Fuel Fury
Organised Labour, Civil So

Protesters

ciety groups and Nigerians rage over government removal of fuel subsidy as government announces palliative measures to asuage the anger
By Stephen Ubanna
Last week, Nigerians rejected the increase in the pump price of premium motor spirit, PMS, otherwise known as petrol from N65.00 to N141 per litre. Reginald Stanley, Executive Secretary, Petroleum Products Pricing Regulatory Agency, PPPRA, announced the increase on January 1, 2012 and immediately attracted public outbursts.
The increase drew a battle line between organised labour and the government. Labour has called out Nigerians to the street to protest the increase. In virtually all the states of the federation people trooped out in their thousands to protest the increase.
In Abuja, the Federal Capital, Territory, FCT, Dino Melaye, a former member of the House of Representatives opened a protest Register at Eagle Square. The government was rattled by Melaye’s action that security operatives went after him. He was arrested and detained but his purpose of mobilising people against the fuel subsidy removal was achieved.
In Kwara state, the protest turned violent as one person was killed. One account has it that the victim died of police stray bullet, but police account has it that the deceased was a victim of protesters.
In Kano, capital of Kano state, angry youths laid siege at the silver square for three days to register their displeasure over fuel subsidy removal. In Benin, capital of Edo state, protesters carried a coffin. Security operatives were forced to keep their distance to avoid a clash.
But in Ibadan, capital of Oyo state, “youths against fuel subsidy removal,” barricaded the University college Hospital, UCH, / Secretariat road.
Tokunbo Solanke, spokesman of the youths, comprising of students, matched to the government House at Agodi, where a protest letter was delivered to Abiola Ajimobi, state governor to hand over to President Jonathan.
Razak Bello, a Lagos based vulcaniser who spends N2000 per day to fuel his generator before the increase claimed that N2000 can only serve him for two hours now. “I wonder where President Jonathan is taking this country, to,” he lamented.
In spite of attempts by the police to contain protesters in Lagos, the protest spread through the state.
The demonstrations, which was led by Ganiyat, wife of late legal luminary, Gani Fawehimi and Seun, son of late Afrobeat musician, Fela Anikulapo-Kuti, Dipo Fashina, former chairman, Academic Staff Union of Nigeria University, ASUU, University of Lagos and other Human Rights Activists. They had gathered at the Nigeria Labour Congress, NLC, secretariat, in Yaba, where they were joined by activists. They then marched through the busy Ikorodu road to the Action Front, Gani Fawehimi Garden at Ojota.
Speeches were made by the activists condemning the fuel price hike. Fashina, National coordinator of Joint Action Forum, JAF, called on Nigerians to support the mass action against the fuel price hike announced by Labour.
Isa Aremu, vice president, NLC, disclosed that labour is not going back on its mass action unless government reverts to the original pump price of petrol. Owei Lakemfa, Acting Secretary General, NLC, stated that labour would not go into any form of negotiation with government unless it reverts to the original fuel pump price of N65 per litre.
Labaran Maku, Minister of Information disclosed that government opted for deregulation of downstream sector because was not “willing to postpone the evil day by indulging in half baked measures while the economy collapses on everybody.” Maku said, “previous governments had “postponed deregulation and the intended benefits did not come through because of government monopoly which scared many private investors into the sector. He stated that there is no alternative to deregulation."
“Having taken this plunge, to go back will be to cripple the economy,” he insists.
Ebitu Ukiwe, former Chief of General Staff, CGS, observed that Nigerians may be going through hard time but would be better off for it.
Ukiwe, however, pleaded with labour to go back to the negotiation table to save the economy from total collapse.
Festus Keyamo, a Lagos based Lawyer described the removal of subsidy on fuel as a ‘complete disservice to the masses’. 'We cannot suffer for the ineptitude of the government which is what the removal of subsidy is all about,’ he said, appealing to all Nigerians to ‘resist the policy and continue to insist that government properly plays its role of managing the subsidy program to eliminate waste and check corruption in the system’.
The multiplier effect of the fuel hike is the rise in transport fares and general cost of living. For instance, transport fare from Oshodi to CMS, Lagos which was N100 before the increase has gone up by 100 per cent to N200 per trip while a one way trip from Akute in Ifo local government area of Ogun state to Ikeja by commercial bus jumped from N170 to N300.
