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Young Professionals, Union Leaders, Experts Seek Lasting Solution to Fuel Subsidy Issue

PRESS RELEASE
 
Young Professionals, Union Leaders, Experts Seek Lasting Solution to Fuel Subsidy Issue
… As Economists Blame Devaluation, Cost Of Funding, Price Regulation
 
Efforts to proffer solution to the recurring corruptible practices of the subsidy regime in the Nigerian petroleum industry moved a notch higher as JCI LagosCity, a group of young professionals organised its annual 2015 Active Citizen Discourse for oil and gas industry stakeholders to further seek ways to ameliorate the burden of high fuel prices on the masses in the country.
 
Chapter President, JCI Lagos City, JC Kehinde Adedeji’s comments:  
What we are doing today is a debate on a national policy issue. We are actually mandated by Junior Chambers International that we should be active citizens. We are not partisan politicians, but however we are active when it comes to issues that affects our lives.
 
“We should actually look at this issues, offer solutions when we can put together whatever we have learnt and sometimes involve ourselves beyond the four walls of our organisation in whatever we do because we know that the success of a nation is when we are also able to gather to do whatever things we want to do. That is why we bring up such pressing issues.
 
“Our focus is also to better ourselves as individuals and also better our communities by actively bringing to the knowledge of a lot of people who do not have the opportunity to be in politics or to be in government to understand why the government do certain things as we seek the way forward for improvement.
 
Reason for choice of topic
“We did a whole lot of reading and we looked at the one that was most pivotal on peoples’ mind and being the fuel subsidy issue, the fuel crises actually elicited this particular topic and we looked at why are we having a persistent fuel scarcity and what we expect of the new government.
 
“A lot of us were agitated about what will become of the fuel subsidy issue which erupted lot of other issues at both the national and state level  which even informed some people’s decision for the choice of a change of mind.
 
“We thought of it that what kind of topic is most pressing on the mind of the people and then  we decided to address the issue of subsidy and how it will affect us on a long run.
 
 
In his view, President National Labour Congress, Comrade Ayuba Wabba in his characteristic comradeship-manner of analysis insisted that subvention is a major function of the government which avails it the ability to be able to carry out its core functions of provision of welfare facilities to the citizens.  
 
He argued thus:
“Subsidy in any economic system cannot be ignored but in our context subsidy has been used to do a lot of havoc to our economy that is why I have given you the background of where it all started. Therefore, the quagmire will continue even if you allow the system to be controlled by marketers.
 
He maintained that placing subsidy side by side with deregulation which means allowing market forces to determine the price emphasizes the need for the government continue to subject itself hook, line and sinker to economic policies of the multinational agencies who will always advance their selfish interests. “They will always give reason Nigeria should continue to import, they will always give reasons we need to deregulate so that they can have more money”, he argued.
 
”First oil is very strategic, even to our security, marketers will one day come together and say that they will sell petrol at N200 per litre but what will you do. Like the case of kerosene and diesel, DPK has been full deregulated but you go to some places they sell at N200 per liter.
 
“Why should this be so? Why should citizens continue to carry the burden? What is the essence of government?  It is welfare and well-being of the people and therefore why should it be so in our system? I gave an example here to capture all OPEC countries’ cost elements, the second issues is that the cost element caused by the free fall of our Naira. If our Naira was very strong, like N1 to a dollar, what will be the cost of fuel in Nigeria?
 
“This is what should guide us because if you allow your money to a free fall and it becomes $1 to N500, certainly the cost element will be there. So it is for us to guide our Naira, so when you are presenting those facts you must also look at the underlining elements.
 
“What amounts to cost differentials between us and other petroleum producing countries is clear when you put the currencies side by side looking at the strength of our currency and it gives us insights to what the economic issues are about the issues of appropriate pricing or deregulation and even subsidy.
 
Renowned Economist, Mr. Henry Boyo, in his analysis of the fuel subsidy regime posited that the fuel can sell at cheaper prices in the country on the basis of an appreciable exchange rate as it has a significant correlation with the price of crude oil. Boyo noted that Naira’s weak exchange rate to the Dollar is a major bane on subsidy regime which has been complicated by the negative impact of Nigeria’s faulty monetary framework on revitalisation of the real sector.
 
“Banks attempts to increase credit capacity in the economy resulting to excess liquidity putting too much cash in the economy, more cash more problems has over the years resulted into weaker Naira, lower purchasing power and inefficient borrowing system both in terms of international debt funding and domestic borrowing.
 
He noted that the subsidy can be allowed to disappear naturally if relatively more dollars are made to chase existing Naira in Nigerian banks and dollar certificates are issued to the three tires of government and MDAs. Boyo advocated that innovative approaches have to be taken to reduce the burden of subsidy until it will naturally disappear from Nigeria’s economic system.
 
“With inflation at almost 10% and cost of funds at over 22 percent to the real sector ansd a weaker Naira, clearly the CBN’s liquidity forecasting and programming have failed as monetary strategy to induce price stability”, Boyo argued.
 
 
MD Economic Associate Dr. Ayo Teriba’s Comments:
Dr. Teriba noted that he is not convenient with the definitions and calculations of subsidy in the country.and strongly averse to why our refineries have probelm producing to capacity. 
 
“I am still concerned that 22 years down memory lane we are still here arguing about removal or retention of fuel subsidy. Such discussion is a waste of time a when solutions can actually be proferred.
 
He concluded that for the inherent problems of fuel subsidy to be solved, fuel has to be refined locally for both export and domestic use. He further argued that government needs to encourage capital inflow as  it determines value of exchange rate. 
 
“Our naira can only be stong if capital inflow is retained”, he maintained.
 
Secretary General, Trade Union Congress (TUC), Comrade Musa Lawal who insisted he will continue to tackle the issue on layman terms noted that the subsidy issue if not nipped in the bud on time will created more problems for every individual in the country in the nearest future. 
 
He noted that inasmuch as an average Nigerian continues to produce electricity for his or her household, there cannot be communal coexistence.
 
“As long as our mind is not of communal basis and we think individually, we will never be able to develop this country. Because we think as long as I have solved my own problem others can go to hell. No country survives by individualization.
 
“We should think that whatever happens to that man that his children cannot go to school today will be a threat to my children tomorrow. We must think together. If we remove subsidy we turn more people into armed robbers at the end of the day we are killing them and killing our population.
 
“My suggestion is this, I don’t want to talk in educational terms, I want to talk in simple terms, as long as your neighbor cannot feed at least three times daily but you can feed seven times, you are not save. Even beyond subsidy, are we having a country? Are we having a nation? I cry not for people but for our future generation.

 

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