We Are Making the Rich Richer, the Poor to Subsidize the Rich – Diete Spiff
June 03, 2014
By Henry Umoru, Joseph Erunke & Levinus Nwabughiogu
Nigerian Vanguard
ABUJA- DELEGATES at the on- going National Conference were sharply divided over the total removal of subsidy on Petroleum Products as recommended by the Senator Adamu Aliero led Committee on Public Finance and Revenue.
Meanwhile, the Committee has also recommended on or before September 30 th as time frame for the presentation of the annual budget to the National Assembly preceding the budget year; while the passage and presidential assent must be completed on or before December 31.
At resumed plenary yesterday during debates on the recommendations of the Committee, while some delegates supported the removal of subsidy, some disagreed with the recommendation, just as some delegates proposed to the federal government to improve on the technology being used by operators of illegal refineries in the Niger Delta to boost oil production since there were no functional refineries by the government that would satisfy the yearnings and desires of the people.
The Committee in its report noted that subsidy on petroleum products was an avoidable major financial burden the nation has been made to bear and stressed that between 2006 and 2007, subsidy accounted to 30% of government expenditure which translated to 118% of capital budget and 4.18% of the Gross Domestic Product, adding that subsidy payment of N2.527 trillion in 2012 and 2013 averaged N1.263 trillion per annum and described it as “a burden too heavy for the nation and its populace.
Meanwhile, the National Chairman of the Peoples Democratic Party, Alhaji Adamu Muazu, a delegate on the platform of Elder Statesmen Category was yesterday replaced by Mallam Ado Yakubu Manka.
According to the Aliero’s Committee the situation at the moment was anomalous and has been encouraging smuggling, even as it explained that government resources which ought to have been channeled into more developmental projects were being spent on subsidy, adding, “subsidy removal will most certainly ensure product availability at all times and significantly mitigate illicit cross-border activities.”
It was the Committee’s position that the poor and the rural dwellers to whom the subsidy scheme was initially targeted were not reaping the benefits; and that removal of subsidy would encourage investments in refineries and the downstream sector generally.
In his contribution, a delegate Professor Anya O. Anya who noted that it was unfortunate that the argument has been reduced to “I support subsidy or I oppose subsidy,” however described such arguments as “over-simplification of a more complex issue.”
Anya who suggested that those boys in the Niger Delta who operate illegal refineries must be encouraged by the Federal government by providing them modern equipment to enable them improve on their businesses as that will solve the problem of fuel scarcity in the country, adding that Nigeria must come up with a road-map in the area of having the crude oil refined in Nigeria.
Professor Anya who demanded that delegates should come up with “a comprehensive national plan for the withdrawal of subsidy, such that people will not suffer at the end, however suggested a phased withdrawal that should follow a comprehensive overhaul of the system with the requisite infrastructure in place such that would make the subsidy issue completely irrelevant and unnecessary.
Also in his contribution, a delegate. Representing the Organised Private Sector, NACCIMA, Bassey Edem also suggested that the way out of the problem was for the government to embrace these youths in the Niger Delta, improve on their equipment to engage in full refinery business and help refine our crude since they already have the know how and that would create jobs for them.
In his contribution, Senator Mimibariya Amange who urged the federal government to work with these boys who engage in illegal refineries, stressed that if encouraged through the provision of modern equipment, there will be no pipeline vandalisation, even as he decried the arrest and detention of boys in the Niger Delta creeks because they were refining crude oil through modular processes, adding, “Our boys in the creeks have invented how to refine oil and I think government should cooperate with them so as to upgrade their technology. These boys are not the people stealing the crude oil, we know them, they are the big men, leave these boys alone, protect them, modernise these refineries these boys have. ”
Also speaking, King Alfred Diete-Spiff from Bayela State while lamenting the level of corruption in the country, spoke in support of the removal of the subsidy and warned that if care was not taken, Nigeria would soon become one of the most corruption nations in the world, adding, “We are making the rich richer and comfortable and making the poor to subsidize the rich. The masses don’t even have cars. The truth is that we don’t take far reaching decision you will see that we will regret it. We must be careful. If we are not careful Nigeria will become the worst corrupt country in the whole world. Subsidy should be removed. How many Governors are here, this is the time to make up the managing and damaging that has happened in the past.”
