Any
discerning reader that is familiar with this column will have by now been able
to see a common thread that runs through this column in the past 30 weeks or
so. This week’s column must of necessity be on a subject of popular will with
respect to the political turmoil with which the country is currently bedeviled.
Let me first commend and salute the people of Nigeria – young, old, middle
aged, labour, civil society, employed, unemployed, market women, and youths for
summoning the courage to do that which is perhaps unprecedented in the struggle
to make Nigeria better and greater during our lifetime.
Thus President Jonathan would not have allowed
power to get to his head if he had learned anything from the lessons of
history. Some have argued that Nigeria is different and as such the Arab Spring
has no place in Nigeria. Do they still think so? To be sure, the ongoing
struggle between the executive arm of President Jonathan’s administration and
the people is, in the view of this column, for all intents and purposes the
Nigerian equivalent of the Arab spring. It is the popular will which shall and
must prevail at the end of the day.
So what really is at stake? Is this just about
the removal of the fuel subsidy, when to remove it or is it about what a good
government should be?
First, let us examine the economics as well as
the politics of the fuel subsidy.
As stated in one of our previous articles on this column on the subject of the petroleum industry, there are 2 schools of thought: (1) That of ‘Buhari and Tam David-West’ that believes there is no subsidy if actual cost of exploration, local refining and transportation are the constituents of the pump price for refined petroleum products, and (2) The ‘government’ school that is based on the opportunity cost, i.e., the international quoted price for petroleum products.
As stated in one of our previous articles on this column on the subject of the petroleum industry, there are 2 schools of thought: (1) That of ‘Buhari and Tam David-West’ that believes there is no subsidy if actual cost of exploration, local refining and transportation are the constituents of the pump price for refined petroleum products, and (2) The ‘government’ school that is based on the opportunity cost, i.e., the international quoted price for petroleum products.
Clearly, if domestic refineries are functional
and producing enough to meet domestic demand, as the 7th largest exporter of
crude oil should do, the difference between the two schools of thought would
narrow as it is simply because the actual cost of delivering a litre of petrol
to the pump head would have been about N40 that no one in the executive arm of
government has yet been able to refute or disprove. Therefore the fact that the
government has to resort to the opportunity cost basis as a rationale for
justifying the existence of an “import-based” subsidy is indeed a self induced
burden that the Nigerian people are being forced to bear.
This brings to mind a fundamental principle of
common law that no one should profit from his or her wrong, which when applied
should preclude the government from seeking to pass the inefficiency and
incompetence on its part in failing to ensure that our domestic refineries work
and jobs are created. Indeed the economic cost to the nation is not just a
subsidy element that the Nigerian people are having to suffer but also foreign
exchange, well paying jobs and skills that have gone down the drain with
importation of refined petroleum products. We can therefore conclude that the
economic justification for the withdrawal of the fuel subsidy is self induced
and should not stand.
Secondly, even if the Nigerian people should
decide that refined petroleum products should be sold at the opportunity cost
which is the international benchmark price, the popular will remains that the
cost and size of government today is unwieldy and unacceptable. In 2011 nearly
75% of the entire budget was spent on recurrent expenditure. The people have
complained time and again that the salaries and allowances of the executive and
legislative arms of government are neither affordable nor sustainable. Why has
the government shied away from tackling 75% of the problem whilst devoting
energy to the remaining 25%?
The bloated overheads are not only real but have
been carried forward into the 2012 budget proposal such that only N1.3tr out of
the total budget of N4.75tr is available for capital expenditure. Meanwhile the
presidency is budgeting N1.8b to maintain ‘existing furniture, office and
residential quarters’, N1.7b for travel (N724m domestic, N951m international),
a ministry has budgeted N2.5b for ‘citizens call centers’ whilst the ministry
of agriculture has budgeted N1.2b to incorporate commodity marketing companies.
Stationery, refreshments and snacks in the presidency will consume about N2b,
miscellaneous spending by the presidential villa alone totals about N1.7b for
food, honorarium and something called welfare packages. The SGF and head of
service will also receive over N2.5b for miscellaneous expenses including about
N300m for welfare and N270m for security votes. These are nothing but misplaced
spending priorities!
Moving on to the components of the so called
N1.3tr fuel subsidy (by end of October 2011) the government is bent on
removing, we can ignore the fact that no one in government has been able to
analyze and substantiate how the amount of the subsidy ballooned or skyrocketed
from the earmarked amount of N240b or between of N300-N500b in the last four
years, to the N1.3tr now and focus on the fact that both the government and the
people have agreed that the process and system of subsidy payments are corrupt
and fraught with fraud. So the question is why this government is not as
anxious to investigate and charge all those found to have abused the system as
it is determined to remove the subsidy.
Meanwhile government has also budgeted about
N1,147 billion (not N922 billion!) for the security sector. Ordinarily, given
that security of lives and property is arguably the most important function of
government, no one will quarrel with the magnitude of this provision for
national security per se but for the fact that like everything handled by this
administration, it is riddled with secrecy, lack of transparency and corruption.