Even those who travelled to the East for the Yuletide are stranded. Transporters have taken advantage of the deregulation to increase their fare from N7,000.00 charged during the Yuletide to N15,000 as fare trip to Lagos.
Maku disclosed that government has put in place palliatives to cushion the pains of the fuel subsidy removal. Indeed, after an emergency Federal Executive Council, FEC, chaired by President Jonathan, on Wednesday, January 4, 2012, he, informed journalists, that 1,600 buses ordered by the government is expected this week. According to the Minister, the purchase of the buses is funded from the N10 billion revolving than granted by the urban development bank. The magazine was authoritatively informed that the buses would be shared to the states, which in turn would share it to their respective local governments to ease movement. Already the President has directed Ngozi, Okonjo-Iweala, Minister of Finance to ensure that salaries of public servants are paid latest by January 20, 2012 as a way of cushioning the effect of the deregulation policy. The states, the magazine was told has no cause to worry on how to pay workers salaries this month as the President has directed the Fiscal Allocation Committee, FAAC, to fast track its meeting so that federal allocation could be shared latest by January 15. The government has also promised to pay debt outed contractors. As part of the paliative measures, the Information Minister disclosed that the President has directed all Ministries, Departments and agencies of federal government to fill the vacancies available as soon as possible as a way of reducing unemployment in the country.
Reuben Abati, the Special Adviser to the President on Media and Publicity disclosed that Labour and Civil society groups have no reason to call Nigerians out to protest against the removal of fuel subsidy. He noted that Labour ought to have known that subsidy on fuel would be removed because there was no provision for it in the 2012 budget.
Signs that the government would remove subsidy on fuel began last year when President Jonathan came up with the populist policy of N18,000 national minimum wage.
Given the volatile nature of the fuel subsidy removal, the Newspapers Proprietors Association of Nigeria, NPAN, organised series of Town Hall Meetings with the sole objective of promoting understanding of the desirability or otherwise of fuel subsidy withdrawal. NPAN brought together opponents and proponents of fuel subsidy removal to the Town Hall meetings.
In a recent workshop organised by the Maritime Association of Nigeria, MARAN , on the "impact of fuel subsidy removal on the nation’s Maritime sector, Emmanuel Ihenacho a Master Mariner and former Minister of Interior frowned at people’s lack of understanding of the substance of fuel subsidy removal. Ihenacho, who is a key player in the downstream sector of the nation’s oil industry, explained that subsidy is the amount which the government pays to distributors so that the product could reach the masses below the market price.The former Minister said the international market price of fuel is rising by the day. According to him, a ton of petrol in the international oil market is $1,000, while it takes about $25 to bring it into the country.He further stated that when the cargo eventually lands at the port, the importer is faced with other charges such as port charge, tax and Customs duty which add to the cost of bringing the cargo into the country.
He confirmed that government had to settle the fuel importers to ensure that fuel reaches the masses below the market price.
Maku said, the government spent N1.3 trillion on importers of fuel as subsidy last year.
He stated that the government is indebted to the International Monetary Fund, IMF and World Bank to the tune of $35 billion and a domestic debt of five trillion naira, while government spends N500 million annually to service the debts which have thrown the economy into a mess.
Idris Umar, a former Senator and Minister of Transport argues that Nigeria could not continue to subsidise fuel when the government needed money to develop the country’s social, and infrastructural development projects in sectors such as health, education, power supply, water and Agriculture, roads , rail and Urban mass transit. The Minister said the major beneficiaries of the subsidy are the rich, middle class and some neighbouring countries where the product is smuggled into for bigger profits.
Leke Oyewale, Special Adviser to the President on Maritime Matters disclosed that management of subsidy on products in the country had been abused. He revealed that some importers who take their vessels to the port of Cotonou in the Republic of Benin find their way back to Nigeria to take their subsidy money from the government. ‘It was a big fraud’, Oyewale remarked.