For Orok Etuk Duke who expressed support for the removal of subsidy, expressed the concerns of his people who are not getting the product at its recommended price, even as he alleged that some persons were paid N5 billion to protest in Lagos, adding, “If you are removing subsidy let us also remove the monopoly from the importation of kerosine and liberalize it for all to participate,”
Also contributiing, a delegate and former Chairman of the Punch, Chief Ajibola Ogunshola who noted that the real problem about Fuel Subsidy was the fact Nigerians find it difficult to trust their governments that they will embezzle their money, was however quick to add that his observation had nothing to do with the present government.
According to him, Nigerians don’t have hope that government would utilize the money to be realized from the subsidy removal to their advantage, adding, “We don’t trust our governments. I’m not talking about the present government. We don’t trust that the government would utilize the money well.”
In his contribution, a delegate representing the Peoples Democratic Party, PDP and former National Chairman of the party, Dr. Ahmadu Ali who urged the government to unravel the revenue being withheld by the Nigeria National Petroleum Corporation, NNPC, said that the removal of fuel subsidy should be done gradually and not at once, adding that the NNPC does not take instructions from the Presidency hence no results.
For a federal government delegate, Chief Mike Ozekhome, SAN who opposed to the recommendations of the committee that the fuel subsidy should be removed, said: “I have always argued in the last 25 years when we were still selling a litre of fuel for about 25 kobo, that we cannot about removing of subsidy from a product that you own. God has given us oil in his infinite wisdom and surprising we are exploiting this oil in the form of crude and export the crude and buy the refined product back to Nigeria. It is one of the greatest ironies that I have to confront with in this country. Does a farmer subsidise a pieace of yam he wants to eat in his family? Do you begin to take a knife and begin to measure and say for me to eat this, I must find out how much it sold in the Utako market or at Ogbete Market in Enugu, before I can allow my family to eat it.
“We do not subsidise our own product. I think it is high time we drop this issue of fuel subsidy because it encourages our elites who have held us by the jugular vein to continue to exploit the common man. I do not agree that there should be removal of any fuel subsidy”.
Dr Mrs Hanatu Ibraham,supported the recommendation for removal of fuel subsidy, saying the interests of the poor masses should be taken at heart.She, however added that the fuel subsidy be rather subsidized, noting that such development would discourage young children who have stopped schooling to trade on fuel in jericans.
She charged the conference to place responsibilities on all delegates to read,understand and educate their communities on the Physical Responsibily Act so that they can monitor developmental and economic issues that affect them, adding that the Physical Responsibility Act be removed from the constitution, saying that most people, especially those in the rural communities do not understand the constitution.
Hon. Salvodor Moshood, a delegate from Lagos State commended the recommendations of the Committee on Public Finance and said sharing of the nation’s resources be fairly shared.
Prof. Olabisi Aina,kicked against removal of subsidy.
Dr Isaach Osuoka, a delegate from the Civil Society: We are not talking about subsidy here,we are talking about the Nigerian state regulating energy products.We are talking about a situation where the people that produce are lacking the products.It is not just about the rich, the fuel susidy should stay,what we need to address,Mr Chairman is corruption, the looting of public in every aspect national life.It has been observed that over 80 percent of public funds have been looted by officials and those that connive. No country can make progress under this situation.Those that loot our resources are not hiding, they display everywhere–in the mansions that they build,in the cars that they drive.We cannot make progress in this country if we don’t identify the need to recover public funds held by a few persons. For this, I suggest that this conference should recommend that a law be enacted kwown as the Ill Goten Wealth Act and under this law,there shall introduce a new radical criminal jurisprudence that will reverse onus of proof.In this case,if any ex official or serving officials of government,whether civil servant or ‘legislootors’ build any house that is deemed to be more expensive beyond what they can reasonably reach and legitimately earn,then they consfiscate it until they themselves are able to prove their innocence.
Sergeant Awuse who supported the removal of fuel subsidy, stressed that the conference must be seen to be protecting the interests of majority of Nigerians
Opposing the move, a Labour delegate, Isah Aremu said when compared with other oil producing countries, Nigerians pays outrageous prices on fuel, adding that the issue of proposal for subsidy removal should be dropped from the report of the conference.
