The recent deregulation of the downstream sector of the petroleum industry in Nigeria which saw the federal government pegging the pump price of PMS, otherwise known as petrol at N145 per litre has expectedly incurred the wrath of oragnised labour currently prosecuting an indefinite strike action calling on government to revert back to the pump price of N86 for the NNPC stations and N86.50 for major and Independent marketers.
The Attorney General of the federation, Abubakar Malami, had dragged the NLC to the Industrial Court, seeking an order of the court restraining the NLC from proceeding with the planned strike. He had sought the order on the ground that the strike would paralyse the nation’s economy. The Attorney General is damn right as that is exactly what is happening with the on-going strike. Billions of naira have been lost in revenue which ought to have accrued to finance the N6.06 trillion budget of the federal government.
This disagreement has left Nigerians, particularly the common man in very precarious situation. The worry of the organised labour is not misplaced. The deregulation is coming at a time when the average worker and the common man are experiencing multiple monetary and fiscal policy being unleashed to stabilise the Naira, curb waste in governance, and put the economy on the path of growth and prosperity. These policies no doubt appear as bitter pills for the ordinary man.
But the truth must be told. These policies are needed and important, perhaps the timing is the issue which both government and labour needed to sort themselves and the right way to go is the round table, not this stalemated affair which is currently inflicting more pains on the average Nigerian. The current strike action by the Nigeria Labour Congress (NLC) is definitely hurting the already fragile economy and there is urgent need to end the strike.
But Labour must appreciate where Nigerians are coming from with the issue of fuel subsidy and the clamour for its removal. Government has, over the years been battling with how to make the products available to Nigerians all year round at an affordable cost. But given the comatose state of affairs of the nation’s refineries there is the resort to importation of products to fill the wide gap. Although that has been going on these years, the huge cost of importation to the economy of the nation rationalizes why local production is still the best option for government.
But because crude oil and its derivatives – refined petroleum products – are subject to the vagaries of forces at the international oil market, a prickle in crude oil price directly shocks retail prices of refined petroleum products at filling stations.
This explains government opting to subsidize the difference between the landing cost of imported petroleum product and retail price put at above N86 per litre. The implication is that huge amounts has to be paid as subsidy to petroleum products marketers for fuel imports so that ordinary Nigerians can get it at affordable price since Nigeria is an oil producing country of international market status. Nigeria in the last five years has consistently spent over 1 trillion naira that is about $5b USD annually on petrol subsidies, same country that spent less than 20 billion naira on roads in the year 2015, but spent over 1 trillion naira on petrol subsidies in same year is unacceptable.
Sadly too, the corruption in the fuel subsidy arrangement over the years made the arrangement very untidy and unattractive for the present administration, which at inception found it extremely difficult to continue the payment of the subsidies. In fact, the government inherited huge backlog of subsidy claims which it has been paying since assumption of office in May last year.
It remains a fact that on inception, government inherited a backlog of over N600 billion subsidy bill due to marketers. Coming at a time the country’s economy was hemorrhaging from declining revenue earnings as a result of low global crude oil prices, paying the huge bill became a huge burden and a bitter pill for the Buhari government to swallow. Although part of the money was paid in November 2015, it was hardly enough incentive for all the marketers to continue fuel importation.
The finance Minister only last week disbursed over N87bn in subsidy claims by petroleum marketers and has actually prepared a reimbursement schedule for the marketers, some of which are questionable. Several billions of dollars have been lost by the country to a few marketers who swindled and milked the nation dry all through the regime of former President Goodluck Jonathan. Over 50 cases of petroleum subsidy fraud are pending in various courts in the country owing to the massive corruption that characterised the subsidy regime under the PDP.
Aside the issue of unpaid subsidies, claims for arrears of interests on bank loans, and differentials in foreign exchange made the new fuel price unattractive for the marketers. The result has been the scarcity and fuel crisis that has been witnessed from the beginning of the year till government resolve to remove the subsidy completely through deregulating the sector offering the marketers opportunity to source their foreign exchange from the parallel market and other sources available to them to source products.
Putting it succinctly, since deregulation was a major point of discussion during the last election campaigns, it is only pertinent that the Buhari -led APC government should have taken time out to explain the issues surrounding deregulation deeply within key stakeholders, including organised labour and take a decision once and for all. This is the missing link in the government’s action, otherwise, government enjoys the backing of majority of Nigerians to get rid of subsidy from petrol before it brings the nation’s economy to its knees.
The inability of the PDP government to be decisive on this issue is part of the reason why growth in the sector in Nigeria is stunted. Nigeria cannot afford another round of policy uncertainties and summersault. The Buhari government must be resolute, the APC government must fully deregulate the downstream sector of the oil industry and the understanding and support of organised labour is direly needed.
Going forward, I recommend that both Labour and Government must get back to the negotiation table with all parties bearing in mind that the focus is Nigeria and Nigeria’s future. Labour must come down from its extreme position while government must roll out clear, well thought-out palliatives to cushion the effects of the new policy for all Nigerians, part of which should be a new minimum wage package for the workers. Private sector that have already increased cost of goods and services as a result of the current policies of government should also follow suit by implementing an agreed wage for workers in their employ.
• Mr. Dan Owegie is a chieftain of the All Progressives Congress (APC), Edo State.
