The Unending Subsidy Debate:
Oil & Gas

The Unending Subsidy Debate:


·       Labour Gives Condition For Removal

·       Stakeholders Decry Rampant Corruption, Canvass Working Refineries As Panacea

·       Controversies Trail When Removal Will Take Effect

The issue of fuel subsidy has been a recurring decimal in Nigeria and barring any last minute’s change of mind from organized labour in the country, social and economic activities will be brought to a halt on Thursday, January 27, 2022 as organized labour will embark on a warning protest in all the 36 states of the federation against the plans of the Federal Government to end the subsidy regime by the second half of 2022.

The National Economic Council, NEC, a few days ago disclosed that its decision on the removal of the subsidy on petroleum would be made in June when provision for its payment in the 2022 budget expires.

Prior to that, in October last year, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, had disclosed that the federal government only made provision for fuel subsidy for the first six months of 2022 because it was seriously considering complete deregulation of the sector.

“In our 2022 budget, we only factored in subsidies for the first half of the year; the second half of the year, we are looking at complete deregulation of the sector, saving foreign exchange and potentially earning more from the oil and gas industry,” she had said.

However, rising from its first meeting for the year in Abuja yesterday, NEC said though conversations on subsidy removal had been ongoing, it is yet to take a position on it.

The council, chaired by Vice President Yemi Osinbajo, is composed of governors of the 36 states of the federation, the Central Bank Governor and some Federal Government officials and ministers.

Rumors however filtered in that a fuel price of between N320-N340 is being considered as against the N162 that it currently sells for.

This has not gone down well with many prominent Nigerians who have been speaking out against this.

According to former Head of State, Abdulsalami Abubakar while speaking at the 19th Daily Trust Dialogue held in Abuja on Thursday, January 20, 2002, the decision to remove subsidy and increase fuel pump prices at this time will push more Nigerians into poverty.

 “There is a continuous rise in the prices of food items beyond the reach of many Nigerians. On top of all these, fuel prices are expected to rise significantly in the coming months as announced last November. We all know that when this happens, it will push many millions of Nigerians into poverty” he disclosed.

He is not alone! Many Nigerians have been gripped with fear since the news of the impending increase was first announced.

Consequently, Nigeria Labour Congress (NLC) insisted that the planned removal of petrol subsidy by the federal government was tantamount to leaving Nigerians to bear the consequence of in-built inefficiency in the product supply value chain.

Speaking on national television recently, the National President of the NLC, Mr. Ayuba Waba, reiterated the body’s earlier decision to embark on a warning protest on January 27, over the matter.

However, in what seems like a turnaround, the Trade Union Congress, TUC, another arm of organized labour in the country has indicated that it might support the proposed removal of subsidy, albeit, if certain conditions are met.

At the end of its National Executive Council, the TUC in a communique said the government must ensure that local refineries are operational before such a move is implemented.

While highlighting the “worrisome economic situation and the rising cost of living in the country”, the TUC said both federal and state governments should put in place measures to ensure “food security and infrastructural development.”

It directed its state councils and affiliates to prepare for “industrial actions” if the government goes ahead with its removal plans without meeting the conditions.

“The Proposal by National Council of State on the final removal of subsidy on Premium Motor Spirit (PMS) as from June 2022 should take into consideration the attendant economic impact on the masses,” the TUC communique, signed by its President Quadri Olaleye and Secretary-General Musa-Lawal Ozigi, said.

“There must be assurances that refineries are fully overhauled and establishment of modular refineries encouraged.”

The trade congress noted that the effective policing of the nation’s borders to stem the rate of petroleum products smuggling must also be implemented.

Meanwhile, Enough In Enough, a Network of young Nigerians promoting good governance and citizen engagement has lamented the rampant corruption in the energy sector in the country and the lack of political will-power to tackle the endemic issue.

The body posited that the energy sector is plagued with corruption and like President Goodluck Jonathan, President Buhari does not have the political will to address the issues

They called on the Federal Government to address various fundamental issues bedeviling the sector and Nigeria as a whole before even thinking of removing fuel subsidy.

They also decried the huge amount of money spent on refineries without anything to show for it while making a case to ensure that refineries in the country are working before thoughts of subsidy removal are entertained.

“We still do not have adequate domestic refining capacity to meet our domestic needs for refined petroleum products. Nigeria is the only member of the Organization of Petroleum Exporting Countries (OPEC) that imports over 90% of its fuel consumption. Others import less than 20%.

In 2020, workers at the Port-Harcourt, Kaduna and Warri refineries were paid N69.07bn while the plants generated zero revenue as they did not processa single barrel of crude.

All reports about reducing the cost of governance have not been implemented, yet we are setting up new agencies and continue to fund an inefficient government bureaucracy. However, the government is quick to announce the removal of subsidy; planned increase in electricity tariffs as the price of gas continues to increase.

As we said 10 years ago, removing fuel subsidies without addressing the fundamentals, building trust and showing good faith is a lazy and thoughtless approach!” the body said.

An issue that has continued to confuse Nigerians is whether or not the removal of fuel subsidy will take place. The Senate President, Ahmed Lawan stoked public debate when he disclosed that President Muhammadu Buhari has not directed any of his officials to remove fuel subsidy on account of the prevailing economic hardship, the Minister of Information and Culture, Lai Mohammed on the other hand differed with the latter’s position, saying he was not sure if the presidency had directed otherwise.

Mohammed who is the spokesperson of the federal government, however, promised to initiate a fact-finding mission to determine the true position of the government on the removal of petroleum subsidy.

He said this while briefing State House Correspondents after the Federal Executive Council (FEC) meeting presided over by Vice President Yemi Osinbajo, at the presidential villa, Abuja on Wednesday.

His reaction was in response to a question that he should provide clarity on the alleged plans to remove subsidies since the 2022 budget has no subsidy provision beyond June 2022.

Mohammed said he would need to consult with the relevant government agencies to determine the exact position of the subsidy removal issue.

“As for the removal of fuel subsidy, I think you will give me time to consult with relevant departments and ministries and I will get back to you,” he said.

Nigerians wait with bated breath as events unfold in the coming days.

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