A Review of the Nigerian Energy Industry

Uncertainty heightens as SURE wobbles

Clara Nwchukwu

03 April 2012, Sweetcrude, Lagos –
By November 2011, the Federal Government had enunciated the Subsidy Reinvestment and Empowerment Programme, SURE-P, to cushion the effects of the removal of subsidy from premium motor spirit, PMS or petrol. For this reason, the government gave Nigerians the rudest shock of their life by announcing the removal of subsidy from petrol on January 1 and the price of the product skyrocketed from N65/litre to N141, but was later brought down to N97/L following nationwide protests.

Government argued that it was pertinent to remove subsidy on petrol because it, “poses an unsustainable financial burden on the government, creates inefficiency in usage for consumers, disproportionately benefits the rich, and diverts critical resources from much-needed investments in infrastructure.”

After three months of implementation, Clara Nwachukwu, writes that Nigerians are still wondering what the SURE programme is all about, and if they will ever benefit from the gains promised by government.

Gains from SURE
The monies “saved” from the difference between the old pump price and the new one, which is N76/L X 35million litres national daily requirement makes a total of N2.67billion daily will be deployed to provide basic amenities for Nigerians.

Government had expected to save more than N1.74trillion, being the sum spent to reimburse oil marketers for selling petrol below market price through full deregulation.

According to the Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, ‘This programme (SURE) is a 3-4 year programme designed to mitigate the immediate impact of the removal of fuel subsidy and accelerate economic growth through investments in critically-needed infrastructure.”

And to demonstrate its “seriousness” to actualise the gains of the programme, the government made additional provisions for some critical sectors of the economy such as infrastructure, education and health outside budgetary provisions in the 2012 Appropriation Act.

Some of the projects and allocations as announced by the Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, are as follow:

•Works – about N46.5billion to be used to support a number of road projects including the Abuja-Lokoja Road; Benin-Ore-Shagamu Road; Port-Harcourt-Onitsha Road; Kano-Maiduguri Road as well as for the construction of the Second Niger Bridge and Oweto Bridge.
•Power – additional N155billion will go for power projects such as the Mambilla power plant, coal power plant and small hydro power plants between now and 2015.
•Transport – is expected to get about N20.9billion to support the Abuja-Kaduna and the Lagos-Ibadan railway line projects.
•Education – gets additional N24.6billion for vocational training centres.
•Health – to get N73.8billion for maternal and child heath
•Niger Delta – gets about N21.7billion to support the East-West Road, and,
•Water Resources –for a four-year period ending 2015, will get additional N205.5billion for rural water, water supply, and irrigation schemes and other water related projects.

Okonjo-Iweala maintained that “These projects will not only significantly improve the country’s infrastructure, but will also create millions of jobs for Nigerians. This struggle is not between the government and Nigerians, because government is squarely on the side of the people.”

She argued that the fight on subsidy is “between the government and Nigerians on one side, and persons who are bent on continuing their age-long ‘milking’ of the system for their personal benefits on the other side.”

To be or not to be?
Ironically, no sooner did she beg to “support government’s efforts at defeating these persons, and creating a better country for all Nigerians,” than President Goodluck Jonathan was quoted as saying that the SURE programme was no longer realistic.

According to reports, the President allegedly told the 58th National Executive Committee meeting of the Peoples Democratic Party, PDP that the SURE was hurriedly conceptualised on the heels of the nationwide protest against the removal of the fuel subsidy.

It is uncertain why the president chose to declare the programme as hurriedly packaged, considering that the full policy document was dated November 2011.

Accordingly, he said; “We are working on a new document based on the reality, but we don’t want to promise what we will not achieve. Those who have it please withdraw it, we cannot realise the money that is stated therein, but we will still come up with a document based on what we get.”

Since Mr. President is now confused about the workability of the programme, he failed to tell Nigerians what becomes of the Dr. Christopher Kolade-led, Subsidy Reinvestment and Empowerment Programme Committee, charged with the responsibility of monitoring the disbursement of funds accruing from the partial petrol deregulation.

