The Labor Union’s reaction to the timely removal of the notorious fuel subsidy after just one meeting with the heads of the new government is extraordinary.
Given that the best of the best economists world over, chartered accountants, bankers of great repute at home and abroad and seasoned business reporters- to name a few categories of knowledgeable people all agree that the removal of fuel subsidy is best for Nigeria’s development in the medium and long term. Why then would the Labor Unions declare a strike ultimatum? Could it be a strategy to “cow” the newly elected government headed by President Tinubu? A million and one person smell rat.
nlcName beneficiaries of fuel import subsidy ,NLC challenges FG
What exactly is fuel subsidy with regards to the Nigerian economy? In 1977, the subsidy regime was introduced in good faith to cushion the effect of rising global oil prices on the cost paid for diesel and petroleum products by the military regime of former President Olusegun Obasanjo. In other words, fuel subsidy regime was a form of government intervention in the market to reduce the cost of fuel to consumers. It was implemented by the Petroleum Products Pricing Regulatory Agency (PPPRA), the government agency responsible for regulating the price of petroleum products in Nigeria.
Convene a stakeholders meeting before removing subsidy – NLC tells Tinubu
The system is such that the PPPRA sets a maximum price price for petrol, which is lower than the landing cost or actual market price. Meanwhile, oil marketers are licensed to import and sell the products to the government at the subsidized price and later collect the difference between the subsidized price and the actual market price.
It did not take long for fraudulent marketers whose eyes were actually opened to the possibility of fraud by government officials to see the loopholes in the system and began to exploit it with unprecedented impunity. Thus, the subsidy regime grew in corruption as it became inefficient and the major drain on the finances of the Nigerian government. The gross inefficiency gave room to a humongous amount wasted on administrative costs, award of fraudulent contracts and fake invoices by ghost companies.
For example, and apart from the flawed payment to the marketers, some people in the country and their cohorts from other countries have been indicted for various other subsidy frauds in Nigeria. Chief among them was Diezani Allison-Madueke, the erstwhile Petroleum Resources Minister who was indicted by the Economic and Financial Crimes Commission (EFCC) for allegedly awarding fraudulent contacts worth over N100 billion. Adeola Olusola -Oke, the former Managing Director of the Petroleum Products Pricing Regulator Agency (PPPRA) was also indicted by the EFCC for allegedly awarding fraudulent contracts worth over N20 billion in the self-same fuel subsidy regime. What about the seemingly saintly Funso Kupolokun, the former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC)? He was also caught and arraigned by EFCC for allegedly awarding fraudulent contracts worth over N10 billion in the fuel subsidy scam. Even the former Executive Secretary of the PPPRA, Mr. Olufemi Adegoke won’t let go the opportunity of the slime; he was alleged to have issued fraudulent contracts worth over N5 billion as well. The “friend” of Diezani Alison-Madueke known to be a gigolo who is always rollicking on luxurious yachts by name Akinsola Aluko also managed to get his fingers in the till, allegedly defrauding the Nigerian government of over N1 billion. Although all the aforementioned individuals are currently facing trial at the Federal High Court in Lagos, several others ranging from shady marketers to government officials, bankers are been investigated and may be charged for siphoning billions of Naira in the subsidy’s ponsi scheme.
Now, if you still think the fuel subsidy actually helped the poor mass out of their hell hole for 17 years it lasted, please consider the logic below carefully. As at the time am writing this article, the Lagos State Government say they have approximately 5 million cars registered and 200,000 registered trucks and trailers on their books. The numbers of motorcycle stands at 3 million and tricycle at 1 million. Now, let’s consider that the closest to helping the poor masses in the above equation are the trucks and the trailers because they carry food stuffs and Industrial raw materials and finished goods to and from the factories, farm gates and ports. Ultimately, these trucks and trailers apart from contributing directly to productivity and creating employment, they are very essential in the economic value chain. Ironically, the 200,000 trucks and trailers use diesel to fire their engines and lo and behold, diesel and kerosene had long been removed from under the umbrella of fuel subsidy regime. Diesel presently sell for between N900 and N1,200.
