Fuel subsidy removal: Will Jonathan stoke the fire again?

IN a way, President Goodluck Jonathan has again stirred up the hornets’ nest concerning the vexed issue of appropriate pricing of petroleum products in the country. He used the opportunity provided by a forum in Lagos to forcefully push for a fresh increase in the price of fuel by way of removing what is considered in official circles as the remaining percentage of government subsidy in the sector. “We cannot continue to waste resources meant for a greater number of Nigerians to subsidise the affluent middle class, who are the main beneficiaries,” Jonathan said. But the president, perhaps for some obvious reasons, was silent on the hide-and-seek over the controversy over the N3 trillion petrol subsidy bazaar involving the powerful, influential and rich in the country.


Less than 72 hours after the president reintroduced the bitter pill, the Minister of Information, Mr Labaran Maku, was poignant and unequivocal that the administration was actually not joking over the matter, reiterating the wish of the government to conserve and maximize fund to the benefit of the majority through its ongoing programme of deregulation of the downstream oil sector. Maku stated: “Without deregulation, there will be no deregulated downstream sector. Currently, the government is losing; the people are losing, because we cannot generate jobs. The potential that the oil and gas sector could have unleashed on the country is completely truncated. But the effort is continuous, as the government will not relent in its effort to convince Nigerians so as to reverse the trend of Nigerians suffering as a result of the subsidy on fuel.”
In what looked like a playback of the scenario that culminated in public resistance to the president’s bid to eliminate the subsidy on fuel on January 1, 2012, and institute a N141 per litre price regime, the view of the president  is  already generating sharp reactions from different quarters. This is particularly so in view of the judgment of a Federal High Court sitting in Abuja that deregulation of the down-stream sector of the oil industry was unconstitutional and illegal. The public protest last year had compelled the government to partially back down to N97 per litre from the old price of N65 per litre, though the government had consistently said it spent more than $8bn (£5.2bn) on the subsidies in 2011 alone.

January 2012 increase
The organised labour and the civil society had mobilised the public, which culminated in the mass movement tagged Occupy Nigeria and under the auspices of the Save Nigeria Group. The protests, which included rallies and processions in Lagos and Abuja in particular by workers and members of the civil society, shut down the country for a couple of days with the concomitant effects on the national economy. To underscore the success of the protest, one of the motivators had said they succeeded in sending a warning to the authorities about the readiness of Nigerians to rise up against any unpopular government policy henceforth. “We are sure that no government or institution will take Nigerians for granted again,” said Abdulwaheed Omar, the president of the Nigeria Labour Congress. His remark came after the president had agreed to slightly shift ground on the price of fuel, “given the hardships being suffered by Nigerians, and after due consideration and consultations with state governors and the leadership of the National Assembly.”
Apart from the presidency, government agencies in the oil sector had championed the official crusade for total de-regulation of the sector. Thus, it was the Petroleum Products Pricing Regulatory Agency rather than the Presidency that announced the 2012 price hike on New Year, stating that “Consumers are assured of adequate supply of quality products at prices that are competitive and non-exploitative.” But to what extent has the reality concerning the price of petrol which was jerked from N65 per litre to N97, been competitive?

Reactions
Expectedly, there has been a rash of verbal protests by some individuals since the president spoke on his intention to further raise fuel price. A legal luminary, Professor Itse Sagay, faulted the position of the government , saying it was incomprehensible “what the problem is with the Federal Government; they only think of themselves as less than one per cent of the populace benefits from this fuel issue. What the president should think about now is how to provide enough refineries so that this issue of fuel importation should be removed.”
The chairman of the Conference of Nigerian Political Parties [CNPP}, Alhaji Balarabe Musa, warned the government against underestimating the resolve of Nigerians to press for their constitutional rights when necessary. His position is that, “We should be prepared for another showdown because everyone knows that the people in government need money for themselves and they can only get the money through subsidy removal.”Similarly, an activist lawyer, Mr Bamidele Aturu, who secured the Abuja court judgment, cautioned the government against throwing the country into another needless crisis, given the experience of January 2012episode in the country, as according to him, “Nigerians will certainly challenge this total fuel subsidy removal.” On his part, the leader of anti-corruption group, Mr Debo Adeniran, said it was treacherous for the government to contemplate such an action at all, apparently because of the unresolved N3 billion fuel subsidy saga linked to so many influential Nigerians and firms. There is no reason why we should be led by a government full of deceit and lies,” an angry Adeniran said.

