States Support Removal Of Fuel Subsidy



Report by Thisday Newspaper revealed that decision to completely remove oil subsidy from the books of the Federation Accounts Allocation Committee (FAAC) enjoyed an overwhelming support by all the states of the federation.

According to the report, none of the opposition controlled states voiced any objection to the resolution at its last meeting.

That ordinarily should provide a smooth sailing to the eventual ratification of the FAAC resolution by the presidency given that the latter had severally indicated its willingness to halt the subsidy scheme.
Yet, it remains to be seen if the opposition political parties particularly the All Progressives Congress (APC) would condemned the planned removal on account that it would bring more suffering to the people when it effectively backed the move for the stoppage.

But emerging threats by the labour unions which are against current efforts to end the subsidy have the potential of igniting the flame of crisis in the country if a compromise is not reached by all stakeholders.
During the March FAAC meeting, the committee had constituted a sub-committee to among other things investigate and enlighten members on the performance of the existing subsidy scheme.

Consequently, at its plenary last week, it finally took a decision, after being briefed by the ad hoc investigation committee that petroleum subsidy should be scrapped in its entirety “because we’ve discovered it is more or less a solution worse than the problem it tends to solve.”

It was gathered that the decision by the states to throw their weight behind the removal of fuel subsidy may not be unconnected with the continued decline in monthly statutory mineral revenue occasioned by oil theft, bunkering and other distortion in production activities.

As a result, allocations from the federation account no longer suffice to execute the ever- enlarging infrastructural needs of the states and local governments which are unable to provide the much-needed jobs and execute people-oriented contracts with little resources.

Documents showed that monthly net statutory allocations to states had been on a decline in recent times averaging about N1.5 billion from between about N2 billion in some states.

The onus continued to fall on governments at the regions to deliver on campaign promises to justify their election into public offices by the people.

Essentially, the states argue that the huge chunk of money which is continually set aside to offset fuel subsidy claims were better given directly to the respective states so the resources could be better administered to solve the plight of the people by prioritising their needs.

However, following the latest resolve by FAAC to stop the subsidy deductions, General Secretary of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Bayo Olowoshile had urged President Goodluck Jonathan to jettison the resolution.

Describing FAAC decision as unacceptable to the union, he argued that removing the subsidy without any corresponding increase in purchasing power of individuals could constitute a negative multiplier effect on all aspects of the economy.

He said: “Government must ensure of the turn around maintenance of all the refineries before removing the subsidy. We told government at a meeting we held in January that certain conditions must be met before the removal. Government must fix the four refineries and build new ones. The corruption associated with supply and distribution of petroleum products in the downstream sector of the oil industry must be eliminated.”

But Chairman, Forum of Finance Commissioners, Mr. Timothy Odah told Thisday in an interview the unions were only safeguarding their selfish interests.

He said:”What will they say? We have this suspicion that there are some people who are on the payroll of the oil marketers. We have said it often and often, it should be made known to everyone including labour that members of the labour unions should call their leaders and truly investigate what is happening because these leaders know what is happening and they know the disadvantage. The period has passed when they should be coerced into this unworkable system.”

According to him:”Labour leaders as we say are on the payroll of the oil marketers and they would always support that but the people who suffer are their ordinary members. Who is benefiting from the subsidies? It is the labour leaders.

“The most important thing is that the federal government, states and local governments would know where to apply this (subsidy fund) in the best way. If it is efficiently applied, it will help the people: more industries will be grown and states can grant subsidies in accordance with their capacities and the people will have employment rather than this one that it is spirits that are making use of the subsidies.”

Odah further said: “There’s no reflection of subsidy benefit. Besides, it is like a system that robs Peter to pay Paul; makes the richer to grow richer and the poor to grow poorer” adding that only the rich benefited from the subsidy meant for the poor.


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