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Why govt may not raise intervention fund over fuel subsidy removal

By Collins Olayinka, Abuja
06 January 2016   |   12:20 am
THERE are indications that the Federal Government may not establish any intervention fund to mitigate the impact of the now-to-be-adopted petrol price modulation mechanism.


• NLC canvasses sub-regional product swap
THERE are indications that the Federal Government may not establish any intervention fund to mitigate the impact of the now-to-be-adopted petrol price modulation mechanism.

The Guardian learnt in Abuja yesterday that the adoption of price modulation makes the establishment of any palliative body impossible to create.

In the past, the Sani Abacha government created the Petroleum Trust Fund (PTF) while the Goodluck Jonathan administration came up with Subsidy Reinvestment and Empowerment Programme (SURE-P) to cushion the effects of price increase.

Though the governments of Musa Yar’Adua and Olusegun Obasanjo did not create agencies to mitigate the impact of partial subsidy removal, Obasanjo gave the NLC 80 luxury buses for mass transit services in major cities while Yar’Adua provided N10 billion loan at zero per cent to both the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) to boost mass transportation for workers.

The indication that government may not create any palliative agency came from the Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Ahmed Farouk, who disclosed to The Guardian that the agency planned to keep the over-recovery money to fund under-recovery when the price of gasoline in the international market rises in the course of the year.

It has also emerged that the NLC may not push for the establishment of any palliative measure.
NLC president Ayuba Wabba, said yesterday that the secretariat had been directed to fix a date for the planned National Executive Council (NEC) meeting.

According to him, the long-term solution is for Nigeria to take crude that is meant for domestic consumption into refineries in neighbouring African countries for refining and only pay for costs of transportation and refining.

His words: “NLC is not looking at calling for the establishment of any palliative organisation such as PTF and Sure-P because we believe that we have moved beyond those points. We have consistently argued that the logical thing to do is to take the crude that is meant for domestic refining to our neighbouring countries to refine. Now that government has told us that about 60 per cent of our needs can be refined locally by our refineries, why can’t we refine the other 40 per cent in the countries that have refineries? So, for us, we are not interested in the palliative any longer. We must ask and seek what policy guarantees the best for the commonest amongst us and not serving the interest of the cabal.”

Wabba described the 50 kobo reduction in the price of petrol as a bait that would be rejected by congress, saying: “We are not impressed by the reduction at all. We need to know how government arrived at the price at which they are now selling petrol. We need to see the arithmetic. They are complaining about corruption in the subsidy regime and the existence of a cabal in the system. But we will remind them that we voted for change, which invariably means that we expect government to fix all that. We do not think that it is right for this government to be talking about the existence of any cabal at this stage. Which cabal is stronger than the Nigerian people? Government must fight every cabal to ensure Nigerians are not subjected to more hardship in the New Year.”

On his part, the TUC Secretary General, Musa Lawal, said that the central body would decide on the matter when the secretariat resumed which was yesterday.

The President of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Igwe Achese, said the new price modulation was not sustainable, adding that it would not guarantee product availability just as he hinted that his union would also be meeting this month to examine the trend and take appropriate action.