Sunday, 30 October 2011

Fuel subsidy must go, say Anyaoku, JibrilAminu•Ajibola calls for caution•Kerosene to be deregulated in 2014

For former Commonwealth Secretary-General,
Chief Emeka Anyaoku, removal of fuel
subsidy would correct distortions in the
economy. But former Justice Minister, Prince
Bola Ajibola disagreed, saying the removal is
an explosive issue that must be handled with
utmost care and caution.
Chief Anyaoku told shareholders of Orient
Petroleum Resources Plc, during the Annual
General Meeting (AGM) in Awka, Anambra
State, at weekend, that it would reduce
pressure on the exchange rate. As Anyaoku
spoke, vice-chairman, Senate Committee on
Health, Senator Arthur Okowa said subsidy
on kerosene would go in 2014. Speaking with
Daily Sun in Abuja, Okowa, who is also a
member of the Committee on Gas, said
Petroleum Minister, Mrs. Diezani Allison-
Madueke, told a panel at an interactive
session that kerosene subsidy would be removed
in 2014
Anyaoku said during the AGM that the
planned removal of fuel subsidy by the
Federal Government ‘is expected to help
correct a lot of distortions in the economy,
including the pressure on the exchange rate.’
His support came just as the chairman of the
Joint Action Committee (JAC) of trade
unions in Anambra State University
(ANSU), Comrade V.N..Asoegwu, described
the planned fuel subsidy removal as an evil
proposal that must be resisted by all well-
meaning Nigerians. Asoegwu, who spoke in
Uli while addressing the South-East and
South-South executive council meeting of
National Association of Academic
Technologists, accused the Federal
Government of being insincere over the cost
of subsidy and who the beneficiaries were.
However, Anyaoku in his address at the AGM
noted that the Petroleum Industry Bill (PIB)
would make for increase in crude oil
production and topple the 1.9 and 2.47million
barrels per day registered in 2009 and 2010
Anyaoku, who is Orient Petroleum chairman,
commended President Goodluck Jonathan,
noting that the strength of the new economic
team he has set up was a clear demonstration
of the priority being placed on the
improvement of the nation’s economy. He
told investors that the company has obtained
an Environmental Impact Assessment (EIA)
certificate from the Federal Government for
its yet to be completed refinery.
Assuring that the company’s 55,000 barrel
per day refinery under construction at
Otuocha in Anambra State would be ready by
2012. He said, “The company is expected to
complete construction of the refinery and
commence sales at the end of 2012, and
thereafter, the Board of Directors will review
overall result prior to recommending a
Meanwhile, Asoegwu, who is also the
chairman of Senior Staff Association of
Nigerian Universities (SSANU), ANSU
chapter while buttressing the alleged
insincerity of government said, “in the
beginning, it was put at N4.3 trillion and now
it is put at N1.2 trillion. Even the Senate is
tinkering with the idea of probing to know
who the beneficiaries of the fuel subsidy are.
“My position is that even if it costs the
Federal Government up to N2 trillion to
subsidize petroleum products, so be it, after all
it is the only benefit the common man enjoys
from our national wealth.” On the planned
removal of kerosene subsidy, Senator Okowa
said already, government has informed the
National Assembly in the 2012-2015 Medium
Term Economic Framework (MTEF) and
Fiscal Strategy Paper (FSP) that it would
remove oil subsidy as from 2012. Said Okowa:
“The Minister for Petroleum Resources did
make some clarifications before the Gas
Committee that kerosene is not going to be
deregulated for now. She said the subsidy
removal is not going to affect kerosene at the
moment, possibly not until 2014, while they
are hoping to develop the Liquified Petroleum
Gas, the cooking gas, so that it becomes
“They are trying to reform the process and
take some actions that would make it available
and make it cheap enough so that we won’t
need to use kerosene but we can now use
cooking gas. These are plans we need to know
but Nigerians were probably not aware of this
until she probably said so. Government is
apparently not talking enough.
“Government needs to come out to give us lot
of information on subsidy removal. We need
to have stakeholder discourse and input before
actions are taken.” Okowa called on
government to disclose to the public the
audited accounts of the Nigeria National
Petroleum Corporation (NNPC), Petroleum
Products Pricing Regulatory Authority
(PPPRA) as well as that of Petroleum
Products Marketing Company (PPMC).
“My worry is that the entire capital projects
for 2011 would be financed with borrowed
funds from the banks in the country. That is
a major challenge. “I am sure that most
people never knew, until this motion came up,
that government was likely consuming above
N1trillion on subsidy in a year. Last year,
they spent a little over a trillion and this year,
we have that one trillion. “It, therefore,
means that the subsidy on fuel alone is
equivalent to the entire capital budget for all
sectors including education, health and all
other forms of social services including
critical infrastructure of power and roads.
“So, the question is this: Is it sustainable?
These are things we need to put on the table to
discuss. I feel that the federal government
needs to come in with all information to
Nigerians without holding back on any.
“They should let us know exactly what is
going on and also, letting us know whether
the accounts of the NNPC, PPPRA, PPMC
have actually been audited by firms as related
to the subsidy; whether their accounts have
actually been audited by firms that we can
trust so that they let us know exactly today
how much fuel is actually coming in into this
country, how much fuel is being refined
locally,” he noted.
Meanwhile, Prince Ajibola has cautioned the
Federal Government over its decision to
remove the fuel subsidy.
He said that apart from pauperizing the
common man, such removal is an explosive
issue that must be handled with utmost care
and caution. Justice Ajibola warned that with
the Jos and Boko Haram crises still
unresolved, Nigeria is already sitting on a
time-bomb, Therefore, he emphasised Nigeria
could not afford any other crisis that might
