Agbon: The post election petrol price increase (2)

By Izielen Agbon   |   21 January 2015   |   11:00 pm  

Continued from yesterday

THE SURE-P is the IMF inspired political tool for organizing the Nigerian ruling stakeholders. It represents the largest transfer of cash from the pockets of the Nigerian masses to the bank accounts of the cabal since independence. Under the programme, the monies extracted from the Nigerian masses are shared amongst the FGN, the State Governments, the Local Governments, the National Assembly and the Judiciary. SURE-P pays off all the governing institutions of the ruling class. According to SURE-P,  “The total projected subsidy savings per annum is N1.3 trillion, out of which N633 billion accrues to Federal Government, N349 billion to State Governments, N269 billion to Local Governments and N49 billion to Special Transfers to the Judiciary and the National Assembly in compliance with the Appropriation Act.”  The FGN put the disbursement of its share of SURE-P under the Christopher Kolade Committee. The Kolade Committee is to ensure that SURE-P federal programmes such as maternal child health, public works, mass transit, east-West Road, Roads and bridges, railway and secretariat services were successfully executed. The Kolade committee began work with a lot of fanfare. However, it was not long before the contradictions in the sharing formula intensified the disagreement amongst the ruling stakeholders. The State Governments opposed the direct deduction of subsidy funds from the states budgetary allocations at source. They accused the FGN of giving SURE-P contracts to only the supporters and cronies of the Presidency. The FGN accused the State Governments of giving their share of SURE-P funds to the political cronies of the individual state governors through the State Implementation Committee (SIC). The FGN paid the petrol cabal the sum of N1.3 trillion in 2012. When the Presidency requested an additional N161.6 billion for subsidy payment in 2012, the state governors protested vigorously. They took the FGN to Court. The relationships between the FGN and the State Governments became increasingly antagonistic in 2012-13. 

   The renewed efforts of the FGN in 2014 were announced by the Presidency at the Lagos Nigeria Summit. The FGN maintained that “we cannot continue to waste resources meant for a greater number of Nigerians to subsidize the affluent middle class who are the main beneficiaries”. The next step was to get the state finance commissioners to approve the complete removal of ‘subsidy’. The Accountant Generals and Commissioners of Finance in all states in Nigeria (including the FCT) belong to the Federation Accounts Allocation Committee (FAAC). You probably never heard of this committee or thought about how their decisions affect the price of your garri or okada transport. The FMF organized this committee to approve the increase of PMS prices to N140/litre in April 2014. The FAAC recommendations were then sent to the Presidency for approval by the Federal Executive Council. The recommendations were also forwarded to the FMPR for inclusion in the Petroleum Industry Bill (PIB). The National Assembly plans to ratify and enact the PIB with its new subsidy removal clauses in April 2015. The FGN planned IMF inspired 2015 post-election PMS price increase will be backed by political and legislative force. Speaking to newsmen in May 2014, the IMF Senior Resident Representative/Mission Chief in Nigeria, Mr. Williams Rogers, supported the FGN efforts on subsidy removal. He said that subsidy removal is necessary for planned savings in recurrent spending and public sector reforms (reduced government wage bill by workers layoff and fixed wages).

   The State Governments still refuse to cooperate with the FGN. On December 8, 2014 the Supreme Court began hearing on the case of the State Governors against the FGN method of deducting “fuel subsidy” funds from oil proceeds before payment into the Federation Account. The State Governors want the Supreme Court to declare the NNPC practice of deducting “fuel subsidy” funds from oil proceeds before payment into the Federation Account unconstitutional. They also want an account of all “fuel subsidy” deductions made from the Federation Account from 2007 to 2014. Given that the Judiciary is a direct recipient of funds from SURE-P and the Supreme Court will materially benefit from any decision that it takes, justice will probably not be served. But then, there is no honour amongst thieves. Irrespective of the outcome of the case, the FGN plans to use the verdict as one of its building blocks for defending the planned price increase. 

  On December 18, 2014, the FGN presented a 2015 budget proposal with a 245.53 billion naira subsidy request to the National Assembly. This amounts to 37.37 million litres a day of imported PMS at a N18/litre “subsidy”. It implies no PMS will be produced internally by Nigerian refineries and NNPC will pay nothing for its 445000 barrel per day domestic allocation. The FGN has refused to reduce PMS prices, until two days ago. The FMF declared that “It’s only when our crude oil price for Bonny Light falls below this level ($60 per barrel) that we can now talk about the issue of bringing down any pump price.” The FGN hopes that the Supreme Court decision and the enactment of the PIB by the National Assembly after the election would help her impose higher than international PMS prices on the Nigerian populace. Currently, the IMF is intensifying its pressure on the FGN to increased prices after the 2015 election to the PPPRA Expected Open Market Price (EOMP) of N115.1/litre ($0.685/litre). The Nigerian oil unions and civil society are demanding a reduction in PMS prices.

   If we want to stop the FGN from increasing PMS prices to N115/litre after the 2015 election, our demand must be clear, direct and simple. We should demand N65/litre for PMS. Not a kobo more. Furthermore, we should organize Plan B. We must be prepared for alternative actions if the leadership (union or civil society) capitulates on our demand for N65/litre or are arrested as the struggle unfolds. We should organize Plan C for when the FGN sends the Nigerian Army and Police to take over our streets and democratic spaces in order to force the increased price on us. We must make petrol subsidy the most important issue in the upcoming 2015 election. Each electoral candidate must be forced to take a position on fuel subsidy. The repeated questions for each candidate in the 2015 elections must be: Are you for subsidy removal/fuel price increase or are you not? Are you for the N65/litre or are you not? Will you dismantle the corrupt petrol cabal or will you not? Are you for the Nigerian people or are you for the Cabal? Yes or No? This is our path to victory. 

• Concluded

• Dr Agbon, a former Chairman, University of Ibadan Branch of Academic Staff Union of Universities, resides in the United States.



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