The Federal Government should not effect the proposed increase in the price of Premium Motor Spirit, popularly known as petrol, without reaching an agreement with the organised labour, the Trade Union Congress of Nigeria has warned.
However, the Lagos Chamber of Commerce and Industry described the proposed withdrawal of subsidy on petrol as a welcome development.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had on Monday said the country would need to revert to the old pump price of N97 per litre of petrol next year.
Kachikwu explained that the Federal Government was considering a reversal to N97 per litre in order to ensure that it would no longer fund the subsidy scheme, adding that the issue of total subsidy removal would come after the nation had been able to convince itself that the reversal to N97 would still be costing the government extra funds.
The Chairman, Trade Union Congress of Nigeria, Rivers State, Mr. Chika Onuegbu, said in a telephone interview with our correspondent on Tuesday that the government should engage the organised labour before removing subsidy on the product and reverting to the old pump price.
He said, “Whatever the government wants to do, I expect that it should engage the organised labour represented by the Nigeria Labour Congress and not to take a unilateral action. There should be an agreement between both parties.
“Every country in the world has one form of subsidy or the other. So, the issue is not about subsidy, but how it is managed and the costs and benefits of the subsidy regime to the country. In the case of Nigeria, it is estimated that fuel subsidy costs between 20 per cent and 30 per cent of the budget. This figure is actually huge, especially considering the infrastructural deficit in the country.”
Onuegbu, however, said a good percentage of the figure was perceived as cost of corruption in the subsidy management process, adding that this was partly the reason why it was difficult to convince the unions and the ordinary people that the solution to the conundrum was the removal of subsidy.
“Labour leaders and their civil society partners believe that the government should remove the corruption in the fuel subsidy scheme and not the subsidy itself. To us, the issue of subsidy removal is more about transferring the burden of the payment for the corruption in the subsidy scheme from the government to the ordinary people,” he said.
The Director-General, LCCI, Mr. Muda Yusuf, who stressed the need for the government to remove fuel subsidy, said, “Our position is that the government should allow the private sector to drive that sector. The subsidy regime has been a major hindrance to investment in the downstream sector.
“Look at fuel queues and look at how the black market is overrunning the whole place. Outside Lagos, in the hinterland, look at how much people are paying, apart from the agony and suffering. Oil price is already below $40 per barrel; so, it is even likely that petrol could sell far less than that N97 by the time the government frees the market and we have competition.”
The LCCI DG stated that the subsidy regime had created more problems for Nigerians and investors in the downstream petroleum sector.
“For us, it is a welcome development that the government should totally exit from that area and just play a regulatory role to make sure that the quality of products are okay, to make sure that there is a level playing field, and to make sure that there is a truly competitive environment. That way, we will have sanity back in the sector,” Yusuf said.