Fuel subsidy removal: Recover trapped N94tr, don’t punish the poor, group tells Buhari

Fuel subsidy removal: Recover trapped N94tr, don’t punish the poor, group tells Buhari

Tuesday, September 29, 2020 2:40 pm


 

•President Muhammadu Buhari

 The interim Coordinating Committee of the Alliance on Surviving Covid-19 And Beyond (ASCAB) has written a letter to President Muhammadu Buhari, debunking the claim that fuel subsidy was removed because it benefits only the rich and not the masses. The group went ahead to pulverize the lack of funds argument, listing areas where N94 trillion is trapped. 

The group, in an open letter, dated 28 September and signed by Mr Femi Falana, a Senior Advocate of Nigeria, lamented that petrol prices had increased for three straight months, rising from N122 per litre in June to N142 in July, N150 in August and now N163! , saying there is no good reason for this!!

In March and April of this year the Government, the Committee went ahead, reduced the price of fuel by about 15%, but it has now increased the price again so the new price is now about 12% higher than it was last year (N145). “The new price of fuel does not make any sense in terms of the global price of crude oil and the exchange rate of the naira and the dollar.”

It went further: “Last year the price of crude was about $60 a barrel and the dollar was about N360. Now the cost of crude is about $45 and a dollar is worth about N390. So, last year the cost of barrel of crude oil was about N22,000 a barrel and now it is only N17,500 a reduction of about 20%.

Why is the Government forcing us to pay 12% more for fuel than last year when the cost of oil has significantly reduced?

Unconstitutionality and illegality of deregulation of fuel price. Mr. President, your officials and representatives argue that your government has decided to remove ‘fuel subsidy’ because it benefits only the rich and not the masses.

We reject this argument, as you rejected it during your pre-2015 electoral campaigns, when you argued correctly then that any government that said there was fuel subsidy was a fraudulent government. We agree and adopt your argument then that what is being subsidised is corruption, inability to fight corruption, incompetence and inefficiency in the oil sector.

Mr. President, your electoral promises to the Nigerian people was that the Federal Government under your watch would subsidise production and not importation, that you would make the refineries work and in fact build more refineries so that apart from satisfying domestic demand, your government would also export petroleum products.

Unfortunately, your Government has failed to fulfil these electoral promises. Mr. President, your pre-election electoral promise remains the only solution. The ordinary people of Nigeria continue to reject any other measure as fraudulent, anti-poor people and pro-oil dealers.

The policy of fuel price increases hurts the masses. There is a relationship between the price of fuel and the prices of all other goods and services. The masses rely heavily on road transportation; once there is a rise in transportation costs, the prices of all ither goods and services are bound to rise simultaneously. Therefore, the policy of fuel price increase is a conscious policy to directly impoverish the poor.

Mr President, when the N30,000 National Minimum Wage was passed into law, that rate lagged behind the rate of inflation. With the increases in electricity tariffs since 2016 and the recent increase by about 100%, coupled with increases from about N120/litre of fuel in June 2020 to N162/litre in September, the rise in VAT from 5% to 7.5%, devaluation of the currency among other policies, only a conquered people with slavish mentality would not resist the punitive economic policies your government has imposed on them. Nigerians have been driven to the wall and now have no choice but to resort to section 40 of the Constitution to peacefully protest policies that seek to annihilate them.”

 

Below is ASCAB’s letter to Buhari:

 

 28th September, 2020

The President

Federal Republic of Nigeria Office of the President

Aso Rock Presidential Villa Federal Capital Territory Abuja.

Dear Mr. President,

Open letter to Mr. President:

GOVERNMENT POLICIES MAKE THE DOWNTRODDEN POORER

Introduction

This letter has been authorised by the interim Coordinating Committee of the Alliance on Surviving Covid-19 And Beyond (ASCAB) on behalf of the teeming masses of Nigeria on the main issues of unprecedented and sharp increases in fuel price and electricity tariff.

Mr. President, in comparing the burden any past government has heaped on the masses with the agony the masses go through today under your government, the public perception of the effects of public policies under your government is akin to the Biblical verse, which says:

“My father made your yoke heavy; I will make it even heavier. My father scourged you with whips; I will scourge you with scorpions” (1 Kings 12”14).

The over 80 subscribing organisations to ASCAB had resolved to support the nationwide strike and mass protests called by organised labour and backed by their rank and file members.

Despite the calling off of the strike, ASCAB will still be supporting protests to achieve the aims of the strike of a reversal of the prices of fuel and electricity. We will continue to support the strike by ASUU for proper funding of the education sector. We will also support the unions in the health sector for proper funding for that sector. Finally, will continue to support protests and strikes for the implementation of agreements with the Government in the education and health sectors and for the full implementation of the minimum wage of N30,000 in all states.

