Fuel Subsidy Removal: World Bank Chief Cautions Jonathan

By Emma Amaize, Kingsley Omonobi, Demola Akinyemi , Peter Eguatu, Inalegwu Shaibu, Victor  jeme & Akpokona Omafuaire
LAGOS — As the battle line appears drawn between advocates of the withdrawal of fuel subsidy and those opposed to it, the World Bank Vice President for African Region, Dr Oby Ezekwesili, has stressed the need for government to tackle the supply structure of fuel before implementing the policy.

Ezekwesili spoke against the groundswell of opposition to the policy even as the House of Representatives has assured that it would take a decision on the issue in the best interest of Nigerians.

Commenting on the proposed removal of fuel subsidy by the federal government, the World Bank Vice President, said: “Government needs to focus on the supply side. The supply structure of fuel needs urgent attention of the government. First of all, in tackling the issue of fuel in the country, the government should be able to address the supply of fuel. That is all I can say on this at the moment.”

Ezekwesili, who spoke with newsmen weekend at a forum organised by the Apostle in the Market Place (AiMP) warned the federal government to urgently reduce its recurrent expenditure if it wants to address the huge infrastructure deficiency in Nigeria.

She noted that over $25 billion would be required to address the infrastructure problem in the country, noting that “Nigeria needs to tackle the infrastructure deficiency in order to attract investment.


President Goodluck Jonathan inaugurating the Golf Course of the Air Force after the Parade Tuesday in Abuja with on the left is Chief of Air Staff, Air Marshal Mohhamed Dikko Umar Px State House
The government alone cannot address the infrastructure problem; it is going to involve the private sector, so there is need to have public private partnership.

The private sector cannot come into an economy where there is negative rating; it cannot come into a country where there is infrastructure deficiency and where the cost of transaction is too high. They will not come into a country that has a key bottleneck and in an environment with many hurdles in doing business.

And so government has to focus on things that will improve business climate, some of those things is the bulk bureaucratic reforms that have been going on, but the most important is having a macro economic stability that will ensure that your fiscal activity are well ordered, prudential and your monetary policy are such that check inflation, guaranty stability and prohibit exchange rate volatility so that such stability will make investors take you serious when making investment decision. So in order to address the infrastructure deficit, the role of government and private sector will come complementary.

“In terms of additional financing in an annual basis that is needed, at least more than $25 billion is needed to address infrastructure; you can find private sector and government sharing the risk that is involved in it.”

Commenting on the fiscal problem facing the country, Ezekwesili, said: “Well, it has to do with fiscal consolidation of the budget. By fiscal consolidation we mean taking hard fiscal responsibility in our budget. The entire budget has to be looked at not just the size alone but the quality and structure of the budget.

“There is urgent need to reduce the portion of the recurrent expenditure of the government, it is really urgent for government to do so because no economy can develop its infrastructure with the kind of budget we have. It does not create the basis of economic growth. The bride of economic growth is the investment in infrastructure and human capital for an overall economic growth.

The part of fiscal consolidation really must be considered. The government must live within its means and it should not crowd out the private sector by borrowing from the domestic market where resources are available for the development of the real sector that has potentials for employment.

On her impression on the banking sector reforms and mergers and acquisition taking place in the country, she said, “these are early days we have to focus on both monetary and fiscal policies. The monetary authority has to keep focus on improving the performance of the banking sector. The most important thing is to ensure that credit is revitalized in the system to reactivate the real sector, because that is where the job creation has to come from. Some of the measures that are being taken are on course but the high cost of doing business by the Small Medium Scale Enterprises (SMEs) is not just from the lending aspect but from other transaction costs, such as transport, energy, etc. So by the time you reduce all the transaction costs then there will be a balance when you consider the cost of borrowing.”

You are digging your administration’s grave – CNPP warns Jonathan

On his part, General Secretary of the Conference of Nigeria Political Parties (CNPP), Willy Ezugwu said the honourable way out for President Jonathan is to hands off the removal and focus on how to break the subsidy cartel, insisting that the withdrawal will be to the detriment of the masses.

His words: “We are not surprised that the President who laid claim to having risen to the top from poor background has joined the oppressing elite by planning to visit hardship on the people he promised to cater for. What is however surprising is that it is too early in the day for him to abandon the people in favour of the rich”.