Other members of the committee include Major-General Mamman Kontagora (rtd) as the deputy chairman of the board, two representatives of the National Assembly, two representatives of the organised labour, one representative of the National Union of Road Transport Workers , one representative of the Nigeria Union of Journalists, one representative of Nigerian women groups, one representative of Nigerian youths, one representative of civil society organisations, as well as the Coordinating Minister of the Economy/Minister of Finance, the Minister of National Planning, the Minister of Petroleum Resources, the Minister of State for Health, the Special Adviser to the President on Technical Matters, and six reputable individuals from the six geopolitical zones in the country.

Kolade speaks
Speaking on his committee’s responsibilities, Kolade noted in Lagos that the committee had oversight function for only 47 per cent of the total funds accruable, while the larger portion of 53 per cent goes to the space and local governments.

For efficient and better management of the fund, he urged that the committee should be replicated at all levels of government from Federal to the state and local governments.

He insisted that it was necessary for state and local governments to put systems in place to ensure that the amounts that accrued to them were judiciously spent to win confidence in the programme.

He noted, “The Federal Ministry of Finance published the subsidy savings for January 2012 and how it was shared across the three tiers of government, the Federal Government got N15bn. If we continue at that rate, the maximum the Federal Government would get this year would be N180bn. So, if the intention is to ensure that the people, including those in the rural areas, feel the impact of the subsidy savings, we should find a way to build a partnership with state and local governments,” he said.
Indeed, the 36 states of the federation, the 776 local government areas and the Federal Capital Territory were expected to get N411.03billion, N203billion, and N98billion respectively from the SURE proceeds, but neither the states nor local governments have said anything about their portions of the fund, which is meant to more on Nigerians in the rural areas.
He added that he had ordered consultants working for the committee to report any act of corruption, and promised to resign, “if I find that it is impossible to stand on probity, transparency and accountability.”
Policy somersault
So far, aside from the launch of the federal mass transit, nothing much has been seen of the SURE programme, a development that make Nigerians to believe that the programme might well be just another of the white elephant projects that was accompanied with so much fan fare, but not enough substance.
At the launch of the mass transit programme, approved the disbursement of N15billion as a revolving interest-free loan to boost public transportation in the country. But some states listed in the pilot scheme have complained of lack of access to the fund
However, analysts believe that the SURE can still be salvaged, if only the Federal Government can priotise the execution of the projects.
They argued that N32.04billion per annum can still achieve a lot if prudently used, saying, “Government would have to priotise the projects in such a way that all the geo-political region would benefit from the programme.
“In the past, we have witnessed lopsided development projects in favour of particular regions, but now to win back the people’s trust, President Jonathan must ensure fair play in the allocation of projects because of the complexity of the Nigerian system.”
For equitable distribution of the SURE resources, they noted that some projects planned for the year may have to be shelved, while some others would have to be restructured.
But they equally expressed concern over “the silence of the states and local governments on the SURE programme. Knowing the states and local governments they would have cried out if they had not received their own share of the SURE funds, and since they have remained silent means that they have received the money, so they should let their people know what progeammes they have for them, rather than depositing the money into someone’s account to be generating interest.”
In spite of analysts optimism, Nigerians are worried about the turnaround of the policy as promised by Mr President, as they noted that policy readjustments takes forever in Nigeria, and if a new SURE document is being planned, then they may never be realized in the tenure of this administration.