We will also be campaigning for another increase in the minimum wage next year.

 

 The argument that ‘fuel subsidy’ because it benefits only the rich and not the masses

Mr. President, your officials and representatives argue that your government has decided to remove ‘fuel subsidy’ because it benefits only the rich and not the masses.

We reject this argument, as you rejected it during your pre-2015 electoral campaigns, when you argued correctly then that any government that said there was fuel subsidy was a fraudulent government. We agree and adopt your argument then that what is being subsidised is corruption, inability to fight corruption, incompetence and inefficiency in the oil sector.

Mr. President, your electoral promises to the Nigerian people was that the Federal Government under your watch would subsidise production and not importation, that you would make the refineries work and in fact build more refineries so that apart from satisfying domestic demand, your government would also export petroleum products.

Unfortunately, your Government has failed to fulfil these electoral promises. Mr. President, your pre-election electoral promise remains the only solution. The ordinary people of Nigeria continue to reject any other measure as fraudulent, anti-poor people and pro-oil dealers.

The policy of fuel price increases hurts the masses. There is a relationship between the price of fuel and the prices of all other goods and services. The masses rely heavily on road transportation; once there is a rise in transportation costs, the prices of all ither goods and services are bound to rise simultaneously. Therefore, the policy of fuel price increase is a conscious policy to directly impoverish the poor.

Mr President, when the N30,000 National Minimum Wage was passed into law, that rate lagged behind the rate of inflation. With the increases in electricity tariffs since 2016 and the recent increase by about 100%, coupled with increases from about N120/litre of fuel in June 2020 to N162/litre in September, the rise in VAT from 5% to 7.5%, devaluation of the currency among other policies, only a conquered people with slavish mentality would not resist the punitive economic policies your government has imposed on them. Nigerians have been driven to the wall and now have no choice but to resort to section 40 of the Constitution to peacefully protest policies that seek to annihilate them.

Petrol prices have increased for three straight months, rising from N122 per litre in June to N142 in July, N150 in August and now N163! There is no good reason for this!!

In March and April of this year the Government reduced the price of fuel by about 15%, but it has now increased the price again so the new price is now about 12% higher than it was last year (N145). The new price of fuel does not make any sense in terms of the global price of crude oil and the exchange rate of the naira and the dollar.

  

 Last year the price of crude was about $60 a barrel and the dollar was about N360. Now the cost of crude is about $45 and a dollar is worth about N390. So, last year the cost of barrel of crude oil was about N22,000 a barrel and now it is only N17,500 a reduction of about 20%.

Why is the Government forcing us to pay 12% more for fuel than last year when the cost of oil has significantly reduced?

Unconstitutionality and illegality of deregulation of fuel price

  Mr. President, as far back as 19th of March 2013, Honourable Justice M. Bello of the Federal High Court, Abuja Judicial Division gave Judgment in the case of Bamidele Aturu v Minister of Petroleum Resources & ors. The court declared that the policy of deregulation of petroleum products is unconstitutional, illegal, null and void. Specifically, the court granted reliefs to the effect that:

 the policy decision of the Federal Government to deregulate the downstream sector of the petroleum industry by not fixing the prices at which petroleum products may be sold in Nigeria is unlawful, illegal, null, void and of no effect whatsoever being in vicious violation of the mandatory provision of: section 6 of the Petroleum Act, Section 4 of the Price Control Act, and Section 16(1)(b) of the Constitution of the Federal Republic of Nigeria, 1999 which provides that the Government shall control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity.

 The Court then gave the following orders:

 An ORDER restraining the Federal Government and its agencies from deregulating the downstream sector of the petroleum industry or from failing to fix the prices of petroleum products as mandatorily required by the Petroleum Act and the Price Control Act, and AN ORDER directing the Defendants to fix and publish regularly prices of petroleum products.

We are not aware that the judgment of the Federal High Court has been appealed. Therefore, deregulation of petroleum products in Nigeria today is not only illegal but also unconstitutional.

ASCAB, along with organised labour and the masses of Nigeria are determined to defend this judicial victory. Ultimately, the price levels would be determined by the outcome of the struggles in the coming period between the masses and the state institutions. The big question is: on whose side would history record Your Presidency – on defence of the masses’ interest or against the

 

 interest of the masses and in defence of the interest of oil and electricity dealers? We, in ASCAB, are determined to stand with the masses of Nigeria.

On electricity tariff

  Electricity prices have always been on the rise even against court orders that directed reversal.

 The prices shot up again from 1st September. This comes three months after the tariff hike

 implementation slated for July 1 was called to be halted by a resolution of the National Assembly

 on account of issues related to Covid-19.