No going back on fuel subsidy removal, Says Gov. Suswam

Benue State governor, Gabriel Suswam, however insisted yesterday there will be no going back on government’s plans to remove fuel subsidy, saying it will be in the best interest of the nation.

The Governors Forum, which initially threw its weight behind the removal of the subsidy, has constituted a six-man panel, headed by its Chairman, Rivers State Governor, Rotimi Amaechi, to decide on the forum’s position on the matter.

Speaking with journalists at the venue of the 9th Annual Award Ceremony for Winners of NAFDAC’s organized Annual Secondary Schools Competition in Abuja, Suswam maintained that fuel subsidy was not getting to the masses and and that a very few faceless people were the ones enjoying the subsidy.

He said: “I fully support the removal of fuel subsidy for a number of reasons. Look at what is happening in the Senate, a few individuals or few group of persons are the ones enjoying the subsidy.

“If you go to Sokoto, I don’t think you will buy a litre of petrol at N65, for God knows why. So who is enjoying the subsidy? A few people are taking a lot of money. And in spite of the fact that the Federal Government has made a pronouncement that if it takes N250 billion for this month, few people will share that money.

“So the governors, with no exception, are fully in support of removal of subsidy. Yes, temporarily there would be hiccup.”

Reps ‘ll take decision in the best interest of Nigerians —Ihedioha

The House of representatives has meanwhile assured that it would take a decision on the issue of the removal of fuel subsidy in the best interest of Nigerians after listening to all arguments by the stakeholders.

Deputy Speaker, Chief Emeka Ihedioha who spoke weekend in Ilorin said, “we will be fair to all and we will listen to all the arguments as they present themselves and, of course, you are sure that members of the House of Representatives are very patriotic and very rational.

“We will put the issues on the table and take best action that we consider good enough for the prosperity of the country and our people”.

Ihedioha also stressed that on this matter, in his capacity as the deputy speaker, he would respect the opinions and views of his colleagues on the fuel subsidy in arriving at a collective decision, saying, ”I must respect their opinions and views and respect the fact that they represent their constituencies and do my job which they have asked me to do which is presiding”.

Senators demand Stakeholders’ meeting

Senators, Ali Ndume, PDP, Borno and Ifeanyi Okowa, PDP Delta, on their part advised President Goodluck Jonathan to allow Nigerians decide through a stakeholders’ meeting whether fuel subsidy should be sustained or removed.

Senator Ndume, said, “I do not see the removal of subsidy as government policy. It is individual policy. If you are taking a major policy decision like this and you did not involve the people through the National Assembly then it is not government policy. We are the representatives of the people. Then how come we are not being carried along?

“Even the Constitution provides that the people must have a say in government decisions and that includes issues such as fuel subsidy. So what they are trying to do is unconstitutional. As far as I am concerned, they should forget about it because Nigerians have clearly rejected it.”

Senator Okowa who is also pushing for the revitalization of the nation’s health sector and a special programme to stem the tide of sickle cell disorder urged the government to come up with well defined safety nets in the event that it goes ahead to remove fuel subsidy.

He said: “I feel that the Federal Government needs to come in with all information to Nigerians without holding back on any. Letting us know exactly what is going on and also letting us know whether the accounts as related to the subsidy of the PPPRA, NNPC and the PPMC have actually been properly audited by firms that we can trust.

“Let us know exactly how much fuel is actually coming into this country, how much fuel is being refined locally. We need to know all these because there are several talks about round tripping. There are so many challenges and government needs to throw these cards on the table with all the information available. Let the information be studied by the NLC, by the ordinary Nigerians and then we discuss it as a nation and agree. I think that is where we have been going wrong in this country.”

VANGUARD NEWSPAPER

Ezekwesili is damn right but the AGIP-friendly Government currently leading Nigeria will never listen.

Commenting on the proposed removal of fuel subsidy by the federal government, the World Bank Vice President, said: “Government needs to focus on the supply side. The supply structure of fuel needs urgent attention of the government. First of all, in tackling the issue of fuel in the country, the government should be able to address the supply of fuel. That is all I can say on this at the moment.”

