Fuel Subsidy: Why Reason Must Prevail By Dr. Timiebi Koripamo-Agary

As a Permanent Secretary in the Federal Ministry of Labour and Productivity, one of the things I found particularly striking was the determination – and obvious sincerity of organised labour to challenge unpopular government policies.

The irony of course was that despite their resolve to protect what they perceived as the best interests of trade unions and the larger society, government, almost invariably had the last say.

The cycle was predictable: a government agency would submit proposal for a particular policy direction it wanted government to embrace and implement. The policy would work its way through the highest echelons of government and end up being adopted by Nigeria’s highest policy making and implementation body – the Federal Executive Council. On the face of it, the policy may seem geared towards improving governance, or perhaps freeing up or generating funds which government would then use to improve the lives of the ordinary citizen. Why would anyone criticise such well thought-out policies? 

From the position of government, the questions were: why would anyone go on strike to protest what in essence was a fool-proof decision in common interests? And by the way, who gave Labour the moral imperative to take decisions on behalf of millions of other Nigerians and force them to take to the streets, when as far as government was concerned, the proposed policy was in the greater interests of the entire country and the facts and figures were crystal clear?

In retrospect, and from my observations when I was later deployed to the Federal Ministry of Information and Communications, I realised that the major challenge was that of communication breakdown. It was clearly a challenge about government/public communications – or the lack of one. Government had hundreds of information officers in its employ to communicate with, and explain government policies and programmes to the public. However, a majority of them had become ensconced in the concrete of bureaucracy and were making no real efforts to constructively engage with, and communicate government policies to the wider public. So there was an understandable suspicion of government. Although we initiated schemes to retool information officers in the nuances of their jobs, that there is such confusion surrounding government proposal to remove the subsidy on petroleum products indicates gap still exists.

As far as I am concerned, the plan to remove the subsidy remains a proposal. Today, I am like most other Nigerians – afraid of the potential hardships we would face were the prices of petroleum products, especially petrol go up drastically. From all indications, it seems the Federal Government is fully determined to remove the subsidy on petroleum products and expectedly, another epic battle with Labour is looming. From all accounts, the battle lines are drawn and the country is gearing up for what may be the biggest confrontation over economic policy in many years.  But should we go down that route again?

What is clear is that government could have managed the situation better. Authoritative facts and figures of the actual cost of subsidy are hardly ever made public: not much is known about the actual quantity of fuel imported, the cost of importation, distribution pattern within the country as well as the actual amount spent to augment the cost of the pump price for consumers. All we get to know is when a certain amount of money is declared as having being spent on subsidy. How it is spent was never explained, and so the larger public remain rightly sceptical of government intention as far as the petroleum subsidy issue is concerned.

At any rate, it was recently revealed at the National Assembly that the federal government has overshot this year’s budget on fuel subsidy from the N240 billion provided in the 2011 Appropriation Act to N1.3 trillion as at August 2011. The figure represents an extra-budgetary spending of over N1 trillion representing an increase of about 700 percent. This information did not come from the executive arm of government. How were these figures arrived at? Should the fact that neither the Ministry of Petroleum Resources, the Nigeria National Petroleum Corporation (NNPC) nor the Petroleum Products Pricing Regulatory Agency (PPPRA) come out to refute these figures make them authentic? Why is government not engaging with the Nigerian people on these issues?

As one who has been on the other side, I think that things can, and must be done differently: On one hand, there is a proposal by government to remove the subsidy of petroleum products consumed in Nigeria. On the other, there are threats and promises of mass action led by Labour. And the whole cycle begins again, as we continue to go round and round. Is there an air of inevitability to the imminent confrontation? Are strikes the only way to resolve crises? And have we asked ourselves who suffers the most when strikes happen? And indeed, have strikes ever stopped government from achieving its ultimate goals?

To embrace the practice in other parts of the world, I believe that the time has come to engage constructively to achieve mutual objectives.  What do Labour and Civil Society want? What does Government want? What are the points of convergence? How can we aggregate our collective interests to ensure that at the end of the day, we all emerge winners? Considering these challenges as an ordinary Nigerian, like minded Nigerians and I came together to form the Initiative for Peace and Industrial Harmony (IPIH) to engage all stakeholders on the petroleum subsidy and related issues.

Our first effort was to organize a petroleum subsidy roundtable which had in attendance all stakeholders – except that representatives of government agencies invited failed to turn up. What was clear from our free and open discussions was that labour, civil society and the organized private sector – all of which sent representatives were ready and willing to negotiate with government on this issue, and possibly avert another challenge to our delicate security situation.

From our position as independent arbiters, and our commitment to fairness, justice and equity, IPIH is convinced that negotiation is only way to resolve the seemingly intractable petroleum subsidy crises. But negotiations involve give and take. What is government prepared to offer, and what are the least offensive and most strategic ways of presenting these offers? What palliatives would government offer to mitigate the effects of petroleum subsidy removal? Is there the political will to employ alternative sources of mediation? 
When strikes take place in Nigeria, it is the ordinary citizen that suffers most. Millions of Nigerians, especially in the informal sector, eke out a living from whatever they earn daily. A one day strike, not to talk of any protracted mass action will jeopardize the delicate balance of their lives. Many people never recover from the shock of strikes and other mass action, thus throwing more people into unemployment and poverty. Apart from the more determined labour leaders, a majority of civil servants simply stay at home during strikes – assured that their salaries would be paid in full at the end of the month. In many cases, miscreants have been known to take over public protests to unleash violence and mayhem on innocent citizens. And when all is said and done, government almost always has the last say.

The proposal by government to remove the subsidy on petroleum products presents Nigerians with a unique opportunity to hold government accountable. Rather simply embark on industrial action that ultimately ends in favour of government, this time, all stakeholders must make demands on government – and hold it to its words. It is time to lay out the issues. It is time for all stakeholders to dispassionately study the issues and come out with critical inputs. From these inputs, all sides can bring forward ideas and templates from which a framework for bilateral and multilateral stakeholder engagement will evolve.  

We need to ask: how much of the savings would be used to develop infrastructure? How much will be used to set up sustainable public transport system? Why should the National Association of Nigerian Students (NANS) not negotiate with government for a multi-billion naira students’ loans scheme for university education? How much of the savings from subsidy removal would be used to stimulate private sector led growth and job creation? How can we force government to cut down on waste?

These are sorts of questions that should determine the fuel subsidy debate, not strikes and demonstrations which achieve little. 


Dr. Agary is a retired federal permanent secretary and National Coordinator, Initiative for Peace and Industrial Harmony. Originally posted on Sahara Reporters