Given Labour and Civil Societies opposition to the government policy, Oyewale said the pains of the fuel subsidy removal would be temporary as government has issued 20 licenses for the establishment of private refineries. He affirmed that President Jonathan recently had ordered that the Turn Around Maintenance, TAM, of the four existing refineries in the country be handed over to the original contractors. He emphasised that the Nigerian National Petroleum Corporation, NNPC, has been given 18 months to ensure that the rehabilitation work is completed.
The four refineries have a production capacity of 445,000 barrels of crude oil per day. The old and new Port Harcourt refineries have a production capacity of 210 ,000 barrels per day.. Warri, Delta state, and Kaduna refineries have production capacity of 110,000 barrels and 150 ,000 barrels per day production capacity respectively.
The Magazine was told that the state of the refineries are so bad that one of the producing companies which was approached by the NNPC to take over the management and control of the old Port Harcourt refinery turned it down.
Tam David-West, a Professor and Former Minister of Petroleum Resources, says the government should be blamed for the collapse of the refineries. According to him, if the refineries are functional, Nigeria has no reason to solely depend on petroleum products import to survive. David-West revealed that a barrel of crude oil would give the country 59 litres of petrol if it is refined locally.
The former Minister said due to the ageing equipment at the refineries, their production capacity currently is 30 percent or 133,500 b/d (27.2 litres of products).
He noted that in spite of the poor state of the refineries, they can still actually meet our local consumption need of 12 million litres of petroleum products per day.
The former Minister strongly argues that the government has no reason to complain about money to run the refineries when it costs little or nothing to refine a litre of fuel in Nigeria.
Given the cost structure of Qua Iboe crude oil production, the former Minister revealed that funding and development is $3.5 per barrel, production cost is $1.5, refining cost, $12.5 Pipeline and Transportation cost,$1.5 and Distribution/bridging cost margin stands at $15.69.
David-West revealed that to refine a litre of fuel ,if the refineries are in order is a mere$0.219 or N35.2. and if Value Added Tax of five naira is added to it, it would push up the price to N40 per litre of fuel.
He challenged the government to explain to Nigerians how it came about the original N65 per litre of fuel or the current N141 which is being contested by Labour and Civil Society groups.
An angry West averred that locally refined products cannot be sold at international market price. “We really do not need government subsidy as there was none in the first instance”, adding that “what is lacking is the political will” to enforce the law on corruption.
Meanwhile, the President has set up a Subsidy Reinvestment Board headed by Christopher Kolade, a respected business mongul.
Other members of the Board, according to the President are to be drawn from the Organised Labour, Civil Society Groups , Nigeria Union of Journalists, NUJ, National Union of Road Transport Workers, NURTW, Nigeria Women Groups and Nigeria Youths.
The Special Adviser to the President on Technical Matters, Ministers of National Planning, Petroleum Resources, Minister of State for Health, and six persons from the six geo-political zones, three of whom must be women are also to serve on the Board.
A statement by Abati said the Board is to “oversee and ensure the effective and timely implementation of projects to be funded by savings accruing to the government from subsidy removal.”
It is also to approve the annual work plan and cash budgets of the various Project Implementation Units, PIUs within the Ministries, Departments and Agencies, MDAs and ensure orderly disbursement of funds by the PIU’s to certify and execute projects among others.
To many Nigerians, the choice of Kolade by President Jonathan to head the Trust Fund would bring credibility and transparency to the administration of the fund and ensure proper management of the Fund.
About 18 years ago, late General Sani Abacha, a former Head of State also set up an agency, the Petroleum Trust Fund, PTF, when subsidy on petroleum products was removed by his regime. Through the PTF, the Abacha regime managed to spread development to every part of the country in terms of citing projects and rehabilitation of existing infrastructure in education, Health, Transport, Works and other social and infrastructural development.
Some say the controversy shrouding the deregulation exercise is unnecessary. For instance, they point to the different dates given for the take-off of the deregulation exercise as a key reason for some of the current resistance. President Jonathan confirmed late last year that the administration will take the bold step of implementing the policy in January 2012. But Ngozi Okonjo-Iweala, the Finance Minister who was clarifying issues around the deregulation at the Town Hall meeting gave April 2012 as its take-off date. Others say that the timing of the deregulation which came soon after the yuletide celebration may have sparked the protests.