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  • The Labour Union will only achieve maaingrl results. Best case: Dr. Jonathan concedes and allows a 50% reduction instead of total removal of subsidy. And then removes everything later quietly. His actions are darker than is immediately obvious. Interesting to think that an oil-producing country (one of the foremost, for that matter) will even have oil subsidy removal on it’s table of issues requiring attention. Petrol/gas/Diesel should never be more expensive than N50/Litre! The government has been blinded by the numbers involved and played into the hands of the oil-importing cabal. President Jonathan is now focused on treating symptoms of a disease instead of the root-cause itself. He will ultimately look like a medical doctor who spends sleepless nights fighting each new stage in the symptomatic manifestations of an undocumented and unfamiliar virus. By the time the Doctor discovers that the replication of the pathogens in the patient’s body has not been hampered, the patient has already entered the final stage in the battle for supremacy between Life and Death. Rigor Mortis (Death grips, uncontrollable muscular spasms, and jaw lock) sets in. And the good Doctor weeps in despair at his error.The real issues are:1. Successful Revival of our four (4) refineries, and the successful construction of more across the country, so that we stop being the laughing-stock of the comity of nations by importing processed crude from the same people we sold it to, and then selling it to ourselves at international rates.2. Final resolution of the electricity supply issue by ordering customs to clear the rotting power equipment that has been locked down at Apapa for a lifetime, due to power plays and lobbying by Power Generator Set Importers and other selfish parties benefiting from the stone-age status of our country. This, Dr. Jonathan knows, will have an instant positive effect on the economy, and quality of life in Nigeria.Alternative sources of funding:1. Alerting the lawmakers and politicians to the unique opportunity presented to them to sacrifice just half of their monthly incomes to build a Nigeria where THEY would be our heroes.2. All the evaporated monies in our Foreign Reserve should be refunded, or accounted for. Where, for instance is the $13Bn that was in our Foreign Reserve just before he became Acting President? The country’s silence foes not imply that we are unaware of anomalies in his public character. What did the Governors who went to meet and discuss the savings in the Reserve do with their alleged share of the money? THAT would have nicely paid for extensive overhauls of the power sector, or helped considerably in building an efficient, modern and WORKING refinery.The NSIA Fund is a belated attempt to undo the financial damage that has been done to Nigeria since Dr. Ebele Jonathan became Acting President. We thought he would understand better the plight of the common man. He is now rich beyond his dreams and has forgotten the mire from whence he came.

  • Tom

    RE-CLAIM NIGERIA.Fellow Nigerians,Nigeria belongs to all of us. Nobody has any greeatr stake or right to her than you and I.We must therefore reclaim Nigeria from our tormentors. The present struggle is not just about the removal of subsidy on petroleum. It is also about good governance anda0 alsoabout a fight against the unbelievable level of corruption in government.a0Our tormentors said we must sacrifice to secure our future. No sermon is as powerful as a good personal example. They must lead by example and we would follow.Our demand should be the following and we would accept no less. It is also non-negotiable.OUR CHARTTERa01. THERE MUST BE IN PLACE A LAW THAT MAKES STEALING PUBLIC FUNDS AN OFFENCEa0 PUNISHABLE BY PUBLIC EXECUTION.a02. THE IMMUNITY CLAUSE MUST GO BOTH AT THE FEDERAL AND STATE LEVELS.a03. THE PRESIDENT MUST SELL OFF ALL THE AIRCRAFTS IN THE PRESIDENTIAL FLEET (the Prime Minister of Britain, a much bigger economy does not have one and travels with British Airways).a04. THE PRESIDENT’S SALARY AND ALLOWANCES MUST NOT EXCEED $200,000 (our President has no reason whatsoever, to earn more than the American President . for what?)a05. THE PRESIDENTIAL VILLA MUST BE SOLD OUT AND BE REPLACED WITH NO MORE THAN A 6BEDROOM HOUSE (the British Prime Minister lives in a 3-bedroom apartment).a06. FEEDING IN THE PRESIDENTIAL AND VP LODGE SHOULD NOT BE MORE THAN 1MILLION NAIRA PER MONTH. (Presently it is 90 milliona0Naira per month for both). >:Oa07. NO LEGISLATOR SHALL EARN MORE THANa0A PERMANENT SECRETARY.a08. NO GOVT OFFICIAL SHALL HAVE MORE THAN ONE OFFICIAL CAR.9. NO GOVT OFFICIAL OR APPOINTEE WOULD BE ENTITLED TO FOREIGN MEDICAL TREATMENT (whatever is provided for the citizens should be good enough for our officials).a010. THERE SHALL BE NO OFFICE OF THE FIRST LADY AT THEa0FEDERAL, STATE AND LOCAL GOVT LEVELS.This is our SOCIAL CONTRACT. Don’t just re broadcast, join the PROTEST: it’s a MUST!