Another lawyer, Mr Festus Keyamo, said the people should begin to brace up for action aimed at saving them from enslavement by the authorities, adding the latest proclamation on subsidy removal by the authorities “means what they have been doing, charging people to court is to prepare us for total fuel subsidy removal. They want to shift the whole thing on Nigerians. We should be prepared to go back to Ojota again.”

Palliatives
To appease the public for the initial increase last year, the government had announced a number of palliatives, which it said were designed to cushion the expected negative effects. This included the procurement and distribution of about 1000 mass transit buses to the 36 states and the Federal Capital Territory [FCT], Abuja, as well as the creation of the Subsidy Reinvestment and Empowerment Programme (SURE-P) under the leadership of Dr Christopher Kolade under  Nigeria’s former High Commissioner to Britain, Dr Christopher Kolade. But critics claim that those measures constituted a mere drop in the ocean because of the various challenges confronting the citizens in the area of infrastructure. In a few states, where they had been deployed to the road, the buses have not had any noticeable impact on commuters. On the other hand, there are claims by stakeholders that the SURE-P scheme has been seriously compromised by influential politicians belonging to the main parties to prepare ground for the 2015 elections. 
Given the stake,  some pundits opine that Jonathan should have weighed the option before coming out now to drum into the ears of the Nigerian public, his avowed intention to totally remove ‘the remaining ‘subsidy’  in petroleum products. He and members of his kitchen cabinet and foot soldiers in the political circles would have considered if it would be politically expedient for him to further increase the pump price of petrol, notwithstanding the usual attendant ripple effects of the general cost of living in the country. Others have also raised a teaser on whether it would be politically exigent for the president to contemplate the increase in view of its possibility in further heating up the polity and exacerbating the seemingly intractable security challenges in the land. Some observers have equally expressed concern over the economic wisdom in jerking up the price of fuel when the gains of the 2012 price hike not truly manifested in basic economic indices, particularly in the area of job creation, infrastructure and manufacturing, to name a few.

Projections for the oil and gas industry
In its Marshall Plan, the government has proposed public sector investment in the oil and gas down-stream and up-stream activities at approximately N571.163 billion, having identified the oil and gas sector as very germane to the sustenance of rapid economic growth and development in Nigeria. This is informed by the fact that the sector accounts for over 95 per cent of the nation’s total foreign earnings. However, the impact of the sector on employment, value addition and diversification of other sectors of the economy has remained comparatively low in spite of promises since 1999 when Nigeria restored civil rule. According to official reports, there are challenges such as high-level of foreign content, focus on export of unprocessed crude and low refining capacity, as the four refining plants in the country, which have a combined production output of 18 million litres per day, operate at full capacity, whereas the total daily local demand is 30 million litres.
On the whole, part of the basis of the government’s promise is the SURE-P, which the authorities say is to ensure that the “savings from fuel subsidy removal or reduction is applied on critical infrastructure projects and social safety net programmes that will directly ameliorate the suffering of Nigerians and mitigate the impact of subsidy removal.” But the scheme has become a subject of controversy if, for example, the promise of the president when inaugurating the board of the agency is anything to go  by. He said that the Public Works Women and Youth Empowerment Programme, an intervention programme, was designed to employ 370,000 youths in 2012 alone. Despite this and other strident criticisms from the general public and members of the National Assembly, the SURE-P management said it spent the sum of N62, 423,351,736 expended on capital projects, while the sum of N325, 525,292 went into committee running costs [secretariat services] as at the end of November 2012. In short, Dr Kolade personally gave an account of his stewardship and declared that it was erroneous for people to see the body as duplication of organs.  “Ours is an interventionist agency and we will do the job with great patriotism, commitment and service for the progress of the country. I have built my reputation over the years, I am satisfied with how God has blessed me and I will not compromise my reputation, not for anything. And I do not think any of my committee members would want to compromise their reputation. Accountability, transparency and performance remain our guiding principle.”

Petroleum Industry Bill
It is one of the major outstanding issues in the oil industry, which some observers say is deeply riddled with corruption. The bill predates the startling revelations contained in the report of the House of Representatives’ ad hoc committee that investigated the subsidy regime in the importation of petrol into the country. Before it went through Second Reading in the Senate, the bill had been mired in controversy because of political undercurrents. The belief is that a proper regulation of the activities of stakeholders in the sector could prevent a situation where the government resorts to inflicting further hardship on the citizenry through fuel price increases.

Jonathan has declared his intention to stick by his ongoing deregulation of the oil sector, just as his information minister has reinforced the message and intention of government on the issue of further increase in fuel price. Will the president dare Nigerians again, even when the pains occasioned by the 2012 increase remain fresh, as the race for 2015 hots up?