arise over removal of oil subsidy. Ajibola spoke
to Daily Sun in Abeokuta, Ogun State. He
warned that it would be foolhardy and self-
destructive for the government to go ahead
and remove the subsidy without proper
consultation with all the stakeholders.
According to him, the Federal Government is
holding the wealth of the nation in trust for
the people and if the people insisted that the
oil subsidy should not be removed, so be it, he
stressed. Justifying the proposed removal of
subsidy, spokesman of the NNPC, Dr. Levi
Ajuonuma, said the the planned deregulation
of the downstream sector of the oil and gas
industry is a veritable avenue for increased
investments and job opportunities.
The Group General Manager, Group Public
Affairs Division of the NNPC, Dr.
Ajuonuma, told journalists at the weekend in
Lagos that the removal of fuel subsidy would
enable government plough back the huge
annual subsidy on provision of some basic
infrastructure as well as facilitate the entry
of private investments in refineries,
petrochemicals and allied products.
“As a people, we must learn to open our eyes to
current realities and embrace the
opportunities that a deregulated downstream
sector of the oil industry has on offer for us
all. Removal of subsidy means that
government would have more funds to
channel into the provision of some identified
vital infrastructure and social welfare
packages for some vulnerable groups like
pregnant women, children as well as
unemployed youths. All these are captured in
the post-deregulation Social Safety Net
scheme,’’ Ajuonuma stated. He said special
community public work programme with
competitive reward package is being designed
to help keep youths, especially in non-urban
areas engaged and help them resist the lure of
the rural-urban migration.
“It is common knowledge that about 10 years
ago government gave licenses to some private
investors to build refineries and one decade
after none of them has come on stream. The
reason for this is very simple: No investor
would enter a market where government
prescribes how much the products should be
sold; in fact, such a venture is not even
bankable. But under a deregulated and
liberalised regime, as we have seen in the
telecoms, aviation and even media businesses,
private initiatives and ventures help to
stimulate the much needed competition and
growth,” Ajuonuma argued.
He called on the Nigeria Labour Congress
(NLC), the Trade Union Congress (TUC)
and all other bodies opposed to the removal of
subsidy to give government the benefit of
implementing the deregulation programme
and monitor how the proceeds would be used
for the benefit of the citizenry.
Reacting to the proposed removal of the
subsidy, a former minister of petroleum,
Prof. Jibril Aminu, has said there was no way
the Federal Government could continue with
oil subsidy, insisting neighbouring countries
were benefiting more. Aminu served in the
Gen. Ibrahim Babangida (retd) regime.
Senator Aminu, who represented Adamawa
Central Senatorial District, in the sixth
Senate, insisted, however, that the NNPC
must bring the figures out now for Nigerians
to know what they were losing by way of
subsidy. Aminu told Daily Sun in Abuja that
the oil subsidy must not only be done in
phases but just like what the Petroleum Trust
Fund (PTF) was able to achieve during the
military, there must be specific areas the
money would be channeled to, adding that
trillions of naira was too much to be wasted on
subsidy when it could provide roads, quality
education, hospitals and other essential social
“The British say that ‘it is not what you do
but how you do it. It is not what you say but
how you say it’. I am convinced that with the
way things are going now in this country, we
cannot continue with this oil subsidy
indefinitely. It is impossible considering the
amount we are spending. Look at the figures.
We all must have done some science while in
school. How much is it costing the country?
“When I was the petroleum minister long time
ago, it used to cost about N100 million to
convey the subsidy, not even the subsidy itself
but to deliver it. When you look at it, it is not
something that we can sustain and I believe
that the NNPC has a responsibility to bring
the figures out now and let Nigerians know
what we are losing by way of this subsidy.
Show our people what is happening.
“I remember that at the time of former
president Obasanjo, they had thought that
N150 billion would do, N150 billion is a lot of
money to use as subsidy. They thought it
would do and that is; Federal Government will
pay half and state governments would pay
half. Now I hear people dangling figures like
N1 trillion per annum. This is money which I
know is said to be going to certain Nigerians I
believe under the downstream sector. This
money could have been used to develop the
educational system, the roads, agriculture,
e.t.c. now is going to one sector only.
“If this energy was used 100 percent for the
benefit of Nigerians, that would have been ok
but we all know what happens that a lot of
Nigerian neighbours rely on the Nigerian
subsidy and a lot of very important people
participate in smuggling and this is what they
call arbitrage which is where people get free
money and develop their racket,” he added.
In a related development, the Initiative for
Peace and Industrial Harmony, says it wants
to mediate in the impasse between the
government and labour unions.
The group, mainly former labour leaders,
activists and former government
functionaries, said they believed putting the
issues on the table and arriving at a decision
would be beneficial to Nigerians. Spearheaded
by Dr. Timiebi Koripamo-Agary, former
permanent secretary, Ministry of Labour and
Productivity, and Mallam Salihu Lukman,
former assistant general secretary, Nigeria
Labour Congress (NLC), the group said
“current opposition to subsidy withdrawal as
expressed by Nigerians, needs to be engaged
and is the entry point to negotiations.”
Briefing journalists in Abuja at the weekend,
Lukman said the government, the NLC and
other interested parties, had already been
invited for the meeting that would be chaired
by the Senate Committee on Petroleum.

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