Gen. GowonPresident adamant
OPPONENTS of fuel subsidy removal may have lost the battle, with President Goodluck Jonathan insisting that his mind is made up on the combustible issue.
But former Head of State Gen. Yakubu Gowon warned at the weekend that the government should pull the brakes.
Nigeria’s infrastructure should be revived before such a step is taken, Gen. Gowon said.
The President disagrees. He would prefer posterity to judge him than see Nigeria grounded. If the subsidy is not removed, Nigeria will be broke within the next one and a half years, Dr Jonathan said.
Minister of Information Labaran Maku yesterday related details of the weekend meeting between the President and leaders of Civil Society Organisations (CSOs).
The government’s position may be reflected in the 2012 Appropriation Bill, which will be presented to the National Assembly tomorrow.
President Jonathan insisted on the withdrawal of subsidy during the midnight session with civil society leaders.
A Presidency source said: “The consultations have ended and the President and his team have decided that they are not going back on the withdrawal of subsidy and deregulation of the economy in particular.
“We have listened to all options or suggestions which have to be implemented as part of the deregulation of the downstream sector. By Tuesday, the President will unfold his agenda and how to go about it.
To underscore his determination, the President reportedly told the leaders of the civil society organisations: ‘I know there will be some pains, but we cannot go ahead to borrow every time to finance our economy and capital projects’.
Jonathan also reportedly said: “Even if we deregulate and I am shamed, posterity will be there to judge me, that I did the right thing and I will be vindicated when Nigerians start enjoying the benefits of my decision.”
Three distinct groups have emerged over the controversy surrounding the proposed withdrawal of fuel subsidy.
There are those in support, those against and the undecided.
Among those in support are the Nigerian Governors Forum (NGF), the Peoples Democratic Party (PDP), the Federal Executive Council (FEC), National Association of Transport Owners (NARTO), oil marketers and importers, the World Bank and the International Monetary Fund (IMF).
Those against are the House of Representatives, the Nigeria Labour Congress (NLC), the Organised Private Sector (OPS), the Civil Society Organisations (OPS), opposition political parties – the Action Congress of Nigeria (AC N), the Congress for Progressive Change (CPC), the All Nigeria Peoples Party (ANPP) and the All Progressive Grand Alliance (APGA).
Those undecided are the traditional rulers and the Senate.
A statement by Minister of Information Labaran Maku on the outcome of the session with civil society organisations said the President gave reasons why the government will withdraw the fuel subsidy, which has been put at N1.3trillion.
One of these is to “avoid the option of borrowing which will make life more difficult for future generations of Nigerians”.
The statement added: “The President said the policy of deregulation is not aimed at punishing Nigerians but to create a conducive environment for private investment to develop and modernise the downstream sector of Nigeria’s oil industry.
“The President said although Nigeria became a crude oil exporting nation in 1958, it has failed to add value to the sector.
“He said export of crude oil means that Nigeria has shifted job creation in the downstream sector of the oil industry and the real value of our oil resources to foreign countries which buy our crude and export refined products at three or four times the cost to other countries.
“He said between 1958 and now, Nigeria ought to be a major exporter of refined petro-chemical products to the rest of Africa and the world. This has not happened because government has insisted on controlling the sector to the detriment of its growth and expansion.
“He said government has since 2010 given 20 licences to private investors who want to set up refineries and employ Nigerian youths, but which have not taken off because of government price control mechanism.
“He pointed out that the situation we now face is that following the discovery of crude oil in neighbouring countries of Ghana, Benin Republic, Chad and Niger, the private investors who have been waiting for policy reforms in Nigeria are now shifting base to go and set up refineries there.
“So, if Nigeria does not act quickly by deregulating the downstream sector, we will soon face the embarrassment of importing refined products from Niger or Ghana into Nigeria.
“The President described this option as unacceptable because Nigeria has been an oil producing nation more than 50 years before those other countries.
“The President, therefore, urged civil society organisations to appreciate the urgency of reforming the oil sector in order to open up vast new opportunities for Nigeria’s school leavers and population of unemployed graduates to be employed into the new refineries and petro-chemical industries that will emerge after deregulation.
“He said government is working with private sector groups to establish three new refineries which will refine 400,000 barrels of crude oil per day into finished products for domestic consumption and export.
“He said if we add these three new refineries, which will be located in Kogi, Bayelsa and Lagos states, to the three existing refineries, which are already being rehabilitated by their original builders, Nigeria will, before the end of his administration, become a major exporter of finished products.
“The President said this will earn more revenue for Nigeria and create opportunities for employment of our youths, which is a major priority of his administration.
“He urged the civil society groups to carefully re-examine the difficult times we are in, particularly given the very low capital budget of 24 to 26% which government has in recent years been left with.
“He said currently, the entire capital budget is borrowed, including part of the recurrent budget which makes it impossible to deliver on the major infrastructure projects such as power, railways, major road networks and the dredging of the River Niger which are meant to reposition the country for rapid development and job creation.
“The President explained what his government has decided to do is to deregulate the downstream sector of the oil industry and other sectors of the economy in order to attract ongoing capital outflows from Europe and Asia where investors are heading to Africa to set up shop.
“He said his administration is doing the same thing the Chinese did in 1978 in spite of domestic opposition by deregulating the Chinese economy.
“He said today because of that singular act, China has overtaken all those countries which failed to reform and has been able to take 300 million Chinese out of poverty in 30 years.
“He said rather than allow the price control mechanism and wrong government policies to block the economy from developing, government has decided to embark on a wholesale review of these policies in order to modernise and transform the Nigerian economy to create jobs for our teeming young school leavers and prosperity for all our citizens.
“The President stated that he was encouraged to embark on this policy reforms following the clear success stories of similar deregulation of the telecom industry, aviation, and cement production which have over the last ten years grown from strength to strength and employed hundreds of thousands of young Nigerians following those reforms.
“He said government, realising that the initial period of deregulation of the downstream sector of our oil industry will lead to increased cost in fuel price, has embarked on a programme of carefully selected social relief interventions to ameliorate the impact on the vulnerable sections of the Nigerian population.
“The first is that, the NNPC will increase its stock of fuel availability and participate actively in fuel distribution in order to moderate profiteering in the initial stage of deregulation.
“The President stated that as free marketers set up their refineries and bring in their fuel to compete with one another, prices will eventually come down and stabilize, thereby removing all future scarcity of fuel products which occurred due to supply fluctuations that resulted from government price control.
“The President said the social intervention programme will also include massive distribution of mass transit vehicles to transporters across the country at very low interest rate in order to stabilise transport fares.
“The President also stated that the aggressive rehabilitation of railways, which has been embarked upon by his government, has already returned regular railway services to many parts of the country, including major cities like Lagos, Ibadan, Ilorin, Minna, Kaduna and Kano.
“He said presently inter-state train services have also resumed between Lagos and Abeokuta, Lagos-Ibadan-Ilorin, and Minna-Kaduna-Kano.
“He added that presently work has reached advanced stage in the rehabilitation of the rail-line starting from Port Harcourt through Enugu-Makurdi- Lafia-Kafanchan-Jos-Gombe to Maiduguri.
“He said government will use part of the proceeds from deregulation to complete the rehabilitation of railways in order to guarantee the masses cheap transportation for both goods and persons across the country.
“The President said the government is targeting the production of about 450,000 metric tonnes of rice from irrigation projects in existing dams located in parts of the country.
“He said the intervention in agriculture alone is expected to create millions of new jobs for young Nigerians in the coming years following deregulation of the economy.
SOURCE: The Nation, 12 December 2011. http://www.thenationonlineng.net
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