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Petrol subsidy retained for political reasons – Experts

The federal government had a second thought on fuel subsidy removal to save the ruling APC from defeat in the 2023 general elections, experts in…

The federal government had a second thought on fuel subsidy removal to save the ruling APC from defeat in the 2023 general elections, experts in Nigeria’s oil and gas industry and university dons said on Tuesday.

Following a threat of industrial action by the organised labour, the government on Monday announced the suspension of the removal of fuel subsidy and yesterday said the intervention would continue for 18 months.  

President Muhammadu Buhari has 16 months to the end of his second term; meaning the next administration would most likely inherit the debacle.

Some of the experts who spoke to our correspondents said the Buhari-led administration, like those before it, slept on duty because it failed to address the root causes of the subsidy guzzling billions of naira monthly and therefore could not articulate an enduring solution as they rounded off their stay in office.

They also said it was very unlikely for the government to achieve anything in the petroleum sector in the next 16 months.

President Buhari and NLC Chairman, Wabba

 

Reacting, a renowned political scientist, Professor Kamilu Sani Fage, said looking at it contextually, it is difficult not to agree with the school of thought that the APC-led government rescinded its decision because of the fear of losing the 2023 elections.

“The fact that election is in the corner, perhaps that is why the government had to retrace its position because it knows very well that if it goes ahead with the subsidy removal, it will be counter-productive for them.

“Number two, you have to put it in the context of the crisis we are having across the nation, from Boko Haram to bandits to IPOB in the South. So, I think even that alone will make it unwise for the government to go ahead with the subsidy removal as the labour unions have said they will call for strikes and the like. So, that also could have made the government withdraw (the plan) because it would not want to add another conflict for itself,” he said.

Moving forward, Prof. Fage of the Bayero University, Kano, said as long as the country is dependent on loans from the likes of the International Monetary Fund (IMF), the issue of subsidy removal will keep coming up as this is one of the fundamental conditions put forward by the loan givers.

“This is why the government has to go on to satisfy the conditions of the IMF to withdraw subsidy and that is why the government keeps on taxing the people in such a way that they will generate the money to at least pay for the loans. That is why the situation is that for every naira we get, about 70 kobo go to debt servicing.

“I do not think this is the end of it (subsidy removal). For political reasons, the government has withdrawn but when a new government comes, whether APC or PDP, provided we have these loans on us, the issue of subsidy will return,” he said. 

On his part, the Acting Head of Political Science Department, University of Ilorin, Prof. Muhammed Alada, told Daily Trust last night that the government was being “smart” to avoid igniting any crisis, especially in an election year.

“Because 2023 is approaching, politics will determine many things and what the government has done is defer the removal to some other time because the timing is wrong now.

“This is not an appropriate time for the administration to ignite crisis, which the withdrawal will promote”, he said.

It’s a plot to finance 2023 elections – PDP

The leading opposition party, the Peoples Democratic Party, PDP said last night that the decision to extend the time for subsidy removal was because of 2023 politics.

Its National Publicity Secretary, Debo Ologunagba, when contacted by one of our correspondents to comment on the government’s latest decision, said:  “And you notice that any cycle that is near elections, there is a spike in the amount of money paid as subsidy.

“Between 2017 and 2018, it rises by 400 per cent. Now between 2020 and 2021, from N104 billion, it is N1.4 trillion. So, the challenge is this, what is this for other than for corruption and election?

“Go back to the policy and the records. And I want to be specific to you about records now so that you will be guided in your reporting about the exact figure of subsidies supposedly paid under the APC government between 2017 and 2018. In 2017 alone, it was N144.3 billion that was paid. In 2018, just a year into the election, it moved from N144.5 billion to N878 billion. 

“Now, see another spike, in 2019, it was N551.2 billion. In 2020, it was N102 billion. You can see the movement. In 2021, N1.4 trillion, these are all election-related corruption embedded in the regime of payment of subsidy. Now, what happened in 2020 and 2021? That was the year you have COVID when most Nigerians were at home. So, what can account for N102 billion and N1.4 trillion? So, what happened? Who was consuming those petroleum products? That tells you of some challenges there. 

“So, it wasn’t just based on the finance of it, or the account of it, or the requirements or policy, it is purely policy summersault that is consistent with everything they have done,” he said.

Also, a former PDP Chairman in Lagos State, Capt. Tunji Sele (rtd) said the APC-led government had never fulfilled any of its promises.

He said while it was reasonable to remove the fuel subsidy, the government had no moral latitude to remove it, recalling that officials of the present government including the president opposed the initial plan by the former President Goodluck Jonathan administration to remove fuel subsidy.

The PDP leader said it was unfortunate that the Petroleum Industry Act (PIA), primed as the biggest achievement of the administration, was being subjected to a review even before implementation.

Also speaking, a Professor of Economics at the University of Lagos, Ndubisi Nwokoma, said the decision to suspend the implementation was political saying the government was “only postponing the doomsday.” 

He said, “What they are doing is trying to save their neck because if they had done it, the economy would have been in turmoil and that would go against their electoral fortunes.

“The second point is that they have been going back and forth on this. It is something they cannot run away from because they have destroyed the economy; 

“The third issue is about sincerity. I don’t think the people in power have shown enough sincerity because they are the ones who opposed subsidy in the previous government.” 

The APC was yet to comment on the matter as of the time of filing this report.

The 18 months extension 

Speaking on the extension of the subsidy for 18 months, the Minister of State, Petroleum Resources, Timipre Sylva, told reporters after a meeting with the president that the executive will soon reach out to the National Assembly over the development.

Sylva said: “Following extensive consultations with all key stakeholders within and outside the government, it has been agreed that the implementation period for the removal of the subsidy should be extended.”

The minister, while speaking on the effects of the subsidy removal on livelihoods of the poor, said, “The President assures that his administration will continue to put in place all necessary measures to protect the livelihoods of all Nigerians, especially the most vulnerable.’’

 

PIA can’t work now – Fasua

An expert and Chief Executive Officer of Global Analytics, Tope Fasua, said the Petroleum Industry Act signed by President Buhari amidst celebration that it would block leakages, increase revenue for the government and create jobs will not work at present.

“The political consideration has not overtaken the Petroleum Industry Act. The truth is that, logistically, it cannot be done right now,” Fasua, a member of Daily Trust Board of Economists, said.

“It is about survival. It goes beyond this government and we have to be alive to talk about the benefit associated with the Foreign Direct Investment (FDI).”

He said this government had bitten more than it could chew and could not afford another ‘EndSARS.’ 

“We have compounded inflation since 2015 of over 250 per cent. Unemployment is at 33 per cent and our debt stock has quadrupled. The entire economic dashboard is in red and they have to be careful how they go about these things,” he added.

Retaining subsidy not enough- NLC

The Nigeria Labour Congress (NLC) yesterday shelved its planned strike but said that retaining subsidy is not enough to assuage the feelings of Nigerians.

It asked the federal government to quickly fix all moribund refineries in the country and reduce the pump price of petroleum products.

Addressing journalists at Labour House in Abuja, President of NLC, Ayuba Wabba, also told the President Buhari-led administration to rejuvenate all its policies and create sustainable jobs for Nigerian workers and other citizens.

“Going forward, we will continue to engage with the government on the very critical issues of ensuring local refining of petroleum, creation of sustainable jobs and affordable price of petrol for Nigerian workers and people.”

 

By Sunday M. Ogwu, Muideen Olaniyi, Idowu Isamotu (Abuja), Abdullateef Aliyu (Lagos), Clement A. Oloyede (Kano) & Mumini AbdulKareem (Ilorin)

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