Why governors won't back down on removal of fuel subsidy

Nigeria’s 36 state governors are backing the Federal Government in its planned removal of subsidy on petroleum products to make more revenue available to fund development projects at the grassroots, the Jigawa State Governor, Sule Lamido, has said.

Speaking in Dutse, the state capital, on Tuesday, Mr Lamido lamented that states are made to part with huge revenues from their allocations in the federation account every year to enable the Federal Government, through the Nigerian National Petroleum Corporation (NNPC), pay for the subsidy on petroleum products.

Minister of Petroleum Resources, Diezani Alison-Madueke, told the joint Senate Committee probing the management of fuel subsidy recently that disbursement for fuel subsidy since 2010 increased from N600 billion to N1.3 trillion in August this year.

But, Mr Lamido, who was addressing the closing session of the workshop for Business Editors and Finance Correspondents organized by the Nigeria Deposit Insurance Corporation (NDIC), said a review of the contributions of states for fuel subsidy showed that Jigawa state alone has been losing an average of N50billion annually from its allocation from the federation account.

He said, “Before now, governors from the 36 states of the federation have been looking at issues, including the fuel subsidy controversy, from the view point of their political parties. But today, the governors from the different political parties in the country, whether PDP (Peoples Democratic Party), ACN (Action Congress of Nigeria), CPC (Congress for Progressive Change) or ANPP (All Nigeria Peoples Party) have agreed to give their total support to the planned removal of fuel subsidy.

“We cannot afford to continue losing huge sums of money we have used to implement projects that would bring development and ensure the welfare of our people. If I am given N50billion as a result of the decision to stop the payment of fuel subsidy on fuel, I know what that would mean to the effort of my administration to continue with the development programmes we have initiated.

‘What is even disheartening is that even the NNPC that is paying this money does not know the exact amount of litres of fuel is consumed in the country daily. Neither does it know which group of Nigerians have been benefiting from this subsidy. All the governors are now speaking with one voice that there is no going back on the decision to stop further payments for fuel subsidy. Government will not succumb to the blackmail by the Nigerian Labour Congress (NLC) over the issue.”

Mr. Lamido also dismissed insinuations that the the governors were insensitive to the plight of the poor, who are already being pressured by the high cost of living and the general poor social conditions in the country. He said savings from the policy would eventually help raise the standard of living of the poor.

Most Nigerians have risen in opposition to the government’s plan to cut subsidy arguing that, if implemented, it would worsen the already parlous socio-economic conditions of the people, particularly the low income earners, who are finding it really difficult to eke out a living.

The organized labour, represented by the leadership of the Nigeria Labour Congress (NLC), has spearheaded the campaign to persuade government to suspend the introduction of the policy till such a time the necessary infrastructure and palliatives is in place to ameliorate the likely pains on the people as well as create the enabling environment for the introduction of a full-fledged deregulation of the downstream sector of the country’s petroleum industry

The NLC further argue that though deregulation is desirable, the timing by government is wrong, as introducing it at a time the refineries and other downstream facilities, such as depots and products pipelines, are not in place, would pose serious economic problems for the people, particularly as it concerns the retail price of petrol.