In the wake of nationwide outrage that has greeted Sunday’s announcement of formal removal of petroleum subsidy by the Federal Government, Presidential adviser on media and publicity, Dr Reuben Abati in this interview with State House correspondents insisted that the policy was in the long run benefit of the Nigerian economy, adding that President Goodluck Jonathan and other government officials did enough consultations before announcing the removal. Abdulrahman Abdulraheem reports:
What is the true situation of fuel subsidy now, has the government finally implemented the removal?
That question is surprising to me, but truly you will recall that when the Federal Government submitted its budget proposal for 2012, there was no provision in that budget for subsidy on PMS which means that in 2012, there will be no such thing, that is point 1, point 2 is that PPPRA which issued a statement on Sunday is an agency of government and the statement was explicit enough and PPPRA is the agency that is in charge of petroleum pricing and regulation, so I don’t understand why you are still doubting whether this is from government or not from government.
But the President said we had a stockpile that will last for 55 days and it was obviously imported when subsidy was on, so why allow it to be sold at unsubsidised prices?
When did the President say so?
During the media chat, he said he asked NNPC and they said they had a stockpile of 55 days and were even trying to increase it.
This stockpile you are referring to you may be misinterpreting Mr. President. You know that this subsidy, the way it works is that there are marketers who are doing their own private business importing fuel. When they bring in these fuel they then claim the subsidy for the differential they are paid. It is not the NNPC that is paid. So even if the NNPC has a stockpile, it is not the same thing as the price of the marketers. You know NNPC is also bringing fuel and they sell at cheaper rates in some of their outlets and NNPC fuel may not necessarily be imported, it may be the ones from local refineries.
So if you talk about stockpile, it means NNPC has enough fuel to prevent a situation where there will be fuel scarcity. If you check that part of the media chat he was not making that statement in relation to whether subsidy would be removed or not.
This is not a new issue, you know this removal of fuel subsidy has been in the public domain for more than two months.
But the government said consultations were still ongoing?
Well, you know that consultations have been going on for more than two months, we have held town hall meetings, the President had met with students, civil society, media chiefs and even market women and then there have been campaigns even in the newspapers. You are aware of this of course.
Does it mean that since the 2011 budget is still operational that 2012 budget implementation has already started?
Well, the thing is that for 2012, there is no provision for it and we are in 2012; that is what is important because if you continue to subsidise fuel, you will be piling up deficit for 2012. Where will the payment come from? There is no provision for it because even when you spend money in 2012 and you are using the 2011 budget, the money you are spending is money meant for 2012 and that money will be taken from the 2012 budget.
I thought the 2011 budget would rounded off by March
No. You know by December 31st they would have closed the books, in fact I think they close the books by December 15 or so. So once they have closed the book, the new budget begins to operate but you can leave the headings for 2011 for just about three months, that is what the constitution says but it doesn’t mean that the money you are bringing in from 2011 to 2012.
What about the safety nets that government promised to put in place before the removal of the subsidy?
No. Government did not say it will put the safety nets before removing the subsidy. What government said was that the N1.4 trillion that will be rescued from the budget will reduce borrowing, create revenue and that money when rescued will be used in the areas stated in the source documents and it is also stated that a committee made up of stakeholders in the civil society will be mandated to monitor how that money is used and this is to address the issue of trust on the part of many Nigerians who are saying that even if they save money, the money will be wasted.One thing that baffles me is that the media has been placing too much emphasis on removal of subsidy but what government is doing actually is deregulation of the downstream sector. By deregulation the emphasis is on efficiency, the emphasis is on competition, the emphasis is on opening up the market so that global sector players can come in and make that market more effective and you know of course because of subsidy a lot of sharp practices have been going on , inefficiency, corruption , smuggling, once you remove that you remove the incentives for all of these ills and you create an open market and that is why repeatedly it has been compared to what happened in the telecom sector and once you deregulate you create an open field and the long term effect is that prices will crash. When we started with this deregulation in the telecoms sector, simcard was being sold for as much as N20,000 but today people are given simcards almost free of charge. Now, let me ask you, how many refineries were licenced? For all the refineries that were licensed I don’t know of anybody who has taken up the license and put it into operation because the price regime is not good for the business since some other people will either lift oil or not lift oil and then collect subsidy and then go and sell it in neighbouring countries or engage in some other illicit practices. Deregulation is in the interest of the public and I think we should place the emphasis on deregulation.
Are you sure the price we are paying is not sexed up because nobody has been able to tell us the per liter cost of petroleum products refined in Nigeria and why they will cost the same as those imported?
The economics of that was addressed in the presentation by Finance Minister, Mrs Ngozi Okonjo Iweala in her presentation and I think most of it has been reported. She made comparisms of what happens elsewhere in the world. You will find out that even with this deregulation the per liter cost of PMS in Nigeria is still one of the cheapest in the whole of Africa and in the world. Only last week, Ghana removed subsidy on PMS , there was no debate over it there was no acrimony, it was just an announcement, just last week.
What is your reaction to the threat by Labour that they are going to shut down the country?
I hope Labour will hold on to its promise that it will support whatever government does in the interest of the Nigerian people because Labour was consulted. I attended those meetings with Labour and I know there were some understandings reached.
Did government consider the ripple effects of the over 120 per cent increase in the price of petroleum because people that travelled will be stranded?
One thing you will know is that leadership is not about populism, sometimes leaders have to take some very tough decisions in the interest of the people because people are used to a certain kind of reality, it is natural for one to resist it but we believe that once it is clear that this is done in the best interest of the people even those that are opposing it now either for mischief or partisanship will see the wisdom in the action. Government had prepared the people’s mind that in 2012 there will be no subsidy on PMS. The issue had been discussed on the radio, in the market and has been a topic in the public place.
Source: People Daily