Another delegate representing the Speakers forum, Hon. Anayo Nnebe urged delegates to rise up and write their names in gold by supporting the removal of petroleum subsidy for the reason that it was not in the interest of Nigerian masses.
Mr. Atedo Peterside who suggested that rather than total subsidy removal, Nigeria could to alter the way it applies the fuel subsidy by identifying every Nigerian and then applying the subsidy in such a manner that the actual targets of the subsidy would be reached, adding that what was happening now is that the government is subsidizing mainly the rich and the multinational companies with several fleets of cars tomthe detriment of the poor and needy.
The Committee also recommended that in order to enhance accountability, transparency and avoid mistrust between the three tiers of government, it has become absolutely necessary to have Accountant Generals of the Federation and that of the Federal Government and that Accountant General of the Federation would thereafter, manage the accounts of the federation while Accountant General of the Federal Government would handle the finances of the Federal Government.
It was observed by the Committee that in the 1970s, budgetary allocations, up to 70%, were always in favour of capital expenditure; a situation it said enhanced economic development; but that the situation has since changed, adding that in the last 10 years, it said approximately 73% of the annual budgets have been devoted to recurrent expenditure leaving a mere 27% for capital.
The committee remarked: “The present budget mix is unacceptable as no economy can grow with such a paltry allocation for capital and still be expected to provide vital infrastructure and social amenities for the populace.”
It also frowned at situations where budgets are submitted to the National Assembly and thereafter, the crude oil benchmark is subjected to upward reviews, thereby increasing the size of the budget, adding, “it is the prerogative of the Executive branch to propose the annual budget and to determine crude oil benchmark.”
The Committee therefore recommended that the country maintains a budget mix of at least 60% capital expenditure and 40% recurrent expenditure to leave substantial fund to address infrastructural gap, provide jobs and promote general economic growth and development.J
It urged that the time frame for the presentation of the annual budget to the National Assembly should be on or before September 30th preceding the budget year; while the passage and presidential assent must be completed on or before December 31.
It was also the opinion of the Committee that the Fiscal Responsibility Act of 2007 which deals on budget issues be enshrined in the 1999 Constitution and all the controls and sanctions therein adhered to.
On solid minerals, the Committee provided a comprehensive list of essential solid minerals found in states of the federation explaining that these can be a veritable source for diversification of the country’s non-oil revenue base and that when fully tapped, the revenue profile would change from oil dominance.
Under the Sovereign Wealth Fund (SWF), the Committee recommended that a minimum of 50% of all funds in excess crude account be transferred to the SWF while the balance should be used to augment where necessary, certain shortfalls in the FAAC in the short term.
To make it more effective with a higher legal backing, it was the recommendation of the committee that the SWF be enshrined in the 1999 Constitution.
In order to stop the on-going revenue losses due to oil and gas pipeline leakages and theft, the Committee urged that commensurate security be deployed to these areas to deter, detect, apprehend and prosecute perpetrators of the crime.
Besides deployment of security personnel, Committee members said there was need for acquisition and deployment of appropriate technology to check fuel and pipeline vandalism, even as it demanded of government to provide opportunities for young people to be involved in the oil and gas activities as this would engender gainful employment for youths.
While calling for the passage of the Petroleum Industry Bill, it emphasized the need for intelligence gathering and processing in tracking movement of ocean bound vessels coming in and going out of Nigeria and urged the government to consider the involvement of private companies in the management and replacement of oil pipelines, some of which it said are over 50 years old.
It was the position of the Committee that as things stand now, Nigeria’s external debt ration is below the international benchmark of 40%; and that this has created room for further external borrowings.
It said back home, instead of the stated position helping in the growth of the economy, domestic debt profile, especially debt owed local contractors, unpaid salaries of public servants, pensions and gratuities have contributed to hamper the growth.
It recommended that while there was room for borrowing, such external borrowing must be tied to designated projects which must be efficiently and prudently implemented to reduce pressure on lendable funds.
