Tuesday, December 13, 2011

Enough Is Enough on FG’s Games With Fuel Subsidy…. Nigerian Youths

Despite the concerns raised by different groups and individuals, President Jonathan will, tomorrow, present the 2012 Budget to the National Assembly excluding the provision for fuel subsidy.
In her two appearances before the Senate Joint Committees on Appropriation, Finance and Petroleum Resources (Downstream) for the public hearing on The Operations of the Fuel Subsidy Scheme in Nigeria, the Minister of Petroleum represented the Federal Government's position as follows:
The fuel subsidy structure is inefficient, costing us N600bn ($3.75bn) in 2010 and N1.3 trillion ($8.125bn) from Jan“ October 2011. The Federal Government cannot continue to pay as its unsustainable. By removing the subsidy, the savings will be used to provide critical infrastructure and services. Currently, only a small percentage of Nigerians (the marketers, middle & upper-class Nigerians) benefit. When removed, more Nigerians will benefit.
In the words of a Yoruba proverb, the Federal Government has, yet again, left leprosy to treat ringworm. While we understand that the current cost structure is unsustainable, Nigerians can no longer afford to pay for government's inefficiencies. It is too expensive (financially; productive man hours and human lives) and it is also NOT sustainable.
Issues to Consider          
1.    A lazy, thoughtless approach
The government clearly finds it easier to undertake an unwise blanket removal of subsidy than engage in the discussion of trimming the inefficiencies in fuel subsidy management and in the running cost of government. The language is also deliberately confusing one minute it's deregulation and the next it's fuel subsidy removal.
2.    How much subsidy?
The Interim Report on the Process and Forensic Review of NNPC by KPMG states are based on our analysis, subsidy over-deduction for 2007, 2008 & 2009 was estimated at N2 bn, N10.3 bn and N16.2bn respectively. A rough estimation of subsidy payment on product losses for the period under review (2007-2009) is estimated at N11.8 billion.
Clearly, the subsidy management regime is fraught with waste, graft and insincerity; evidence that the N1.3 trillion does not accurately reflect the amount of petrol imported or consumed by Nigerians.
3.    A matter of trust?
To counter the argument that Nigerians do not trust the government to wisely manage the savings from the removal of the fuel subsidy, the government is planning a subsidy savings management program. The details were shared by the Vice-President in a meeting with some civil society organisations on Friday, December 9th. Why has this plan not been made public? The questions and concerns that arise are obvious ones:
a.    How does the government plan to calculate fuel subsidy removal savings?
Will these savings be the theoretical cost of the subsidy minus cost of corruption - or the current (inflated) figure? Also, how does the government intend to remit same to this proposed quasi-government agency? Will this necessitate the setting up of another special account, in the manner of the Excess Crude Account?
b.    The Obasanjo regime wound down the widely acclaimed PTF because it served as a duplication of the work of the ministries. We agree with this approach.
c.    Setting up a new body means an increase in recurrent expenditure for staffing, salaries, pensions, cars, running costs etc. This is UNACCEPTABLE.
4.    No Effect on the Poor
The government assertion that the subsidy removal would have little effect on the poor is quite simplistic. The resultant increase in the price of PMS would drastically increase the cost of food, transportation and doing business, shutting down many small enterprises which directly or indirectly depend on the price of petrol remaining low. The middle class is the engine of growth by way of consumption and the SMEs that create jobs. Any strain on them is negative for the economy.
The Way Forward
The government should take a more measured and sustainable approach that takes into consideration all stakeholders in the Nigerian project.
They need to:
1.    Reduce Cost of Governance
The government must drastically cut down the cost of maintaining public and civil servants security votes, multiple advisers, fuel guzzling convoys, excessive foreign travel and estacodes etc. Expenses such as
(a) The Vice-President residence awarded to Julius Berger at N7 bn
($43.75m) with a request for N9 bn ($56.25m) more; (b) disbursement of
N250 billion per year in security votes to the President and
Governors; and (c) a N1.7 trillion wage bill (2012 Budget) are criminal and unstainable!
2.    Reduce Cost of Subsidy
Why does NNPC get 445,000 barrels of crude a day that it can refine?
In 2006, there were 3 marketers; we now have 77. According to BusinessDay, the increase has also been linked to this year elections and it has been suggested that the subsidy programme became an avenue for patronage extended to those with political connections. Significant savings can be made on the bandied N1.3 trillion if the government will prune out the briefcase marketers, clean up the NNPC/PPPRA to plug waste and leakages, and tackle smuggling.
3.    Restore or Sell the Refineries
This is of critical concern and priority. Increasing the capacity of our refineries would reduce the amount of fuel that needs to be imported into the country. How much has been spent on repairing the refineries in the last 12 years?
4.    Provide Power
According to a 2009 report by the Nigerian Electricity Regulatory Agency (NERC), Nigerians spend N797 billion yearly to buy fuel for powering generators. In 2010, President Jonathan said the cost of fuel (to power generators) was $13 billion. NERC’s estimates 32% of generator fuel is PMS. This means Nigerians spend about $4.19 billion or N646 billion on petrol, while the rest goes to diesel. Imagine how much fuel import dependence we can curb if this government fulfills the often-repeated promise of improving power supply in Nigeria! Why has the government not presented a policy document or engaged openly and directly with Nigerians on this issue? Why the rush to remove the subsidy when other holes have not been plugged?
Enough is Enough Nigeria will continue the conversation by hosting a public Town Hall Meeting within the next 10 days to discuss the issue. In a country that provides no social services and the average citizen provides all basic utilities water, electricity, and security; the government cannot remove the bread from our mouths while it continues to feed fat on its princely cakes.
We will engage in words and action. Enough is enough!
Enough is Enough Nigeria (www.eienigeria.org) is a coalition of individuals and youth-led organizations committed to instituting a culture of good governance and public accountability in Nigeria through advocacy, activism and the mobilization of the youth population as responsible citizens.  The coalition includes The Future Project;
Paradigm Initiative Nigeria; Education as a Vaccine (EVA); Kudirat Initiative for Democracy (KIND); RISE Networks; LYNX Nigeria; Chocolate City Group; EME and Light Up Nigeria. EiE Nigeria created the RSVP (Register|Select|Vote|Protect) Campaign to leverage technology, especially social media to mobilize significant participation from citizens in the 18-35 age bloc in the 2011 elections and beyond.


