24 October 2011

Nigeria: Fuel Subsidy Removal - World Bank Chief Cautions Jonathan

Photo: Vanguard
Traffic in 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.

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."

By Emma Amaize, Kingsley Omonobi, Demola Akinyemi , Peter Eguatu, Inalegwu Shaibu, Victor jeme & Akpokona Omafuaire

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