Ezekwesili, who spoke with newsmen weekend at a forum organised by the Apostle in the Market Place (AiMP) warned the federal government to urgently reduce its recurrent expenditure if it wants to address the huge infrastructure deficiency in Nigeria.

Next year is gonna be interesting!
People that were[b] for[/b] the removal of fuel subsidy never really understood the issues involved and the ramifications of such actions.

The country still have a long way to go   why cant federal govt reduce their expenditure,all over the world most goverment in most countries have cut down from there expenses but in Nigeria is a different case what a country senators they just milk the country and sit there with no ideas to move the country forward i tire for this country.

It seems that kerosene is the only thing that will remain subsidised as part of the palliative package for the poor. I lean in the direction of subsidy removal, but want to hear the full package for the poor first. We should all be ready to scrutinise it to make sure its properly targetted and executed.
As for riots, there will be none; the labour people don't have a hard stance already seem to be buying in, everyone wants to see the full palliative package before making a position.

2012 will be very exciting; people should start saving for the rainy day.

ak47mann:

The country still have a long way to go   why cant federal govt reduce their expenditure,all over the world most goverment in most countries have cut down from there expenses but in Nigeria is a different case what a country senators they just milk the country and sit there with no ideas to move the country forward i tire for this country.

Indeed. It is just plain wrong and a sign of things to come that GEJ has no desire whatsoever to curb profligacy and attack waste. Our democracy is the most hideously expensive in the World. A lot of money can be made available for capital spending if only this current Government is not one totally compromised to the point of impotency.

Beaf:

It seems that kerosene is the only thing that will remain subsidised as part of the palliative package for the poor. I lean in the direction of subsidy removal, but want to hear the full package for the poor first. We should all be ready to scrutinise it to make sure its properly targetted and executed.
As for riots, there will be none; the labour people don't have a hard stance already seem to be buying in, everyone wants to see the full palliative package before making a position.

Though I know your stance but the issue is not about helping the poor. Most poor homes are already using "gas" or electricity for cooking. Kerosine will make little or no impact in their lives.
The issues should be the pending hyper-inflation that will accompany this, the usefulness of the money gotten from the removal of subsidy and the building of our refineries to reduce the cost of petroleum products and reduce unemployment.

I hardly see how a package for the poor will be of any use, knowing fully well that we don't have a database. Moreover, the both the middle class and the "poor" will be "poorer". Therefore, it is worth saying that the removal of subsidy is no removal at all.

otokx:

2012 will be very exciting; people should start saving for the rainy day.

Indeed!

Beaf:

It seems that kerosene is the only thing that will remain subsidised as part of the palliative package for the poor. [/b]I lean in the direction of subsidy removal, but want to hear the full package for the poor first. We should all be ready to scrutinise it to make sure its properly targetted and executed.[b]
As for riots, there will be none; the labour people don't have a hard stance already seem to be buying in, everyone wants to see the full palliative package before making a position.

Best statement I have ever read from you on this forum, Instead of just following the bandwaggon of the presidency blindly.

Here is what will happen. Let Oga Presido keep toying with the opportunity granted him.

by 2012 we shall be watching live season 2 of the lives of nigerians being wasted.

I totally agree with her. Make our useless use there tongue count there teeth well or,

Even the Nigerians supporting this wicked plan know it is not right. Why are we selfish in Nigeria? Why?

I copied the post below from a different source.

"23yrs ago, precisely in 1988, the then SUG president of d University of Jos led a team of students who rioted against the then military dictator (IBB) removal of oil subsidy. He termed it "a crime against the Nigerian masses & a war against the poor". That SUG president is Mr. Labaran Maku, the current Minister for information who has said the removal of oil subsidy is long over due, How ironical!"

;d ;d ;d ;d ;d ;d

what supprises me most was that before okonjo iwela became part of this govt. she was hamering on recurrent expenditure and the need to reduce it to the barest minimum. but now she is part of govt and no one hears that aNY more,
who is deceivlng who,

For the first time[b] BEAF [/b]is pro masses on GEJ issue.
Surprise!

buzor:

what supprises me most was that before okonjo iwela became part of this govt. she was hamering on recurrent expenditure and the need to reduce it to the barest minimum. but now she is part of govt and no one hears that aNY more,  
who is deceivlng who,

The thing is, most, lose their focus when they get there. You and I will probably do the same,[b] IF [/b]we get there.

