07 Oct 2011
Governor Chibuike Amaechi
From Ahamefula Ogbu and Chineme Okafor in Abuja
•Major oil marketers demand more action
The 36 state governors and the Federal Government yesterday rose from the National Economic Council (NEC) meeting and agreed that fuel subsidy should be removed as it was not contributing to the expected well-being of the citizens of Nigeria.
In the meantime, Major Oil Marketers Association of Nigeria (MOMAN) has thrown its weight behind Federal Government’s proposal to phase out the administration of fuel subsidy starting from the 2012 fiscal year, saying it is a “desirable” and “thoughtful” move.
MOMAN – comprising key marketing and distribution companies such as Mobil, Conoil, Total, African Petroleum (AP), MRS Oil and Oando Nigeria Plc – also called on the government to swiftly move in its bid to open up the petroleum industry by fully deregulating the downstream sector instead of concentrating on the removal of fuel subsidy.
Addressing the State House Press Corps after the NEC meeting, Governor Chibuike Amaechi, who is also the Chairman of Nigeria Governors Forum (NGF), said they were ready to engage in dialogue with labour on the issue.
It was however observed by THISDAY that Action Congress of Nigeria (ACN) governors did not participate in the briefing and full deliberation on the issues.
Amaechi, who is also the Rivers State governor, said the Federal Government had already mapped out palliative measures to cushion the effects of the subsidy removal expected to commence in January.
Amaechi, who is also the Rivers State governor, said the Federal Government had already mapped out palliative measures to cushion the effects of the subsidy removal expected to commence in January.
He declined to spell out the details as he insisted that it would amount to playing the role of governor and that of the Finance Minister, Dr. Ngozi Okonjo-Iweala, at the same time.
However, no agreement was reached on the operation of the Sovereign Wealth Fund (SWF) which Amaechi said that discussions were on-going and that if along the way the governors see reason to be convinced and persuaded to maintain the account, they would decide on it.
He said. “One of the most important issues that we canvassed and decision reached was that governors supported the Federal Government’s move to remove subsidy because we believe it is to the interest of this country. We will save money for the development of the economy and at the end of the day; we will provide opportunity for the greater number of people.
“The other issues we discussed were the issues of education and agriculture and the need to develop agriculture at the state level and necessary support from the Federal Government, the issue of Education Trust Fund (ETF) and Universal Basic Education (UBE) and how to get them to support education in the different states.
“We also accepted the need for the setting up of the planning and research and statistics department aimed at capacity building is included in that development. And we are to work with the Federal Government and the National Planning Commission in that regard so that we will have our people trained and their abilities improved upon.
“I am sure you want to hear about the Sovereign Wealth Fund, it was discussed. We deferred decision, the issues were properly canvassed and we are of the view that there is a dialogue in process.”
Asked why no decision was reached on the SWF which the governors met and agreed to oppose, he replied that there was no need to escalate the issue, adding that they were satisfied that there was dialogue in process and that when they were convinced about the issues being discussed about it, they would take decision on it.
On what they intend to do about the groundswell of opposition to the removal of fuel subsidy especially by the labour unions which was capable of grounding the economy, Amaechi said they were elected to act in the best interest of the people and that in doing so, some of their decisions would be hard, but added that they would only act in the best interest of the majority and assured Nigerians that only few people were benefiting from the subsidy.
He also submitted that should the Federal Government deregulate the petroleum sector, more investors would come in and invest in the refineries, which would in turn create employment and open the economy to more prosperity as against the gain from the subsidy by few elite which he said they had decided to confront.
“I don’t think the Federal Government or the governors are shying away from the conversation that will emanate from it. I don’t think the governors or the Federal Government can be insensitive to the people that have elected us and put us in office. Don’t forget that this is a civilian government; it is a democratic government that we seek for votes four years after.
“We must learn to take very difficult decisions. That is what we were elected to do and that decision is to improve on the welfare of our people. So whichever discussion that will escalate the conversation, we are ready for discussion. We are open to discussions and we are open to the fact that there are social safety nets that the Federal Government is trying to put in place to cushion the effect,” he said.
Although he explained that the Federal Government was putting up safety nets, he added that it was only the Minister of Finance that could give the details, pointing out that even at the current price, fuel sells for over N100 in the South-east whereas if the sector was opened up and more players joined in building refineries, the law of demand and supply would come into play and at the long run, prices would fall.
“To take it further, none of you journalists has asked the question or to take it further that the moment you liberalise or deregulate the oil industry, then you will provide opportunities for people to invest in refineries and create employment opportunities. Nobody has picked up that argument; that is why we are saying that all those who said they are opposition, either parties or individuals are not justified.
“The Federal Government and the governors’ forum are ready to engage them in that discussion. Any day and anywhere anybody comes up with that, because there are so many benefits that will accrue to the people.
“Nigerians are dying of hunger on the streets when we can liberalise or deregulate the oil industry and create more employment opportunities and at the end.... most people do not know that from crude oil, you can get a number of other products that can emanate from there and that is part of other aspects of economic development and nobody has addressed that.
“When you talk about sensitivity, you must realise that this is informing our decision. Beyond the fact that a few of us elite are benefiting from this huge pull of fund that no one can account for. The aim is to create conducive environment to explore the opportunity,” he stated.
On whether it would not be wise to enter into dialogue with the unions, both Minister, National Planning Commission, Dr. Shamsudden Usman, and Governor Abdullazeez Yari of Zamfara State explained that there had been engagements with labour where committees had been set up adding that Amaechi is one of the members.
He said that it was an on-going process that would carry all segments of the country along.
He said that it was an on-going process that would carry all segments of the country along.
Yari specifically pointed out that N50 million was deducted from each of the 774 local government areas in the country for fuel subsidy which ends up in a few pockets, and insisted that it would benefit the people to remove the subsidy which was not in the interest of the greater number of Nigerians.
Also yesterday in Abuja, the Executive Secretary of MOMAN, Mr. Obafemi Olawore, said in a telephone interview with THISDAY that the removal of fuel subsidy and perhaps an eventual deregulation of the petroleum sector of the country were long overdue, adding that MOMAN was totally in support of government’s latest move.
The Federal Government on Tuesday announced its plan to phase out fuel subsidy in 2012 when it presented its 2012-2015 Medium Term Fiscal Framework (MTFF) and Medium Term Expenditure Framework (MTEF) to the National Assembly.
According to the document, which was prepared by the Budget Office of the Federal Ministry of Finance, government hopes to save about N1.2 trillion next year alone, which it will employ to provide safety nets for the poor to ameliorate the effects that will come with the removal of the subsidy.
But organised labour and civil societies in the country had in the aftermath of government’s announcement of the proposal, condemned it, pledging to mobilise Nigerians against the plan.
Olawore, in his reaction, said: “I think we should ask labour and Nigerians what they actually want. It is desirable to regulate the petroleum sector considering that government has said it can no longer continue with the subsidy.
“This move is long overdue and MOMAN supports it, although it is a tough decision because of the hardships associated with it which will eventually arise but government, in conjunction with key stakeholders, should actually devise measures to ameliorate these expected hardships.”
In further justification of the latest move by the government, Olawore explained that the deregulation of the sector would in due time allow for an entrenchment of the market forces of demand and supply which in a matter of perhaps six months will ensure stability in the system.
“I should also ask again, what is the way forward especially in deregulation? It goes beyond just removing the fuel subsidy but total deregulation of the sector to allow for the market forces of demand to stabilise the system in maybe six months,” Olawore added.
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