Business
FG in dilemma over subsidy removal, N408/litre petrol price tag
By AYOOLA OLAOLUWA
The Federal Government is in a dilemma on how to remove fuel subsidy without attracting a public outcry and stiff opposition from the labour.
Faced with dwindling revenues and inability to fund the over N13 trillion 2021 budget, the Federal Government had made several attempts to fully deregulate the downstream oil but has not been able to due to lack of political will and fear of a possible backlash from labour.
The government succeeded in increasing price from N121.50 to N123.50 per litre in June; N140.80 to N143.80 in July and N148 to N150 in August 2020.
In September 2020, government again pushed the pump price of petrol to N158 and N162, but met stiff opposition when it tried to effect another price hike in December of the same year .
With the attempt to remove subsidy stalled for over five months, government received a major boost when the Nigeria Governors Forum (NGF) recommended a petrol price of N408.5 per litre price.
While presenting the report of the committee to the NGF, a committee chaired by Governor Nazir El-Rufai of Kaduna State said the current subsidy regime was unsustainable. According to him, the removal of subsidies should be immediate to save the nations economy.
Between N70billion and N210billion is estimated to be spent every month to keep gasoline price at N162 per litre, this is below the cost price and the remittance to the federation account will shrink to less than N50biillion per month or even zero if threats persist.
We are already at zero. I understand for tomorrow, so this scenario has occurred. Why are we keeping the price at N162? We are keeping the price because the Federal Government and trade unions met and agreed to the suspension of some industrial action months back.
Even though we all supported deregulation of petroleum products prices last year, this agreement was suspended by the Federal Government because of a threat of industrial action by unions. This is the root of the problem and now we are back to losing between N70bn to N210bn per month.
The committee recommends PMS pump price increment from the current N162per litre to N408.5 per litre and (negotiations with organized labour unions). N380per litre (settlement with organized labour)”, El-Rufai had stated.
The governors present adopted the report and passed it to the president for implementation.
However, Business Hallmark findings revealed that the government, for fear of backlash from labour unions, might continue to bear the burden of about N225.50 subsidy on each litre of Petroleum Motor Spirit (PMS) imported into the country by the NNPC.
Hardly had the governors came up with the recommendation to jack up the price of petrol that the Nigeria Labour Congress (NLC) threatened to shut the nation without notice should the government increase the pump price of petrol with a kobo as clemoured by governors.
In a communique at the end of its National Executive Council (NEC) meeting, the NLC said its leaders viewed the proposal by the NGF for a 300 percent increase in the price of petrol as the height of provocation, arbitrariness, detachment and insensitivity to the current economic realities in the country and the extreme hardship that Nigerians, especially workers were going through.
According to the statement signed by the NLC President, Ayuba Wabba and acting General Secretary, Ishmail Bello, the NLC said: NEC also noted that there is currently no negotiation with government over fuel price increase.
The NEC recalled that the last meeting with Government in February 2021 was adjourned sine die. Since then, no other meeting has been called by government. The NEC recalled and reiterated the decision it took on February 17, 2021, after the last meeting between labour and the Federal Government team on fuel price increase.
The NEC reiterated that it still stands solidly by its decision taken at its meeting which took place on 17th February 2021 to reject further increases in the price of refined petroleum products particularly the Premium Motor Spirit (PMS); The NEC also re-echoed its decision that the only sustainable way out of the crisis of fuel importation and associated dislocations in the downstream petroleum sub sector is for government to rehabilitate all four public refineries in Nigeria and build new ones;
The NEC resolved that any decision to increase by even one cent the price of refined petroleum products especially PMS will attract an immediate withdrawal of services by Nigerian workers all over the country without any further notice; and NEC resolved to write officially to the Federal Government of Nigeria conveying the plight of Nigerian workers, the concerns of Congress and the resolutions of the NEC on the matter of fresh proposals for an increase in the pump price of fuel especially as informed by the stance of the Nigeria Governors Forum, warned.
While the government and the labour are busy squabbling, the Nigerian National Petroleum Corporation (NNPC) said the outcome of governments discussion with labour on subsidy withdrawal will guide it in taking a position on the controversial issue.
NNPC’s Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, said the corporation is awaiting the resolution of the government/labour talks, but will continue to retain the current ex-depot price, pending the directive from the Federal Government.
The GMD made everything clear as to the real situation and the position of things. If it was left to us, we (NNPC) would like to recover the full cost of production. But, the government wants to carry labour along and reach an amicable resolution of the issue as to how it will be done.
They want to come into agreement as to how deregulation will be effective. So, we (NNPC) are just waiting. But, we will continue to charge the same price.
So, our ex-depot price will remain until such as agreement is reached. We are just waiting for them to come to that amicable resolution. Once it is communicated to us, we take the next steps, Obateru stated.
While commenting on the logjam, the Independent Petroleum Marketers Association of Nigeria (IPMAN), National Vice President, Abubakar Maigardi, said members of his association were ready to comply with the federal government/labour decision.
Whatever the government resolves with Labour, we are ready to accept provided the product is available nationwide.