Consider also that 5 million cars are being subsidized; how many of the cars belong to the poor masses? And with Tricycles selling for N1.2 million a piece, how many of the poor masses owned them. Same goes for the motorcycle which sell for between N200,000 and N300,000. So, who exactly are the Labor Unions fighting for? The rich or the poor?
Consider again that in 2006, the amount spent on direct subsidy payments was N200 billion and in 2007 it jumped to N500 billion and the can of worms rolled down the road to 2012 under the Jonathan government with a whooping tag of N2.5 trillion. So, what happened? While you are still wrapping your head around those big fraudulent figures, consider that in 2012, NNPC, claimed that the country consumed an average of 60 million liters of petrol per day and down the road at 2021, they claimed that the country consumed 62.9 million liters of petrol per day. Common, shouldn’t liars have better memory?
Meanwhile, the Nigerian Customs Services (NCS) has questioned the NNPC claim that Nigerians consumed over 60 million liters per day and asserted that that it is less than 40million per day. They maintained that their data is based solidly on the volume of petrol that is imported into Nigeria and the volume evacuated from the depots. On the other side, the NNPC said their own data is based on a number of factors including the number of vehicles on the road in Nigeria, the distance the vehicles travel and fuel efficiency of vehicles. They insisted that their data is more accurate. But they couldn’t give the method of formula used in their calculations.
The issue to be resolved here is that if the NCS’s data is correct, it means that the over the years the government has been spending more money than it needs to. Therefore it has to be recovered and people who had pocketed the monies must be brought to book.
And, although we do not know the exact amount of subsidy payment and the accompanying frauds perpetrated over the years, a minimum of N10 trillion is been bandied around. Other fraudulent practices like crude oil theft, pipeline breaking and oil scooping, rogue marketers involved in “forward and backwarding” of fuel which had already been paid for, administrative frauds of over-invoicing and phantom contracts are yet to be tagged with a figure. However it is a good thing worthy to be praised that the miasma is being decisively done away with in one fell swoop by the new government.
We are made to understand that the Labor Unions are concerned by the impact of the subsidy removal on the life of the poor masses; if so why were they issuing ultimatum? Why did they not list up palliatives the government should be concerned about? Why did they insist that the removal should be reversed?
Personally, and without prejudice l believe that between NLC and TUC, there should have been a research center where the interests of the people would have been studied and readied for the inevitable dialogue that was bound to ensue when the odious subsidy is removed. They could also have done a snap opinion polls among their members and the general public to gauge the moods in the country. Also, if they have done the needful research, they would have come to a definite conclusion on where the interest of the people lies. They would have weighed there options well in that the total budget for education and health in Nigeria in 2023 stands at N1.2 trillion. N706 billion is allocated to education and N500 billion to health. The NLC and the TUC would also have known that UNESCO recommended that we allocate 6% of our gross domestic products (GDP) to education but that in 2023, Nigeria was only able to allocate 2.5% of our GPD for reasons of lack of funds. Ditto with healthcare. World Health Organization (WHO) recommended we allocate at least 15% of our GDP to it. Again we are able to budget only 5.5% of our expected GDP in 2023. Which then is more important to the people; inadequate funding of education and healthcare or subsidy to make people with 3 or 5 cars comfortable?
My candid opinion is that the fuel subsidy was riddled by a skunky corruption of a Kilimanjaro proportions, and therefore a sacrilege and unpardonable offense to the workers, women, students, youths and all men from all walks of life in Nigeria. Ignorance they say, is worst than wickedness! In the genuine interest of workers, the Labor Unions should bury their pride and shove the ultimatum of strike out of the window forthwith. Bamboozling won’t work with this government. They are field-smart already.
