The Petroleum Products Pricing and Regulatory Agency (PPPRA) on January 1, 2012, acted on a longstanding government desire, by announcing the total removal of subsidy on petroleum. The policy is part of the deregulation of the downstream operation of the oil sector in the country. By the move, the pump price of premium motor spirit (PMS) more than doubled, from 65 naira to 141 naira per litre.
Not unexpectedly, the steep rise has shocked many Nigerians, who have reacted angrily to the government’s decision. The Nigeria Labour Congress (NLC) and Trade Union Congress of Nigeria (TUCN) and other civil society organisations have scheduled today for a nationwide indefinite strike that is expected to draw workers from both public and private sectors.
As a measure of how the deeply unpopular policy has had on the generality of the Nigerians, and the possibility of chaos that the strike might cause, the House of Representatives met at an emergency session yesterday to discuss the issue. Before the House went on Christmas recess, the members had rejected the idea of subsidy removal. After a heated debate, reflecting the general mood in the country, the House called the government to suspend implementing the subsidy removal policy.
On its part however, the federal government, following a meeting of the Executive Council, said it had no intention of rolling back its policy, and announced the introduction of what it says would be palliatives to cushion the effects of the fuel subsidy removal. Two committees were set up, one to supervise and ensure effective and timely implementation of projects to be funded from the savings that would accrue. The other committee was named to dialogue with organised labour on the removal of subsidy.
The government and its agencies have repeatedly argued that the amount spent subsidizing the petrol that Nigerians consume had grown from around 300 billion naira in 2007 to 1.3 trillion naira last year. Removing such subsidy, the government further argued, would free money that would be ploughed back into providing infrastructure, like power and roads, and create employment.
On the other side of the debate is the argument that if cost of government was reduced and corruption effectively tackled, the savings would be far greater that the subsidy that has been removed.
On balance, the government’s alarm bells sounding the imminent collapse of the economy if subsidy was not removed does not ring true. That much is evident when it is placed against monumental wastage in the day to day running of government in the country. President Goodluck Jonathan appeared to have underscored that fact when he announced cuts to his emoluments and those of high political office holders, offers that were aimed at mollifying public anger at the subsidy removal and averting today’s strike.
By the subsidy removal, the government appeared to have squandered its goodwill with the public, and there is widespread scepticism that its subsidy reinvestment and empowerment programme would work.
The entire subsidy debate revolves around Nigeria’s inability, chiefly due to corruption, to refine enough petrol for local consumption. Apart from the over two million litres per day export quota, over 400,000 barrels are also approved for refining and local consumption in the country.
The palliative measures being proposed to absorb the shock of this huge price increase are not different from the previous ones that have failed. A serious transport policy, which is critical in addressing transportation problem in the country, for instance, does not end with the procurement of buses and ‘repair of roads’, as the government has proposed.
As the labour unions proceed on strike, they should be wary of their action being hijacked by opportunists to cause more harm, especially in the heightened security challenges in the country. Protests must be responsible and devoid of any form of destruction. The members of the nation’s security forces must also be up to the task in civilized handling of the situation as well as protecting the protesters. Citizens have the constitutional right to peacefully protest government policies, and the police and other security agencies have the responsibility to act within the law and the constitution in handling such protests.
Ultimately however, the onus is on the government, labour unions and other critical stakeholders to immediately begin a dialogue to break the current impasse and debate the future of the nation’s oil industry. Arbitrary policy decisions only hurt public discourse, which was lacking before the subsidy removal. The government should defuse the current logjam by reconnecting with the public through dialogue and then amicable resolution of the situation.
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