Osinbajo: With 60% Reduction in Revenue, FG Can’t Sustain Fuel Subsidy
•Says focus now on compressed natural gas at half price
•Assures no plans to increase taxes
•FG orders workers to report to work on Monday
•Hope rises as NGF, NLC, TUC meet over proposed strike
Obinna Chima, Bayo Akinloye in Lagos, Chuks Okocha in Abuja and Sylvester Idowu in Warri
Vice President Yemi Osinbajo, yesterday, joined forces with millions of Nigerians to support subsidy removal, saying with 60 per cent reduction in federal government revenue base, the country can no longer sustain the fuel subsidy regime. A statement by the Senior Special Assistant to the President on Media and Publicity, Office of the Vice President, Laolu Akande, quoted Osinbajo as making the remark at a virtual interactive forum in Abuja at the weekend.
However, as part of efforts to offer Nigerians an effective option to petrol, Osinbajo said the federal government would focus on developing Compressed Natural Gas, otherwise known as auto gas, which is priced significantly lower than petrol.
The federal government, also yesterday, through the Head of Service of the Federation, Folasade Yemi-Esan, asked civil servants to shun the industrial action being planned by the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC). It warned all federal civil servants on Salary Grade Level 12 and above, as well as those on essential services, to report to work on Monday, despite the industrial action declared by labour unions. Yemi-Esan reminded the workers of the subsisting court injunction against the strike, in a circular dated September 25, 2020.
In a related development, governors of the 36 states of the federation, under the aegis of the Nigeria Governors Forum (NGF), and the leaderships of NLC and TUC, yesterday, said they were moving towards an agreement to avert the proposed nationwide industrial strike called by NLC and TUC to protest the increase in the price of Premium Motor Spirit (PMS) and the electricity tariff.
Answering a participant’s question on the removal of petrol subsidy, the vice president said, “We have experienced a severe downturn in our finances over the years, so at 60 per cent less revenue, we are in a position where sustaining fuel subsidies is practically impossible simply, because we do not have the resources.”
In the alternative, Osinbajo said, “What we have decided to do is to focus on Compressed Natural Gas (CNG), which is about half the price of petrol today. So, if we use CNG for our cars and for our buses, it will cost between N78 and N80 or so per litre.
Under the Nigerian Economic Sustainability Plan (NESP), the federal government’s objective is to promote domestic use of CNG and support the creation of one million jobs by maximising the domestic use of CNG while reducing reliance on refined petroleum products, like kerosene and PMS.
On another question regarding alleged planned increase in taxes, the vice president noted that the administration had no plan to increase taxes, stating, “Our position really is that, this is hardly the time to raise taxes.”
According to him, “It is even more difficult for people to pay taxes now than ever before, I mean, given the state of affairs, but this is why we’re doing everything now.
“We are trying to ensure that businesses survive this period by providing as much support as we can, and by relieving them of as much burden as possible and ensuring that they are able to get some moratorium so that they can at least continue to run their businesses and by all the other interventions and support that we are giving, we hope that those interventions will help businesses.
“Our approach is, first, to ensure that we save jobs. If we save jobs and save businesses, and then do the best we can in agriculture, the housing scheme and all of that, we will actually be able to improve spending and if we are able to improve spending, taxes will definitely improve, and if businesses survive, taxes will improve. So, those are the sorts of projections that we are looking at.”
It is worthy of note that the 2020 Finance Act exempts businesses generating less than N25 million in annual turnover from Companies Income Tax. Also, businesses with a turnover of between N25 million and N100 million only pay 20 per cent Companies Income Tax instead of the 30 per cent, the former applicable rate.
The vice president recently said it was the plan of the Buhari administration to put money in the hands of Nigerians.
On electricity tariffs, Osinbajo said the era of subsidising petrol and electricity was over, noting that government has adopted measures to address the situation.
He stated, “What we are trying to do is to ensure that we are able to reform the electricity industry. The industry is privatised except for the transmission sector. But what we have seen is that the distribution companies (DisCos) are just not able to meet their targets or to even provide electricity on any kind of stable basis now.
“The DisCos have been hankering all these years for a cost-reflective tariff and government has been paying the subsidy. In fact, in the past few years, we have spent about N1.3 trillion on subsidies for electricity. Again, here is a situation where that is completely unaffordable.
“We want to ensure that new companies come into the market. So, that will be decentralised completely. This way, in several parts of our country, we can have micro-grids, small grids, and all of that. We are doing five million solar connections as part of the Economic Sustainability Plan. We think that, with all these, we can electrify our country within a short period of time.
Osinbajo added that the overall target of government in the NESP was to save existing jobs and revamp businesses by improving the spending capacity of Nigerians through the various initiatives in industry, agriculture, mass housing, and the solar connectivity projects.
Over 1, 200 persons on different platforms across the world participated in the virtual event tagged by Africa Report, the organisers, as Digital Dialogues.
Circular to Workers
The circular, which was addressed to all ministers, permanent secretaries, as well as heads of government agencies and parastatals, was titled, “The Nigerian labour unions planned industrial action”.
It read, “Sequel to the call by the labour unions for workers to embark on industrial action from Monday, September 28, 2020, the Office of the Head of Civil Service of the Federation wishes to inform all public servants that the Federal Government team is currently engaging with the labour unions with a view to resolving all contentious issues and avert the planned industrial action.
“Furthermore, it is important to note that there is a court injunction granted by the National Industrial Court (Suit No. NICN/ABJ/253/2020) on September 24, 2020, restraining the Nigeria Labour Congress and Trade Union Congress of Nigeria from embarking on any tom of industrial action pending the hearing and determination of a motion on notice.
