LCCI, NUPENG Knock FG Over Subsidy Removal, $800m Palliative Loan
The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns over the $800 million loan the Federal Government has secured to cushion the effect of premium motor spirit (PMS) subsidy removal on poor Nigerians, saying additional debt is not needed at this time the country is weighed by huge indebtedness.
Also, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) expressed disappointment in the failure of the Federal Government to deliver on its promises of reviving the three national refineries before contemplating the removal of the subsidy.
The oil workers argued that fixing the refineries before the removal of subsidy is important given the enormous impacts it would have on economic activities as well as considering the socio-economic importance of PMS to ordinary Nigerians.
The union stated this at the end of its National Executive Council (NEC) meeting where the president, Williams Akporeha, urged that the local refineries must be put into full operation before such a major policy decision would be taken in the interest of all Nigerians.
He said as much as the union is not averse to the removal of fuel subsidy, deregulation that is based on local production would not only increase the revenue base of the country but would also generate employment and create positive impacts on the citizens.
Examining the country’s state of unemployment, especially the condition of workers in the oil and gas industry, Akporeha lamented the increasing degeneration, indecency and precariousness of employment and working conditions of his colleagues.
The NUPENG chief decried the behavior and employment tactics of some unscrupulous indigenous employers and multinationals, whom, he alleged have exploited and turned the nation’s local content law into ambits of slavery.
To this end, he called on the incoming administration to declare a state of emergency in the oil and gas sector to properly situate the employment situation to engender technical expertise and skill enhancement for young Nigerians.
Speaking with The Guardian yesterday, LCCI’s deputy president, Gabriel Idahosa, said even though the fuel subsidy removal is a decision that is 30 years behind time and would be hopefully taken when the new administration comes in, the new loan is not addressing the root problem. He said: “Apart from the fact that the terms of the loan and the selected people are not clearly defined, everything is all currently in the clouds, in terms of the effects of addressing the fuel removal subsidy. The subsidy removal will not affect Nigerians for six months and disappear. So, connecting the effects of the subsidy removal to the distribution of cash for six months has no real basis.
“What we expect to see are actions that address the actual effects of the subsidy removal. Transportation would be the most affected; then all the other areas and sectors where fuel is consumed. We want to know what government is going to do to mitigate the cost of transportation for everyone. Distributing $800 million to some people is not going to address the cost of transportation and resulting inflation. We are adding another $800 million layer to an existing debt profile.”
“The business community has looked at it in various discussions and they do not see any real value in taking this loan for this purpose. What we believe should happen is to look at how the infrastructure, services and cost of living can be addressed. Besides transport, most Nigerians pay school fees and healthcare. Government can subsidise these significantly. Government can also improve public transportation by providing more buses across different routes within the city and rural areas as well as making gas available.
“If you are getting $800 million and you are using it to finance the conversion of all vehicles in Nigeria to gas and make gas available, then you are spending money to achieve a purpose. There has to be a connection between what you are borrowing for and what you intend to do.”
Idahosa added that every aspect of the economy is affected by the cash squeeze but more so manufacturing, which has reduced output significantly.
“The manufacturers are more affected because they had already gotten raw materials and had their warehouses full of goods before the crisis started. Retailers were less hit but it was felt across all sectors.
“The first quarter of this year was badly affected by the cash squeeze, elections and the lethargy from last year, but we are hoping that things pick up in this quarter. Government needs to employ a more sophisticated, inclusive approach to cushioning the effect of subsidy removal. And it is not by taking this loan.
“If we are not careful, knowing the way things work here, the money will not get to those that need it the most. The cost of every single thing is going to go up significantly. And if government does not provide ways in which Nigerians can absorb the increase, most people would suffer. Deep thinking should go into how to manage the fallout of the removal,” he said.