- See more at: http://www.vanguardngr.com/2014/06/making-rich-richer-poor-subsidize-rich-diete-spiff/#sthash.aD8TTdbe.dpuf
 |
| Nigerian skyline in Lagos, the commercial capital. |
By Henry Umoru, Joseph Erunke & Levinus Nwabughiogu
Nigerian Vanguard
ABUJA- DELEGATES at the on- going National Conference were sharply divided over the total removal of subsidy on Petroleum Products as recommended by the Senator Adamu Aliero led Committee on Public Finance and Revenue.
Meanwhile, the Committee has also recommended on or before September 30 th as time frame for the presentation of the annual budget to the National Assembly preceding the budget year; while the passage and presidential assent must be completed on or before December 31.
At resumed plenary yesterday during debates on the recommendations of the Committee, while some delegates supported the removal of subsidy, some disagreed with the recommendation, just as some delegates proposed to the federal government to improve on the technology being used by operators of illegal refineries in the Niger Delta to boost oil production since there were no functional refineries by the government that would satisfy the yearnings and desires of the people.
The Committee in its report noted that subsidy on petroleum products was an avoidable major financial burden the nation has been made to bear and stressed that between 2006 and 2007, subsidy accounted to 30% of government expenditure which translated to 118% of capital budget and 4.18% of the Gross Domestic Product, adding that subsidy payment of N2.527 trillion in 2012 and 2013 averaged N1.263 trillion per annum and described it as “a burden too heavy for the nation and its populace.
Meanwhile, the National Chairman of the Peoples Democratic Party, Alhaji Adamu Muazu, a delegate on the platform of Elder Statesmen Category was yesterday replaced by Mallam Ado Yakubu Manka.
According to the Aliero’s Committee the situation at the moment was anomalous and has been encouraging smuggling, even as it explained that government resources which ought to have been channeled into more developmental projects were being spent on subsidy, adding, “subsidy removal will most certainly ensure product availability at all times and significantly mitigate illicit cross-border activities.”
It was the Committee’s position that the poor and the rural dwellers to whom the subsidy scheme was initially targeted were not reaping the benefits; and that removal of subsidy would encourage investments in refineries and the downstream sector generally.
In his contribution, a delegate Professor Anya O. Anya who noted that it was unfortunate that the argument has been reduced to “I support subsidy or I oppose subsidy,” however described such arguments as “over-simplification of a more complex issue.”
Anya who suggested that those boys in the Niger Delta who operate illegal refineries must be encouraged by the Federal government by providing them modern equipment to enable them improve on their businesses as that will solve the problem of fuel scarcity in the country, adding that Nigeria must come up with a road-map in the area of having the crude oil refined in Nigeria.
Professor Anya who demanded that delegates should come up with “a comprehensive national plan for the withdrawal of subsidy, such that people will not suffer at the end, however suggested a phased withdrawal that should follow a comprehensive overhaul of the system with the requisite infrastructure in place such that would make the subsidy issue completely irrelevant and unnecessary.
Also in his contribution, a delegate. Representing the Organised Private Sector, NACCIMA, Bassey Edem also suggested that the way out of the problem was for the government to embrace these youths in the Niger Delta, improve on their equipment to engage in full refinery business and help refine our crude since they already have the know how and that would create jobs for them.
In his contribution, Senator Mimibariya Amange who urged the federal government to work with these boys who engage in illegal refineries, stressed that if encouraged through the provision of modern equipment, there will be no pipeline vandalisation, even as he decried the arrest and detention of boys in the Niger Delta creeks because they were refining crude oil through modular processes, adding, “Our boys in the creeks have invented how to refine oil and I think government should cooperate with them so as to upgrade their technology. These boys are not the people stealing the crude oil, we know them, they are the big men, leave these boys alone, protect them, modernise these refineries these boys have. ”
Also speaking, King Alfred Diete-Spiff from Bayela State while lamenting the level of corruption in the country, spoke in support of the removal of the subsidy and warned that if care was not taken, Nigeria would soon become one of the most corruption nations in the world, adding, “We are making the rich richer and comfortable and making the poor to subsidize the rich. The masses don’t even have cars. The truth is that we don’t take far reaching decision you will see that we will regret it. We must be careful. If we are not careful Nigeria will become the worst corrupt country in the whole world. Subsidy should be removed. How many Governors are here, this is the time to make up the managing and damaging that has happened in the past.”