“Accordingly, all officers on Grade Level 12 and above and those on essential services are hereby strongly advised to be at work to perform their official duties.
“Permanent secretaries and chief executive officers are therefore enjoined to bring the contents of this circular to the attention of all concerned officers and ensure strict compliance.”
Governors’ Effort to Avert Strike
The governors have made a concerted effort to stop the proposed nationwide strike. A communiqué of their meeting signed by the Chairman of NGF, and Ekiti State Governor, Dr. Kayode Fayemi, stated that they were on the “path to resolving the impasse occasioned by the threat by workers to embark on industrial action if the federal government does not rescind the recent decisions to increase the pump price of Premium Motor Spirit (PMS) and Electricity Tariff in the country.”
Averting the strike was the main thrust of the early morning meeting between representatives of the forum, NLC and TUC, which took place at Fayemi’s residence in Abuja on Saturday.
Fayemi spoke for the NGF while NLC President, Comrade Ayuba Wabba, who was accompanied by the TUC President, I inQuadri Olaleye, as well as the NLC General Secretary, Emmanuel Ugboajah, spoke for the workers.
Director General of NGF, Mr. Asishana Okauru, was also at the meeting.
Fayemi explained that governors decided to intervene in the on-going negotiations with a view to broadening consultations and assisting in resolving the impasse, in order to avert the impending strike action. He pleaded with the labour representatives to shelve the strike, stressing that the timing of the action was inauspicious and could aggravate an already bad situation.
Fayemi said, “No one that is conversant with the prevailing situation in the country would disagree with labour and its demands, as it were.
He requested that the governors be given time to consult more broadly with the various stakeholders, including the Secretary to the Government of the Federation, Mr Boss Mustapha, the vice president, and the president. He said this would be top priority for the governors and promised to head straight to the presidency once the meeting was over.
On his part, the NLC president said the federal government violated the time-tested global process of dialogue. He thanked the NGF chairman for his effort to ensure that sanity returned to the negotiation table.
“When the cost of PMS rises, the cost of everything in the country rises with it,” Wabba explained. “I praise you for showing a good grasp of this matter and I believe that if they had widened the mechanism for consultation and involved people like you, we wouldn’t have come to this pass,” he stated.
Responding, Fayemi explained that government and labour were not very far apart in the negotiation, saying the differences are not irreconcilable.
“Our president, who is always on the side of workers, will not be averse to the issues being raised and I’m hopeful of an amicable settlement of the issues highlighted,” he stated.
Dafe Sejebor, Ex NAPIMS GM, Appeals to Labour
Meanwhile, a former Group General Manager of National Petroleum Investment Management Services (NAPIMS), Mr. Dafe Sejebor, has appealed to NLC to reconsider the planned industrial action against the hike in fuel price. Sejebor said removing subsidy on fuel by the federal government was in the best interest of Nigerians, maintaining that it would benefit the country’s economy in the long run.
In a statement issued yesterday, Sejebor stated that this was the best time for the federal government to remove the subsidy, with the crash in the price of crude oil in the international market. He lauded the government and the Nigerian National Petroleum Corporation (NNPC) for the removal of the subsidy and called on the labour unions to reconsider their planned protest.
The former NAPIMS boss also called on Nigerians to show more understanding and thoroughly review the reason the federal government took the decision to stop the subsidy on petroleum products.
The Petroleum Products Pricing Regulatory Agency (PPPRA) said recently that the federal government had spent a whooping N8.94 trillion on petrol subsidy between 2006 and 2015. The agency explained that in 2006, 2007, 2008, 2009 and 2010, the government spent N257.36 billion, N271.51 billion, N630.57 billion, N469.31 billion and N667.08 billion, respectively, while also in 2011, 2012, 2013, 2014 and 2015, the government paid N2.104 trillion, N1.354 trillion, N1.315 trillion, N1.217 trillion and N653.51 billion, respectively, on petrol subsidy.
Sejebor said the over N8.94 trillion spent on petrol subsidy could have been used to build more important infrastructure, improve the economy, and even support the private sector for the creation of jobs.
The Ex-NAPIMS boss, who was recently discharged and acquitted by a US court on alleged human trafficking, appealed to NLC to reconsider its planned protest slated for Monday. He maintained that the money spent on subsidy benefited a few individuals at the detriment of the economy and a majority of Nigerians, adding that such money can be channelled to projects that would benefit more Nigerians.
Ahead of the labour strike planned to begin Monday, the British government has warned its citizens to be vigilant. In an updated travel advice made available to THISDAY on Saturday, the country’s Foreign and Commonwealth Office (FCO) said, “National strikes are planned in Nigeria to commence from Monday 28 September.
“This brings increased likelihood of protests across the country and may impact the aviation industry’s ability to operate. Anyone with flights booked to arrive or depart Nigeria on 28 September should contact their airline for the latest information on flight operations.”
It added, “You should monitor local media, avoid any demonstrations or large gatherings and follow any instructions from local police and security forces.”
THISDAY had reported NLC and TUC’s defiance of entreaties and subtle threats by the federal government. The unions had given the strike notice to reverse the recent increase in petrol price and electricity tariffs. In spite of some desperate moves on the part of the government to stave off the industrial action, labour leaders insisted that the strike would commence on Monday.
The meeting between the federal government and representatives of the organised labour on Thursday was adjourned until Monday following the failure of both parties to agree on a cocktail of palliatives presented by the President Muhammadu Buhari administration.
However, in an apparent bid to outsmart the leadership of the organised labour, the federal government obtained a fresh order from the National Industrial Court on Friday stopping the NLC and the TUC from going on strike.