One month after the All Progressives Congress, APC, cautioned against removal of petrol subsidy and asked Nigerians to be ready to rise up against the federal government if it goes ahead with the policy, the 16 state governments controlled by the party, represented by their finance commissioners, met with their counterparts from other states and advised President Jonathan to remove the subsidy.
The APC had on March 11 in a statement by its spokesperson, Lai Mohammed, said the petrol scarcity being witnessed across Nigeria was
a plot by the federal government to remove the subsidy. The party asked Nigerians to resist the fuel price removal. “The only deterrent is to let the government know Nigerians will resist any price hike,” the APC said in a statement by its spokesperson, Lai Mohammed.
The party also insinuated that the plot to remove the subsidy and thus increase the pump
price of petrol was to raise funds for Nigeria’s
ruling Peoples Democratic Party, PDP, for the 2015 elections.
“The truth is that with the elections approaching, the PDP-led FG is desperately seeking all possible avenues to raise funds for its usual
electoral shenanigans, and increasing fuel prices has always been an attractive option to the government, not minding what the impact will be on the same people it has impoverished since 1999,” it said.
However, at the end of the meeting of the Federation Accounts Allocation Committee on April 15, the commissioners of finance of the 36 states, including the APC’s 16, arrived at a unanimous resolution, calling on the federal government and President Goodluck Jonathan to remove the subsidy.
The FAAC is made of the 36 finance commissioners and headed by the Minister of State of Finance. Other members include the Accountant General of the Federation and accountants general of the 36 states; and revenue generating agencies of the federal government, including the Federal Inland Revenue Service, FIRS, and the Nigeria Customs Service, NCS.
We are united against petrol subsidy
Before the April resolution of the FAAC, the committee had also at its meeting in March made similar resolution.
At the end of its March meeting held two days after the APC’s statement, Mr. Odaah had said FAAC unanimously supports the removal of
the subsidy on petrol.
“The subsidy should be removed so that every state or any member of the federating unit sharing from FAAC will take its own money and determine how to use it or grant subsidy to the level that it can afford,” Mr. Odaah, who is the PDP-led Ebonyi State Commissioner of
Finance, told journalists.
He explained that a committee on subsidy was set up at the meeting. The committee comprised a member each of the finance commissioners’ forum, the Nigerian Customs Service, Accountants General of the states and a representative of the Minister of State for Finance.
When we contacted Lai Mohammed on the involvement of APC finance commissioners in the March FAAC meeting, he said he was not sure they attended; and asked for some time to verify the report.
When he finally got back, he said he had spoken to the Lagos Finance Commissioner, Ayodele Gbeleyi, who said he was not at the meeting.
Mr. Mohammed said the APC’s stance against the removal of petrol subsidy remained and would not change.
However, the FAAC after considering the report of its committee on petrol subsidy at its April 15 meeting unanimously agreed to the
removal of the subsidy. The meeting was attended by Mr. Gbeleyi and other APC finance commissioners.
When we asked Mr. Odaah after the April meeting if the APC commissioners agreed to the removal of the subsidy, he answered in the affirmative saying there was no party division among the commissioners.
“There was no opposition on the fuel subsidy removal resolution,” he said.
“We don’t have any division in the Forum. We don’t play politics in the Forum,” Mr. Odaah said. “We don’t have APC, PDP or any other
party division in the Forum. Members are all united for a common purpose. Once in the Forum, political differences dissolve. Every
decision we take is always one. It is either we are for it or against it.”
Mr. Gbeleyi also confirmed Mr. Odaah’s statement in a telephone interview with us.
“The position of FAAC on the issue of fuel subsidy removal by the Federal Government was unanimous. It was a common resolution by all
FAAC members. I would not want to say more than that,” the Lagos finance commissioner said of the controversial subsidy.
The resolution may present the Federal Government its most potent justification to realise its long term dream to remove the fuel
subsidy and fully deregulate the country’s downstream petroleum industry.
The petrol subsidy
The official pump price of premium motor spirit, PMS, popularly called petrol, across Nigeria is N97 per litre. However, the current fuel
scarcity in major states across Nigeria makes various filling stations sell above that price.
A total removal of the subsidy on the pricing template for petrol would automatically hike the pump price to above N140 per litre across
Nigeria with prices to be much higher in northern states due to the haulage cost from Lagos from where the product is imported into the
country.
Apart from fuelling vehicles and industrial machinery, Nigerians also use petrol to fuel their generators to power their homes and offices due to insufficient electricity supply across the country. Any increase in petrol price leads to an increase in the cost of virtually everything from tansport, to food, housing and so on.
A complete removal of the subsidy on January 1, 2012 led to massive protests across Nigeria which forced the federal government to
backtrack on the policy.
Since then, the federal government has maintained that it believes the total removal of the subsidy is best and inevitable for Nigeria even though it had been suspended temporarily.
The government argues that money used in payment of subsidy to marketers could be better spent on areas like health and education
that would benefit majority of Nigerians.
While addressing federal lawmakers earlier in the year, the petroleum minister, Diezani Alison-Madueke, reiterated the government’s stance saying there was no going back on fuel subsidy removal.
While justifying the FAAC’s resolution as regard fuel subsidy, Mr. Odaah explained that subsidy “robs Peter to pay Paul by making the
rich to grow richer and the poor to go poorer.”
“Marketers are not following the intention of the government because it has created a very big market for them in certain ways. This is
because transparency is not coming up. There are some people that are eating from the subsidy to the disadvantage of others.”
The commissioner also suggested that Nigerians opposed to the subsidy removal are ignorant.
“Nigerian Labour Congress (NLC) and majority of the Nigerian populace appear to have been deceived into clamouring for subsidy because of syndicated projects and programmes that were put in especially with regards to easing transportation problem and likewise tariffs on power supply, but you will discover that it’s the average poor man that suffers,” he said.
United against Nigerians
While the public officials across political divides appear untied against the policy, the organised labour say they are determined to
ensure it never sails through.
Many Nigerians and labour leaders say if the country, Africa’s largest oil producing country, had enough refineries, it would have no
reason to import petroleum products and could then remove the subsidy.
The Secretary General of the NLC, Chris Uyot, told us that the position of organised labour and its affiliates on the issue has not changed, pointing out that any attempt to remove fuel subsidy at this point would worsen the negative impact on Nigerians
socio-economic situation.
He said what Nigerians should insist that government ensures a transparent and accountable system for the scheme to check the
monumental fraud that has been uncovered in recent times.
Also, the General Secretary, Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Bayo Olowoshile, asked the Federal Government to reject the FAAC resolution as it is unacceptable to its members.
He, however, asked government to focus attention on the turnaround maintenance of all the country’s four refineries, while also building new ones to guarantee adequate supply of petroleum products.
It’s all about more funds
Investigations revealed that members of the FAAC may have opted to demand for the abolition of the fuel subsidy regime as a result of the dwindling monthly statutory oil revenue allocations available for distribution among the three tiers of government. The oil revenues dwindled due to crude oil theft, pipeline vandalism and disruptions in oil production activities.
Majority of Nigeria’s 36 states rely on monthly federal allocations, largely from oil, to run their states and local governments.
Available data from the FAAC secretariat showed that monthly net statutory allocations to the 36 states and the Federal Capital
Territory, FCT, declined significantly since last year from an average of about N1.5 billion to about N2 billion in some states.
During the FAAC meeting in January 2014, members resolved that there would not be any further augmentation of allocation from the Excess Crude Oil Account, ECA, as has been the practice, as the balance in the savings appeared to have been massively depleted.
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