Edo State governor, Adams Oshiomhole, says only a decisive action by President Goodluck Jonathan against corruption in the country’s oil industry can earn his administration trust and confidence of Nigerians on the controversial fuel subsidy removal plan.

The governor, who featured as one of the guest speakers in the town hall meeting organized by the Newspapers Proprietors Association of Nigeria (NPAN) on the topic: Removal of Fuel Subsidy: In whose Interest?”, challenged Mr. Jonathan not to delay action that would see top Nigerian National Petroleum Corporation (NNPC) officials in jail for collecting money for the repair of the refineries, but failing to deliver.

He said: “Government had wanted to privatize the refineries, but NNPC officials offered to do turnaround maintenance and asked for six months to fix it. Now the refineries are grounded, and the people have since gone home to enjoy their loot, leaving the country to be exporting jobs to Europe, while importing unemployment into the country. When will Mr. President fire those people? Jonathan will earn the trust and confidence of Nigerians if NNPC officials responsible for mismanaging our refineries are brought to justice.”

Though he was booed by the audience for pleading with Nigerians to give government the benefit of the doubts and allow it go ahead with the planned removal of fuel subsidy, Mr. Oshiomhole however asked the people to be prepared to hold government responsible for any failure to keep its promise.

“What Nigerians want to hear at the moment is how persons that diverted imported kerosene subsidized by tax payers’ money should be jailed, not tomorrow, but today,” said the governor, who  was a former president of the Nigeria Labour Congress (NLC). “The people want to hear that the man has been charged to the EFCC (Economic and Financial Crimes Commission). Confidence building means that Nigerians want to see the president dealing with the cabal decisively.

“NNPC and PPPRA (Petroleum Products Pricing Regulatory Agency) officials who collaborate with the importers to calculate demurrage on imported fuel cargoes should be brought to book. It is only when government has brought such people to justice that it will earn the trust of the people. The issue is not about sermonizing, but action, and the time for it is now,” he said.

But, Central Bank of Nigeria (CBN) governor, Lamido Sanusi, who also spoke at the meeting noted that though asking the people to pay a high fuel price is unpopular, government was ready to go ahead, because it is convinced that it is the right policy to take to save the economy from collapse.

Though government is still keeping the issue of both the take-off date for the subsidy removal and the expected retail price close to its chest, indications are that Nigerians may be made to pay as high as about 115.4 percent hike in the retail pump price, from the current of 65 per litre to N140, next year.

According to the CBN governor, with one third of government total expenditure (about N1.4trillion) spent on subsidizing petroleum products supply, removing the subsidy component in fuel supply chain remains the only way to save the economy from collapse.  

He said: “When oil prices crashed in 2008 from N147 per barrel to N37, the only reason the country’s economy is still growing was that there was a $62billion reserve. Today, there is no such shock absorber. If the oil price crashes again by about 30-40 per cent, and Naira exchanges at the rate of N200 to the dollar, while inflation rises to 18 percent, that will be the end. I am willing to guess that this policy will never be a popular policy. If people are paying N65 per litre, and government is saying they should pay N140 per litre, it is not going to be popular.

Government has a responsibility to decide whether to pursue a popular policy or one that is right for the country. We are willing to be unpopular. The popular thing for government is to continue paying fuel subsidy.

“The way forward is for Nigerians to take a decision between the cost on the economy of removing or not removing fuel subsidy. The government can continue to pay fuel subsidy till 2015, it will not come down. But, the next government would be saddled with a debt burden that it will not be able to maintain,” he argued.

Mr. Sanusi does not believe increase in fuel price will negatively impact the rate of inflation, pointing out that with the percentage rate of fuel and transportation in the consumer price index (CPI) at less than 1.5 percent, even if the price of petroleum products is doubled, a month-on-month increase of three percent will only result in an annual increase of two percent in the rate of inflation.

“If petroleum product has 15 percent impact on the CP1, for the rate of inflation to go up by 4 percent, one would need to increase petroleum products prices by 200 percent. Though this is not a good thing, it is about making a choice to take a difficult decision now that is in the medium to long term interest of the country’s economy. Removing fuel subsidy is not about ideology, but about simple economic and common sense,” he said.

President General, Trade Union Congress (TUC), Peter Esele, criticized the debate on fuel subsidy removal  as lacking in any viable alternative position, adding that the biggest problem in the fuel distribution chain in the country is the Pipeline and Products Marketing Company (PPMC), a subsidiary of the NNPC responsible for the marketing and distribution of petroleum products, which he said must be overhauled if deregulation is to work.

“We have always said that government needs to look at the fuel price template again to remove the corruption components that contributes to the increases in the cost of fuel in the country. The issue of cabal cannot thrive except there are collaborators in government. If government wants to deregulate, there are some fundamental issues to put in place to facilitate the process. Overhaul NNPC and make it run like its counterparts in other parts of the world, rather than depend on importation of petroleum products,” he said.