 When the Federal Government privatised PHCN they promised a steady supply of electricity

 within six months. The private companies have taken over, but electricity generation has not

 improved. Why should we have to pay even more to the private companies when they have

 hardly been able to increase the amount of power they provide above the meagre levels provided

 by PHCN?

 It is not that Nigerians get cheap electricity. A study of prices in 2011 showed that in Nigeria

 prices were more expensive than most other countries (and this was before the big increases in

 2012). Nigerian electricity was fifty per cent more expensive than most of the BRICS countries

 (Brazil, Russia, India, China and South Africa) and almost three times the cost in China.

The argument of drop in revenue/no money

ASCAB rejects the argument of no money to provide basic goods for the masses.

The wealth of Nigeria, as measured by the GDP, is now three times higher than it was in 1998, but the minimum wage is only worth half of its value then, and at least eight states have yet to fully pay the legislated N30,000 that was agreed to be paid from July 2019. As a result, the National Bureau of Statistics recently reported that 40% of Nigerian households have to survive on N11,500 a month or less, when the average per capita GDP is now around N75,000 a month.

The Federal Government claims it cannot afford the ‘fuel subsidy’, state governments claim they cannot afford the minimum wage. In contrast, ASCAB has shown that the Federal Government has money owed to it of nearly N95 trillion. Assuming the revised Federal budget for 2020 of N10. 8 trillion is constant, the N95trillion would fund the total Federal budget for over eight years. Annexure 1 to this open letter is the tabulated N95trn revenue leakages. We demand a Committee of representatives of Labour, civil society organisations and government to keep track of the revenue leakages.

Moreover, we argue that in the first quarter of this year, the government’s oil income was the highest since 2014. The second quarter figures were very slightly lower, but the August figures   were 5% higher than the rate in the first quarter of the year. So, state governments have plenty of money to pay a decent minimum wage and fund proper budgets for public education and health.

ASCAB also insists that the COVID-19 Funds, being money mobilised in the name of COVID- 19 pandemic should be used for revamping public education and health.

The minimum demands

ASCAB supports organised labour’s resolve to resist punitive economic measures. Ordinary people look up to labour. We trust the NLC and TUC would continue to provide inspiring leadership to implement the following basic demands of ordinary people:

1. Implement N30,000 minimum wage in all states!

2. No job or wage cuts by governments or the private sector! Wages to rise as inflation rises! 3. Guarantee security of life!

4. Protect the livelihoods of the poor and informal sector!

5. No hike in electricity tariffs, VAT or fuel prices! Reverse all price increases!!

6. Provision of PPE & payment of hazard allowances for medical workers!

7. Safe and conducive environment in schools and universities!

8. Upgrade facilities in public hospitals and prohibit medical tourism by top public officials!

9. Frontal fight against corruption!

10. Implement all previous agreements with trade unions!

11. Federal and state security votes should be used to meet basic needs.

12. A Committee of representatives of Labour, civil society organisations and government to keep track of the revenue leakages.

Unless and Until the above demands are met, we will continue to support the strikes and protests by the downtrodden Nigerian people.

Respectfully yours,

Femi Falana, SAN

Interim National Chair

 Annexure 1

Organisation

Explanation

Amount (Ntrillion)

Government Owned Enterprises

unremitted operating surpluses as at August 2018

10

Asset Management Corporation of Nigeria (AMCON)

Debts owed to CBN at July 2019

5.5

International Oil Companies in Nigeria

unrecovered share of profits in October 2019

23.560

Petroleum Products Pricing Regulatory Agency

non-remittance of operating surpluses in December 2019

1.343

Department of Petroleum Resources

Unremitted revenue of N1. 9tn in 2019. Projected total revenue of N2.3tn in 2021

1.900

NLNG a subsidiary of NNPC

N6.840tn said to have been remitted, between 2004 and 2017

6.840

Illicit Financial Flows

Out of Nigeria 2015 till 2020

36

The Deep Offshore and Inland Basin Production Sharing Contracts (Amendment) Act

Signed into law last year will fetch the country the sum of $1.5 billion per annum with effect from this year.

0.6

Ministry of Transportation

In 2016, the Cargo Tracking Note was terminated.

0.2

Nigeria Immigration Service

CERPAC immigration fees not remitted to the Federation Account

0.02

NNPC

Crude oil stolen from Nigeria by well-known oil and shipping companies between 2011 and 2014.

5

Central Bank of Nigeria

2006, withdrawal from foreign reserves lent to 14 commercial banks.

2.7

NNPC

2009, Exxon Mobil owes for licences of 3 oil blocks. of $1.9 billion.

0.73

TOTAL

94.393

 

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