March 2, 2024

Fuel Subsidy Removal: Good policy, wrong timing – Organised Labour, CSO seek dialogue with new Govt

Oredola Adeola

The Trade Union Congress and other Civil Society Organisations(CSO) have condemned the timing speed and context in which President Bola Tinubu made his pronouncement on the removal of petrol subsidy without adequate consultations with relevant stakeholders and players within the downstream sector.

 

They are, therefore , charging him to use the 30-day window left for the removal of petrol subsidy to consult and engage with the right organisations on the best measures that can be put in place to cushion the effect of fuel subsidy removal on low-income households.

 

This is coming on the sidelines of the fuel scarcity that greeted the inaugural speech of President Tinubu in Abuja at the Eagle Square, when he was sworn-in alongside the Vice President Shettima on Monday.

 

 

According to them the contentious policy direction on the petrol subsidy removal was envisaged to commence by June 2023, hence the need to conduct proper engagement before the pronouncement to address fundamental issues that are needed to be guaranteed before full implementation.

 

 

They emphasised that the pronouncement on the subject matter came as a rude shock to Nigerians who have been struggling to afford major expenditure on non-essential goods and services as double-digit yearly inflation rate since 2016, that has continued to have its toll on their purchasing power and wiping out a large portion of the country’s middle class.

 

Festus Osifo, TUC President, and Nuhu Toro, Secretary General of the Union in a joint statement released on Tuesday said that President Tinubu cannot solely take the decision to remove subsidy payment on petroleum products in the country.

 

 

The Congress emphasised that there are a host of issues that need to be amicably considered and resolved before such a decision can be taken by the President, thereby revealing that he should “tarry awhile to give room for robust dialogue and consultation and stakeholders engagement” before making any decision on the “delicate” matter.

 

 

TUC leaders noted that the Nigerian Workers and masses, must not be made to suffer the inefficiency of successive governments.

 

 

“But we were subsequently taken aback, even horrified, when he announced the withdrawal of subsidy on petroleum products, if by this, he means increases in pump price and the exploitation of the people by unregulated and exploitative deregulated prices, then it’s a joke taken too far.

 

 

“It is not for nothing the Buhari government pushed this to the new administration, but we expect the Tinubu government to be wise on such a sensitive issue and be more explicit in its pronouncement to avoid contradictory interpretation when comparing his written statement, what he said and the provision in 2023 appropriation act,” the leadership of the TUC said in the statement.

 

Dr. Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, who also bemoaned the approach adopted by President Tinubu in respect of the plan to end subsidy, noted that there are better ways of pursuing delicate and controversial things with capacity to spark nationwide unrest.

According to him strategic planning and dialogue with stakeholders and platers would have completely addressed the present ongoing fuel scarcity.

He said, “Since this is the most important national issue that needed to be addressed, the new administration should have conducted all sorts of informal engagements with the critical stakeholders in the sector to discuss the appropriate and applicable mechanism that would ease the possible tension.

 

 

“After all, the 2023 budget was very clear about the proposed removal of fuel subsidy in June 2023. the President’s pronouncement, however, gave the wrong impression that makes people feel like the implementation is going to happen immediately.

 

The CPPE’s founder revealed that the approach adopted by the President during the inauguration is not urgently address will complicate the negative impact that has already been triggered by the double-digit inflations which has eroded consumer purchasing power, limited spending on essential goods and services.

 

In a statement obtained by EnergyDay on Monday Dr. Yusuf said despite the impact of the pronouncement which came much earlier than expected, the fuel subsidy removal will unlock about N7 trillion into the federation account which would reduce fiscal deficit, and ultimately ease the burden of mounting debt.

 

He noted that it was currently extremely difficult to attract private investment into the petroleum downstream sector because of the unsustainable subsidy regime and the stifling regulatory environment.

 

“The subsidy removal will eliminate the distortions and stimulate investment as we would see more private investments in petroleum refineries, petrochemicals and fertiliser plants,” Yusuf said.

 

 

According to him, post subsidy regime will unlock investments in pipelines, storage facilities, transportation and retail outlets.

 

“We will see the export of refined petroleum products petrochemicals and fertiliser, as private capital comes into the space and quality jobs will be created.

 

 

“There is a foreign exchange effect, and this will result from the import substitution as petroleum products importation progressively decline and this will conserve foreign exchange and boost our external reserves.

 

 

“Increase in investment would translate into more jobs in the petroleum downstream sector while the smuggling of petroleum products across the borders will come to an end with a market pricing of refined products,” he said.

 

The CEO of CPPE also encouraged the new administration to end the monopoly being enjoyed by the Nigerian National Petroleum Company Ltd. (NNPC) in the importation of petrol into the country.

 

Dr. Yusuf said that this will entrench competition within the downstream sector and provide all the private sector players sustain the gains of subsidy removal.

 

 

He, however, called for palliatives which should be segmented into immediate, short term and medium term deliverables.

 

 

He said the immediate and short-term options include wage review in public service, and introduction of subsidised public transportation schemes across the country.

 

 

 

” As well as reduction in import duties on intermediate products for food related production to moderate food inflation.

 

 

“In the medium to long term, there should be accelerated efforts to upscale domestic refining capacity, driven by private investments; accelerated investments in rail transportation by government to ease logistics of fuel distribution across the country as well as domestic freight costs,” the CPPE’s CEO said.

 

 

 

Wale Oyerinde, Director General, Nigeria Employers’ Consultative Association (NECA), on his part, stated that engagement of stakeholders is the direction that would help Nigeria achieve sustainable and optimal results faster than expected.

 

 

He insisted that it is wrong for President Tinubu to go ahead with the subsidy removal without adequate consultations and input from stakeholders.

 

 

The NECA DG, therefore, recommended that the month of June should be used to decide on the best approach and measure that would address the concerns of all stakeholders and the poor people who would be affected.

 

Elder Chinedu Okoronkwo, National President of the Association, Independent Petroleum Marketers Association of Nigeria (IPMAN) while commending the President Tinubu for his bold vision, pleaded that his members who trade with borrowed funds should be given the time to access and sell the products that they had earlier paid for before any adjustments.

 

 

The President of IPMAN noted that some of his members had made payment over a month ago to the depots but have not received the product. He also stated that going ahead with the removal of subsidy without the release of outstanding product would amount to double payment should there be any adjustments in ex-depot price of petrol.