I hope the plan is for good, any hardship from govt could lead to more crisis, so those that have ear let them hear before its too late

God bless Nigeria

Everybody knows that Nigerians won't accept the removal of fuel subsidy. GEJ is simply wasting his time

fiscal consolidation
like jonathan and patience chopping 1million naira daily. wetin dem dey chop,umblela?

buying new presidential jets etc

the kind of austerity measures and sacrifices needed are drastic and severe
in fact even NFA should go and look for money outside government.
is GEJ willing and able to make these changes.
i say confidently that the budget of the FG makes very little difference or impact on ordinary nigerians e.g. federal ministries of health,education ,transport,works,sports are all a waste

President Goodluck Jonathan inaugurating the Golf Course of the Air Force after the Parade Tuesday in Abuja with on the left is Chief of Air Staff, Air Marshal Mohhamed Dikko Umar Px State House


Sorry to go off topic -  A whole President inaugurating a golf course in the military baracks.  Is this man devoid of important tasks

I pray this administration yields to good good advice and shun this sbsidy removal idea o

Am already begining to get scared of what the consequencies migth be o. People will use oppurtunity of the protest to vent their anger on elected officials and we all know what that can lead to. Mr. President, be wise and let sleeping dogs be please.

This is not actually rocket science and we've said it on this forum many times! Let refineries work. We should be exporting fuel instead of importing. Rather than address the issues militating against exporting (refineries), they are flexing muscle on removal of subsidy. This is one of the things they must address before talking about subsidy.

On another note, how come it's very easy for them to consider the removal of fuel subsidy but it's not convenient to reduce the cost of running government? How come they find it difficult to police the borders? How come it's not easy for them to audit NNPC or the fuel subsidy accounts? Who are the beneficiaries? How come fuel subsidy bill went up from N600billion last year to over N1trillion this year?

How's the alternative energy source - electricity? What's happening on this?

Who knows, the removal of fuel subsidy (if government insists) might be what is needed to open the eyes of Nigerians to their suffering and the fact that they (Nigerians) can do something about their thieving, uncaring, and unthinking politicians masquerading as leaders.

Gbawe:

Ezekwesili is damn right but the AGIP-friendly Government currently leading Nigeria will never listen.

@ Gbawe,

Ezekwesili's statement, as quoted does not make much sense. Supply of a product should be left to companies/businesses who have a profit motive to ensure that it is constantly available. Can Nigeria's government ensure adequate supply of a product as efficiently as businessmen? Shouldn't the government be doing something better with its time than supplying fuel which should strictly be a commercial product instead of the political/social product it is seen as now?

Btw, why have private companies or IOCs refused to build refineries? It isn't an accident when private firms refuse to refine fuel in Nigeria if it would be "cheaper" for then to do so as claimed by Nigerians. Investors base their decisions on rational economics and not on political sentiment. The existing subsidy regime make refining business non-viable in Nigeria. A business where all inputs are at international market prices but its output are fixed by populist political fiat.

Only a government can run a "business" like that which is why only government owned refineries exist in Nigeria with its attendant inefficiency. Deregulate and then refineries will spring up meet existing gaps in the market. A gap caused by the inability of government refineries to meet market demand.

IBB removed subsidy, Abacha removed subsidy, Obasanjo removed subsidy many times and now GEJ is about to remove subsidy. How are we sure after this, the subsidy will not be removed again.
Is there something i dont understand with this subsidy thing?

Fuel subsidy should go.

kalokalo:

@ Gbawe,

Ezekwesili's statement, as quoted does not make much sense. Supply of a product should be left to companies/businesses who have a profit motive to ensure that it is constantly available. Can Nigeria's government ensure adequate supply of a product as efficiently as businessmen? Shouldn't the government be doing something better with its time than supplying fuel which should strictly be a commercial product instead of the political/social product it is seen as now?

Btw, why have private companies or IOCs refused to build refineries? It isn't an accident when private firms refuse to refine fuel in Nigeria if it would be "cheaper" for then to do so as claimed by Nigerians. Investors base their decisions on rational economics and not on political sentiment. The existing subsidy regime make refining business non-viable in Nigeria. A business where all inputs are at international market prices but its output are fixed by populist political fiat.