  1. No comments as this isn't gossip. LOL.
    Nigerians are in for a hard time with the removal of the subsidy. The bad thing is that the money gained from it will be embezzled by GEJ and his new inner caucus. This is what Okonjo-Iweala has brought with her from the World Bank with all their draconian policies which are unfavourable to Third World countries. So sad.

  2. Ginika I can't express my disappointment in NOI enough. But aside from all that, until they tell us what plans need the money that will be saved from removing the subsidy are going towards, they need to keep their grubby hands to themselves. Diezani and her huge eye balls with the libido to match is just a mismanaging ... let me not finish.

    If they remove this fuel subsidy and Nigerians do not protest or revolt, we deserve the bad government we have

  3. Me Again, thanks for commenting. It's not all about gossip after all.

    They have said they will use it to do this and that (roads, refineries etc,) but we all know it's a ruse. What they want to do is to dethrone those who are gaining from the subsidy and that's why that list came to light. GEJ, Mark, Diezani, NOI and perhaps OBJ will form the core of the new cabal. They will loot the whole thing.

    The West especially America will still gain from this. If for instance they see their supply of oil threatened, they will covertly sponsor and launch an Arab Spring-like revolt in Nigeria. I don't see it happening. Most of these politicians are CIA moles anyway.

    Who will revolt in Nigeria? Count Iboland out of it. There are too many divisions to successfully launch a revolt, except the Army steps in. The way this government is going and with the core North's hatred of GEJ, it may happen next year.

  4. I thought wikileaks already exposed Diezani as an American govt source, yet GEJ allows her to have access to that portfolio. Anyways lai lai, until they say we have project x,y & z and it needs x million, who am I kidding everything is now billions, plus given us exact plan, they had better keep that subsidy in place. See the budget they just released, they're not ashamed?!!!

    Nobody wants to die, that's why we don't revolt, but the thing is we're already dead as we're living & we don't even realize it.