, there is nothing terribly wrong about subsidy.

What labour is saying is that there is need for good governance. For me, building more refineries is the major challenge for government. I think we need to build on the ideas that have been generated here. Nigerians are desirous of good governance. I want to add that all of us need to work together and the Nigeria Labour Congress must be factored in all of government’s policies.”

Labour should fight for increased local fuel production —Sanusi
Backing fuel subsidy removal, Sanusi said the country could not continue to fund consumption instead of production and urged opponents of fuel subsidy removal to channel their energy towards campaigning for increased local production of fuel.

He said: “People said we should subsidise. Yes, subsidy is good, but the question we should be asking is if we should be subsidizing consumption or production. Should we subsidise the poor or should we subsidise those who are making illegal gains from the system? We always complain that government makes promises and do not meet up with its promises. We have an opportunity every four years to change that government.

“If the government removes this subsidy and it did not do anything tangible with the funds, when the government later come for re-election, people have the opportunity to assess if the government delivered on its promises and the people have a chance to take their destiny into their own hands. That is why we must strive to deepen and strengthen democracy.

He, however, noted subsidy removal would not address the issue of corruption, inefficiency and bad governance, adding that if the subsidy was not removed, the burden would be too much for the government.

Cabals have insiders in govt – Peter Esele, TUC president
In his contribution, TUC President, Comrade Peter Esele regretted that the government had not implemented various reports of committees it set up on the issue. He also lamented that the government failed to yield to their demand for the refineries to be handed over to labour for management, which he said would fix the refineries within six months.

He averred that the government could deal with the oil cartel, if it were serious. “People talk about cabals, the cabals cannot survive if they do not have people in government. The NNPC must be allowed to run like a multinational company as observed in other parts of the world. If we do not see any action, we will not support the removal of the oil subsidy.”

Govt must listen to Nigerians – Falana
Vehemently opposing the policy, Falana urged the government to do the needful first, listen to “alternative suggestions” and allow for more time to engage Nigerians before going ahead with the plan to remove fuel subsidy.

Falana said the country would not come to this cross road if the government had implemented extant laws in the nation’s statute books that would have dealt with those holding the country to ransom.

He urged that the fuel cabal should be prosecuted because they had brought us to where we were. “They have benefitted from the non-removal of subsidy because the government has refused to implement all the necessary laws that would have prevented them from ripping off Nigeria. Don’t impose further punishment on Nigerians. They cannot afford to pay for the corruption and inefficiency of government,” he said.

Removal yes, but we must insist on prudent use of savings – Oshiomhole
Former President of the NLC and Edo State Governor, Comrade Adams Oshiomhole among others backed fuel subsidy removal but he said Nigerians must rise and insist that the proceeds must be judiously utilised.

He also charged the government to deal with the cabal headlong.
His words: “The removal of the fuel subsidy does not address the issue of who benefits from it or not. Who are those benefitting from the subsidy?

Those are the issues that must be addressed? We have not subsidized production and therefore, there are no jobs being created. If jobs must be created, the alternative is that oil must be subsidized. For me, we have subsidized the production sector and with that, few people are helping themselves by feeding fat at the nation’s expense. Nigerians must commend the federal government for not increasing the prices of crude oil despite the current oil prices. Every other thing has changed except the oil sector.”

Subsidy is a matter of time – Amuka
For Publisher of Vanguard Newspapers, Mr Sam Amuka, the robust debates at the meeting showed that subsidy removal was a matter of time as both sides appeared agreed on the issue.

“It seems this has been the most worthy meeting. Both sides have benefitted. It is clear to me that the removal of subsidy is a matter of time, when or how,” he said, noting that the government must get the citizenry to trust government by reducing cost of governance, tackling corruption, reducing hardship and assuring the people that the benefits would accrue from fuel subsidy savings.

The Roll call
Eminent Nigerians at the event chaired by Mallam Ismaila Isa include: Former governor of Ogun State, Aremo Olusegun Osoba; Minister for Justice and Attorney-General of the federation, Mr. Mohammed Adoke (SAN); Special adviser to the President on Research, documentation and Strategy, Oronto Douglas; business mogul, Alhaji Aliko Dangote; Mr Femi Otedola of Zenon Oil; Senator Babafemi Ojudu, Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Engineer Austen Olusegun Oniwon. Others are Editor-in-Chief of TELL magazine, Mr. Nosa Igiebor; Chairman of Channels television, Mr. John Momoh; Alhaji Mohammed Haruna and Publisher of the Business Day, Frank Aigbogun.

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  • Thomas Oshioke John

    After watching the debate on tele and reading through this summarized version; i have this to write:

    The proponents of the subsidy removal are right.
    Even though; the imminent pain accompanying its removal would seem never ending and hard on the common man(like the vice president of the labour congress pointed out). To be frank: It is still by far preferable to the fore-telling danger of doing nothing and watching our youths suffer a greater sisyphean-cause ahead.
    And the issue of the government being a slothful two-faced bitch shouldn’t surface here.
    Of utmost importance is the fact that we need the employment schemes published and our refineries should be running production above that 30%(as pointed out by the minister for petroleum) ASAP! Thank you.


    To me, the solution to the burning issue of fuel subsidy removal is like a beheaded head talking, what does it has to say? Our past government are 100% responsible for taken us to where we are today. We have lots of portfolios that our so called national cake is always servicing but yet no visible outcomes. Ask Minister for Agricultiure of what benefit is the office to the Nigerians? No visible or reasonable national farm. No particular product (crop) we could call ours. These problems also apply to other offices, the country spends money on them but at the end there is no harvest. In summary, the present dictators want us to pay for what we never bought. Ask Goodluck, Sanusi, Iweala, minister for petroleum and others when last have they paid for fuel consumption from their purse? That answers it all.