A Review of the Nigerian Energy Industry

Govt should eliminate corruption in fuel subsidy – Wabba

11 August 2015, Lagos – President of Nigeria Labour Congress Mr. Ayuba P. Wabba, in a chat with Ejiofor Alike, restated the opposition of the organised labour to the total removal of petrol subsidy, saying that the federal government should first recover all the looted funds and eliminate corruption in the subsidy regime. Excerpts:

Ayuba-Wabba, NLC president

Why has the labour continued to oppose the removal of petrol subsidy, which is seen by other stakeholders as a waste of resources that should have been channeled to the provision of infrastructure to the people?

The current system is inefficient and the hardship should not be transferred to the masses. The system should be cleaned up and then we can look at other issues associated with subsidy because the current system is not sustainable. We need a transparent system. Every issue in Nigeria is tied to oil – to run your personal business; to run your car and to run even Small and Medium Scale Enterprises (SMEs). Everything depends on oil and therefore, any increase in price by removing subsidy will have a multiplier effect. The cost of transportation will go up and every cost is tied to production cost. Increasing cost when poverty is ravaging Nigeria, I don’t think it is appropriate. So, we should find ways around how to make the system transparent because from the reports of the various audits of subsidy payments, including that of the Nigeria Extractive Industries Transparency Initiatives (NEITI), a lot of public resources  and revenues  that accrued to the country have gone into private pockets. Let them recover those resources.  When they recover those resources and the system becomes transparent, we can come back and look at the other associated issues. But for now, for us I don’t think we should add salt to injury because Nigerians are already on the ground and anybody who is on the ground is no longer afraid of falling. That is the situation we are in. Poverty is high; unemployment is high; many people cannot eat three square meals in a day. The issue is about how we can strengthen our system and put in place, a measure of good governance, then we can be able to discuss if there are other issues.
The argument against subsidy is that it doesn’t benefit the poor but the elites, who have cars. Don’t you see it from that angle?

It is not true. Who is pushing for the subsidy?  If the masses are not benefiting, they will not be pushing for subsidy. What I am saying in essence is that the word subsidy is not a bad word but the way it is being managed in Nigeria is our problem. Even in the United States, they subsidise agricultural insurance to the tune of over 20 per cent. In other countries, they subsidise education. That tells you that it is not bad to subsidise because once there is price differentials, it will affect a lot of lives.  What they are saying is that government intervention and control should be removed so that there will be free market.  Once you allow free market, one day, even on security issues, the marketers will come together and say that one litre of petrol will be sold for N200 and there is nothing you can do. Government must regulate; government must cushion the effects of bad policies on the general public. That is the essence of our argument. What happens to Kerosene? Do you see kerosene in the market? They have monopolised it. Only one person brings kerosene to the market. Is that the kind of free market we want? The answer is NO. The system has to be very transparent.  Even if you are doing that, you have to clean the system. If they are not benefiting, why is it that they come to Nigeria to take crude oil and refine it abroad and come here to sell it? Why can’t they build the refinery in Nigeria?  It is because there is corruption in the system. Once you clean up the system, they will build refineries here.  Therefore we must not lose sight of the critical issues in the argument. Who are pushing for subsidy?  If it does not benefit them, why are they pushing for it? Once it is cleaned up, I assure you that things will flow normally. Why has it become difficult to even refine locally. We have crude oil and they have issued licenses to people to build refineries but nobody built refineries because they are benefitting from the corruption in the system. Corruption is no longer in millions but in billions. Why did they not follow up on the expositions made in the course of investigating subsidy payments? It is an issue that affects everybody. That is why the masses participated in the January 2012 uprising against the removal of subsidy. If they do not benefit, why did they participate. So, for us the labour, we must continue to represent your interest; we must continue to advance the issues that will promote good governance. We are against total removal of subsidy. The word subsidy is not a bad word; it is good but the way it is managed in Nigeria is bad. What we are saying is that they should investigate even five or 10 years back and recover money and clean up the system. If they do this, there will be enough resources to run the government and provide essential services to the people.
Are you saying that removal of subsidy will mean absence of regulation? I mean, if government removes subsidy, can’t they set up regulatory bodies as is in the telecommunication, power and other sectors to regulate the activities of the operators?

Have they regulated kerosene? Have they not deregulated diesel? Yet, few people monopolised the importation of kerosene and diesel and once they bring it, they allocate it to the major marketers and they sell it at exorbitant price. Are you not aware of that? Everything is shrouded in secrecy. We have to remove the mystery in the system. Unless we remove the mystery, we can’t deregulate. If you deregulate under this present arrangement, who will benefit? It is the marketers who will benefit if you deregulate under this present arrangement. They have not been interrogated because there are no clean processes in place. They are the ones who will benefit. Even in the United States, the issue of power is very strategic and there will be uprising against the government if government tampers with it. What is happening in Nigeria? They are using subsidy to hold us to ransom. The issue is the corruption in the system.
People also argue that subsidy is unsustainable because, for instance, N286 billion was budgeted in 2011 but over one trillion naira was paid. Is the labour not mindful of the fact that such huge amount of money will benefit Nigerians more if it is utilised in the provision of social infrastructure?

That is what we are saying that there is corruption in the system. If they want to embezzle money in government, the only thing they will do is to put it under the heading of subsidy. If I want to help you in government, I will use subsidy. That is why we are saying that they should clean up the system. They should not shift the burden on the people. The primary duty of the government is well-being and welfare of the people. Why not clean up the system? Removing subsidy is just shifting the burden to the citizen. I have given you clear examples with kerosene and diesel. We must understand where we are going to. In some countries they subsidise education. I have given you an example. I give you example of United States where they subsidise health insurance. We have such examples in Africa; Asia and many countries. I give you example of Ethiopia where their major source of income is the Ethiopian Airways and they have managed it successfully that the citizens have confidence in the government. So, the citizens are supporting this issue of raising $10 billion to generate power and even export to other countries. The citizens, even civil servants donate their salaries because they believe in the transparency of the system. Our problem is lack of transparency. Once we are convinced in the transparency of the system, even if means making sacrifice, we are ready to make sacrifices because these things are transparent. But what we are saying here is that subsidy is not transparent.
So, for the labour, the government should continue to spend over one trillion naira in the payment of subsidy claims?
Once they clean up the system, the figures cannot be up to that. That is the point I am raising. It will just be a little differential. We should also increase our local refining capacity. Once we clean up the system and increase local refining capacity, we will no longer require huge foreign exchange for importation of petrol. Government should clean up the system. If you look at the analysis given by Professor Tam David-West, you will understand what I am saying. Even after they made presentation to President Buhari, he said that these issues were not straightforward.

The administration of Muhammadu Buhari has stated that it would split the Nigerian National Petroleum Corporation (NNPC) into two separate entities. What is your take on this?
They can even divide it into ten if it can enhance efficiency. What we need is efficiency. NNPC is noted for corruption. NNPC has proved over the years that they are the conduit pipe for corruption. So, what needs to be done is to unravel NNPC and make the place more efficient and effective.


– This Day

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