For Orok Etuk Duke who expressed support for the removal of subsidy, expressed the concerns of his people who are not getting the product at its recommended price, even as he alleged that some persons were paid N5 billion to protest in Lagos, adding, “If you are removing subsidy let us also remove the monopoly from the importation of kerosine and liberalize it for all to participate,”
Also contributiing, a delegate and former Chairman of the Punch, Chief Ajibola Ogunshola who noted that the real problem about Fuel Subsidy was the fact Nigerians find it difficult to trust their governments that they will embezzle their money, was however quick to add that his observation had nothing to do with the present government.
According to him, Nigerians don’t have hope that government would utilize the money to be realized from the subsidy removal to their advantage, adding, “We don’t trust our governments. I’m not talking about the present government. We don’t trust that the government would utilize the money well.”
In his contribution, a delegate representing the Peoples Democratic Party, PDP and former National Chairman of the party, Dr. Ahmadu Ali who urged the government to unravel the revenue being withheld by the Nigeria National Petroleum Corporation, NNPC, said that the removal of fuel subsidy should be done gradually and not at once, adding that the NNPC does not take instructions from the Presidency hence no results.
For a federal government delegate, Chief Mike Ozekhome, SAN who opposed to the recommendations of the committee that the fuel subsidy should be removed, said: “I have always argued in the last 25 years when we were still selling a litre of fuel for about 25 kobo, that we cannot about removing of subsidy from a product that you own. God has given us oil in his infinite wisdom and surprising we are exploiting this oil in the form of crude and export the crude and buy the refined product back to Nigeria. It is one of the greatest ironies that I have to confront with in this country. Does a farmer subsidise a pieace of yam he wants to eat in his family? Do you begin to take a knife and begin to measure and say for me to eat this, I must find out how much it sold in the Utako market or at Ogbete Market in Enugu, before I can allow my family to eat it.
“We do not subsidise our own product. I think it is high time we drop this issue of fuel subsidy because it encourages our elites who have held us by the jugular vein to continue to exploit the common man. I do not agree that there should be removal of any fuel subsidy”.
Dr Mrs Hanatu Ibraham,supported the recommendation for removal of fuel subsidy, saying the interests of the poor masses should be taken at heart.She, however added that the fuel subsidy be rather subsidized, noting that such development would discourage young children who have stopped schooling to trade on fuel in jericans.
She charged the conference to place responsibilities on all delegates to read,understand and educate their communities on the Physical Responsibily Act so that they can monitor developmental and economic issues that affect them, adding that the Physical Responsibility Act be removed from the constitution, saying that most people, especially those in the rural communities do not understand the constitution.
Hon. Salvodor Moshood, a delegate from Lagos State commended the recommendations of the Committee on Public Finance and said sharing of the nation’s resources be fairly shared.
Prof. Olabisi Aina,kicked against removal of subsidy.
Dr Isaach Osuoka, a delegate from the Civil Society: We are not talking about subsidy here,we are talking about the Nigerian state regulating energy products.We are talking about a situation where the people that produce are lacking the products.It is not just about the rich, the fuel susidy should stay,what we need to address,Mr Chairman is corruption, the looting of public in every aspect national life.It has been observed that over 80 percent of public funds have been looted by officials and those that connive. No country can make progress under this situation.Those that loot our resources are not hiding, they display everywhere–in the mansions that they build,in the cars that they drive.We cannot make progress in this country if we don’t identify the need to recover public funds held by a few persons. For this, I suggest that this conference should recommend that a law be enacted kwown as the Ill Goten Wealth Act and under this law,there shall introduce a new radical criminal jurisprudence that will reverse onus of proof.In this case,if any ex official or serving officials of government,whether civil servant or ‘legislootors’ build any house that is deemed to be more expensive beyond what they can reasonably reach and legitimately earn,then they consfiscate it until they themselves are able to prove their innocence.
Sergeant Awuse who supported the removal of fuel subsidy, stressed that the conference must be seen to be protecting the interests of majority of Nigerians
Opposing the move, a Labour delegate, Isah Aremu said when compared with other oil producing countries, Nigerians pays outrageous prices on fuel, adding that the issue of proposal for subsidy removal should be dropped from the report of the conference.
