Subsidy removal inevitable –
Jonathan
Says retaining it ‘ll collapse the
economy
From AIDOGHIE PAULINUS, Abuja
Friday December 16, 2011

Two days after presenting Budget
2012 to the National Assembly,
President Goodluck Jonathan
yesterday insisted that fuel subsidy
must go.

The President was silent on the
controversial issue while addressing
the lawmakers.

According to him, “our country
cannot go on as usual.”
His pronouncement came barely 24
hours after the Coordinating
Minister on the Economy, who is
also the Finance Minister, Dr. Ngozi
Okonjo- Iweala said in Abuja that the
subsidy could not be removed now
until the government consults with
more stakeholders in the Nigeria
project.

But speaking through Labaran
Maku, Information Minister,
yesterday, the President said that in
the last couple of months, there had
been a huge debate relating to the
direction of the economy and how to
properly manage it to advance the
future interest of the people.

President Jonathan noted that one of
the on-going debates or one of the
issues that had been hotly contested
recently, is the issue of the
deregulation of the economy.
He was represented at the first
anniversary lecture of National
Mirror newspapers in Abuja
yesterday by Maku.

“I wish to re-emphasize that our
country cannot go on as usual. One
of the areas that our nation has
continued to debate on and which
has eaten deep into the further
progress of the economy, is the
issue of the deregulation of the
downstream sector of our oil
industry.

“Since 1958, our nation has been
exporting crude oil. After 53 years,
there is a need to look back and see
how this sector has really made
progress and impacted on the lives
of our people. “Today , government
is taking a clear look at this. If the
original vision was to transform that
sector, in 53 years, our nation should
today, become the hub of
petrochemical industry, exporting
finished product to Africa because
after 53 years, we have no excuse to
say that we continue to have crude
oil without adding any value into it,”
Jonathan said.

Taking a look at the infrastructural
decadence which has embodied the
polity, Jonathan bemoaned the spate
of unemployment in the country,
saying the Niger Delta region ought
to be a place for youth employment.
“Today, the Niger Delta should be
the place where young Nigerians
should be moving to for employment
because of the associated industries
that ought to grow along with the
discovery of oil but this has not been
the case.

“So, we are faced with a situation in
which the nation has discovered a
roll resource, has depended on
selling this roll resource to the rest
of the world that is making three,
four times the money they buy from
us,” Jonathan bemoaned.

Quoting David Ricardo, the English
political economist and one of the
most influential of the classical
economists, Jonathan said “it was
David Ricardo, the British economist
that said in the last century that in
the history of comparative
advantage, we Africans are better
positioned to export raw materials
to Europe, while Europe will
manufacture and sell finished
products to us.

“That theory lasted throughout the
era of colonial rule. Now, after 50
years of nationhood, I believe that
the time has come for us to target
the essence of economic
management by ensuring that we
open up each sector for
transformation,” he said. While
stating that the real issue about the
deregulation is not about subsidy,
Jonathan said that there is no nation
that can do without subsidy in one
area of the people’s life or the other.
“What the government has been
arguing is that between January and
now, we have spent N1. 6 trillion in
subsidizing petroleum products.
This is about one-third of our annul
budget and at the same time,
government’ s capital budget is
about 26 per cent presently. How do
you transform a nation under this
type of management of your
resources,” Jonathan asked. Stating
that what government has targeted
in the deregulation is to open up the
sector so that private capital, private
technology can come in and develop
the sector, Jonathan said that in the
last 10 years, the Federal
Government has issued 20 licences
to people who wished to set up their
own refineries, but they have been
unable to do so because of
government’ s price control
mechanism on fuel.

“Those companies that have been
waiting on Nigeria to open up the
downstream sector, are now moving
to Niger Republic, they are moving
to Chad, they are moving to Ghana
and they are moving to Benin
Republic because these countries
have also discovered fossil fuel and
they are now, managing their own
resources, taking into account, the
mistakes that Nigeria made.
“Recently , you heard that Niger
Republic opened a new refinery.
They didn’t only open a new
refinery, but they also increased the
cost of fuel in Niger so that they will
target Nigeria for export of their
own product.“Everywhere in the
world, countries are cutting cost.
Even Europe that is our pace setter,
today is facing major crisis because
they have postponed decisions on
the economy for a long time and the
present generation of Europeans, is
now facing a huge debt for which
government and people are unable
to endure.

“That is what is happening to
Greece, that is what is happening to
Spain, that is what is happening to
Italy and that is what is going on in
most European countries and the
United States,” he stated. Jonathan,
however, said that if we can’ t take
those decisions that will reposition
our country, Nigeria will face the
same crisis currently experienced in
the western world.


Source:
sunnewsonline.com/webpages/news/national/2011/dec/16/national-16-12-2011-002.html