People are demanding for the so called security votes to be made more
transparent and for competitive bidding to be the norm for all national
procurements in accordance with the Public Procurement Act. So at a time when
the entire country is under siege from attacks by insurgents, religious
fanatics, armed robbers, kidnappers and militants alike, including the
unfortunate and condemnable massacre of innocent citizens in sacred places of
worship, the government chose to worsen the mood of the nation by unilaterally
removing the fuel subsidy.
In response to the widespread anger, the
government in yet another show of insensitivity and incompetence, announced a
so called ‘SURE’ package to ostensibly alleviate the suffering of the citizens
but if truth be told, the so called ‘SURE’ package is founded on unsure,
unsound and uncertain grounds. But for the fact that it may not be politically
correct to accuse the government of embarking on a grand 419 scheme, the SURE
program is close to being a mirage if only because not a single naira provision
has been made in the 2012 budget for the program in its entirety. So it is bad
enough that the government blatantly violated our constitution by admittedly
expending more than N1.3tr on fuel subsidy without legislative approval or
appropriation, but it is taken to the point of absurdity that the government
will now openly announce and publish an elaborate program of spending as
detailed in the SURE program without any appropriation whatsoever.
This is why the people must see the Jonathan
administration for what it is. The excuse that the government plans to submit a
supplementary budget is clearly an afterthought that should be out rightly
dismissed. In any case, the 2012 revenue projections already assume zero
deductions for subsidy and still contains nearly N1 trillion as deficit, so
where will SURE get the revenues to fund it? We should cross that bridge if and
when we get there if only because a bird in hand is worth 10 in the bush.
For the government to offer a so called
palliative that has not even been submitted as a budget proposal is as
deceptive as it is a case of medicine after death given that the people’s
suffering started as far back as the 1st of January when those that travelled
for the holidays were and are probably still stranded. The unaffordable price
increases that were occasioned by the removal of the subsidy with which
necessities such as transport and food were immediately affected are present
and continuing and no one knows how many will not be alive to benefit from the
so-called palliatives.
The government needs to apologize to Nigerians
and go back to the drawing board. Nigerians, including this writer, are not
against deregulation per se and if any example of shoddy government is needed,
it is to be found in this current impasse of subsidy removal. Deregulation is a
package of transition from public monopoly to competitive market. Necessary
ingredients for this transition include at the barest minimum; (1) Well
articulated policy review (2) Enabling legislation to de-monopolize the sector
(3) A regulatory agency that will supervise the sector and implement the
program (4) Attracting and licensing of private sector providers in the sector.
That is what we did in the BPE with the telecommunications sector, and now the
electricity industry.
Clearly when the Jonathan administration’s
approach to this issue is measured against the foregoing minimum 4 ingredients,
it is glaringly obvious that what we have is, at best, a knee jerk approach
rather than a well thought out deregulation program. If not, who is the
regulatory agency for the deregulated downstream petroleum sector? If the
answer is PPPRA, is the agency well equipped and ready for this task? And where
are its program? And why was the petroleum industry bill not enacted prior to
the subsidy removal? Who are the private sector competitors that will replace
or augment the moribund publicly owned refineries? Are we to continue to depend
on the imported refined products as a substitute for local value addition and
job creation? These and more are the reasons why the people have embarked on
the peaceful protest against subsidy removal.
As can be summarized from the foregoing points,
there can be no rational economic justification for the subsidy removal until
the wastages in government have been curtailed if not eliminated, those that
abuse the system have been penalized or sanctioned; just as there can be no
political or social justification until a consensus has been reached by the
people that petroleum products should be priced at the opportunity cost. It
only remains to also state that the legal issue of whether or not the ongoing
protest is legal is an issue of semantics simply because the injunction that
the government procured from the National Industrial Court is only to preclude
organized labour from calling for or embarking on a national strike. It is
submitted that this is not just a strike but a peaceful protest that goes
beyond organized labour.
This in essence is the thesis of this submission
that the right to protest in support of the popular will is an inalienable,
fundamental human right that can never be abridged or abrogated by any court;
such that were organized labour to recall their members from the national
strike, this nationwide peaceful protest will continue unabated. The government
is duty bound to protect its citizens and see that no protester is harmed, so a
situation where thugs are attacking and vandalizing the NLC offices or
attacking unarmed youths in Abuja should be looked into by the government.
Overwhelming majority of Nigerians are not just protesting against the removal
of the fuel subsidy but against bad governance that manifests itself in the
pervasive insecurity of lives and property, widespread corruption and unacceptable
huge cost of running the government.
In conclusion, both houses of the National
Assembly have called on the executive arm of government to respect the popular
will and not only reverse its position on removal of fuel subsidy but to also
begin to address itself to the urgent pressing issues of corruption, insecurity
and bloated cost of governance. This is the popular will that cannot be wished
away. President Jonathan was wrong to have dared the people’s resolve. Now that
he has been confronted with mass protests, it is in the collective best
interest for him to begin to show that he is a democrat and a leader by
respecting the popular will. The sooner the better. Worse still, the government
sought to save about $7b from subsidy removal whilst the country is losing
between $1 – $2b daily by way of lost GDP from the nationwide protests. Is this
not a case of penny wise pound foolish? The answer is President Jonathan’s call
and not that of his cabinet and advisers.
Nasir
Ahmad El-Rufai
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