Only a government can run a "business" like that which is why only government owned refineries exist in Nigeria with its attendant inefficiency. Deregulate and then refineries will spring up meet existing gaps in the market. A gap caused by the inability of government refineries to meet market demand.

the american government uses its time to fight several wars to ensure supply of oil.
the real world is quite different from textbooks.
nigeria's economy is relatively primitive and cannot survive world competition
it is an often repeated fallacy in the west that government cannot carry out economic activity effectively or even profitably. well china has debunked that myth now.
truth is nigeria with next to zero other sources of revenue cannot afford to buy unsubsidized petrol. the other side to subsidy which is not being mentioned is imported petrol is priced in dollars and as long as the naira is weak and volatile petrol prices will be. so if subsidy is removed we peg petrol prices in nigeria to the dollar? the real issue is our exchange rate not subsidy per se.
out currency has been debased(and still is) over the years as such this subsidy story will never end

This is not actually rocket science and we've said it on this forum many times!  Let refineries work. We should be exporting fuel instead of importing.  Rather than address the issues militating against exporting (refineries), they are flexing muscle on removal of subsidy.  This is one of the things they must address before talking about subsidy.

On another note, how come it's very easy for them to consider the removal of fuel subsidy but it's not convenient to reduce the cost of running government?  How come they find it difficult to police the borders? How come it's not easy for them to audit NNPC or the fuel subsidy accounts?  Who are the beneficiaries?  How come fuel subsidy bill went up from N600billion last year to over N1trillion this year?

How's the alternative energy source - electricity? What's happening on this?

Who knows, the removal of fuel subsidy (if government insists) might be what is needed to open the eyes of Nigerians to their suffering and the fact that they (Nigerians) can do something about their thieving, uncaring, and unthinking politicians masquerading as leaders.

[b]I cant agree more, u see, this miscreant Jonathan is too daft to realize the consequences of his proposal, the bottom line is that there is high demand for fossil energy in the country simply because the Govt itself has failed to provide stable power.

Nigerians buy more PMS for Gen sets than cars, there are families that cannot afford a car but can afford different sizes of Gen sets and these translate to higher demand on fuel.

the masses have died and endured CO asphyxiation from Gen fumes for ages while waiting patiently for the Govt to be responsible, in the end they looted all the money proposed for electrifying the country.

I was in warri over the weekend and what i saw on the street protesting against uduaghan was unprecedented, dont you ever dare a hungry man, Gone are the days Nigerians don't revolt, lie, Nigeria has successfully bred militants,kidnappers,bombers etc which defied our military.

though i anticipated jonathan to end like this reason i didn't even bother voting for him, don't think your hungry police will save you when the time comes  just one Gun shot and NATO takes over, glad Nigeria has oil reason enough for NATO to come and give the masses "DEMOCRACY" when you start shooting. if in doubt ask Ghadaffi.

we are one of the biggest gas exporters in Africa, the criminals in power only benchmark their budget prices on oil and nobody talks about Gas, the Nigerian LNG is keeping europe and Asia afloat on Gas exports yet we don't see those figures hardly do we know how it translates to revenue for the government.

whatever the state governors think , fuel subsidy is a necessary waste that could have put the govt on their toes to seek for a solution fast.

reduce the demand on fuel by providing electricity that way the amount of fuel you subsidize will reduce drastically thereby reducing the cost of subsidizing them.
quickly encourage local refining, if the militants could do it in the delta why cant the govt? by so doing the imported ones will lose patronage and everyone comes home.

ironically, when the revolution start, the likes of the Govs forum and the okonjos will begin to chair our NTC while you go into hiding in Bayelsa state. be wise be wise

the die is cast, remove subsidy and NATO will give us "DEMOCRACY" useless man [/b]

aribisala0:

so if subsidy is removed we peg petrol prices in nigeria to the dollar? the real issue is our exchange rate not subsidy per se.
out currency has been debased(and still is) over the years as such this subsidy story will never end

Straight up. Thats the point

For all i know the bubble will soon burst in this nigeria we are where leaders and politicians are greedy and not care about about 70% unemployment, no roads , education zero , it will soon burst i know that, we are watching we are waiting,