Another delegate representing the Speakers forum, Hon. Anayo Nnebe urged delegates to rise up and write their names in gold by supporting the removal of petroleum subsidy for the reason that it was not in the interest of Nigerian masses.
Mr. Atedo Peterside who suggested that rather than total subsidy removal, Nigeria could to alter the way it applies the fuel subsidy by identifying every Nigerian and then applying the subsidy in such a manner that the actual targets of the subsidy would be reached, adding that what was happening now is that the government is subsidizing mainly the rich and the multinational companies with several fleets of cars tomthe detriment of the poor and needy.
The Committee also recommended that in order to enhance accountability, transparency and avoid mistrust between the three tiers of government, it has become absolutely necessary to have Accountant Generals of the Federation and that of the Federal Government and that Accountant General of the Federation would thereafter, manage the accounts of the federation while Accountant General of the Federal Government would handle the finances of the Federal Government.
It was observed by the Committee that in the 1970s, budgetary allocations, up to 70%, were always in favour of capital expenditure; a situation it said enhanced economic development; but that the situation has since changed, adding that in the last 10 years, it said approximately 73% of the annual budgets have been devoted to recurrent expenditure leaving a mere 27% for capital.
The committee remarked: “The present budget mix is unacceptable as no economy can grow with such a paltry allocation for capital and still be expected to provide vital infrastructure and social amenities for the populace.”
It also frowned at situations where budgets are submitted to the National Assembly and thereafter, the crude oil benchmark is subjected to upward reviews, thereby increasing the size of the budget, adding, “it is the prerogative of the Executive branch to propose the annual budget and to determine crude oil benchmark.”
The Committee therefore recommended that the country maintains a budget mix of at least 60% capital expenditure and 40% recurrent expenditure to leave substantial fund to address infrastructural gap, provide jobs and promote general economic growth and development.J
It urged that the time frame for the presentation of the annual budget to the National Assembly should be on or before September 30th preceding the budget year; while the passage and presidential assent must be completed on or before December 31.
It was also the opinion of the Committee that the Fiscal Responsibility Act of 2007 which deals on budget issues be enshrined in the 1999 Constitution and all the controls and sanctions therein adhered to.
On solid minerals, the Committee provided a comprehensive list of essential solid minerals found in states of the federation explaining that these can be a veritable source for diversification of the country’s non-oil revenue base and that when fully tapped, the revenue profile would change from oil dominance.
Under the Sovereign Wealth Fund (SWF), the Committee recommended that a minimum of 50% of all funds in excess crude account be transferred to the SWF while the balance should be used to augment where necessary, certain shortfalls in the FAAC in the short term.
To make it more effective with a higher legal backing, it was the recommendation of the committee that the SWF be enshrined in the 1999 Constitution.
In order to stop the on-going revenue losses due to oil and gas pipeline leakages and theft, the Committee urged that commensurate security be deployed to these areas to deter, detect, apprehend and prosecute perpetrators of the crime.
Besides deployment of security personnel, Committee members said there was need for acquisition and deployment of appropriate technology to check fuel and pipeline vandalism, even as it demanded of government to provide opportunities for young people to be involved in the oil and gas activities as this would engender gainful employment for youths.
While calling for the passage of the Petroleum Industry Bill, it emphasized the need for intelligence gathering and processing in tracking movement of ocean bound vessels coming in and going out of Nigeria and urged the government to consider the involvement of private companies in the management and replacement of oil pipelines, some of which it said are over 50 years old.
It was the position of the Committee that as things stand now, Nigeria’s external debt ration is below the international benchmark of 40%; and that this has created room for further external borrowings.
It said back home, instead of the stated position helping in the growth of the economy, domestic debt profile, especially debt owed local contractors, unpaid salaries of public servants, pensions and gratuities have contributed to hamper the growth.
It recommended that while there was room for borrowing, such external borrowing must be tied to designated projects which must be efficiently and prudently implemented to reduce pressure on lendable funds.
- See more at: http://www.vanguardngr.com/2014/06/making-rich-richer-poor-subsidize-rich-diete-spiff/#sthash.aD8TTdbe.dpuf
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