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| Jaye Gaskia (Hand Raised) Addressing A News Conference |
(Being Paper Presented By Jaye Gaskia,
National Convener, United Action For Democracy [UAD] At A Forum Organized By Lawan,
NECA House, LAGOS On 30TH MARCH 2012.)
Introduction:
At the height of the tremendous mobilization and organising
efforts aimed at preparing Nigerians for resistance and persuading the
government to change its policy course on subsidy removal, I had written a
paper in December 2011, titled ‘Governing by stealth: exploding the myths of
fuel subsidy removal’, attempting to summarize all the counter arguments of
civil society and its labour allies against the hiking of price of petrol.
The Outstanding Issues:
The principal planks of the counter arguments which remain
valid even today bear some brief mention;
first,
there is the whole question around the nature of the subsidy. The most
important fact here is that around the reason why the subsidy which is the
difference between the landing price and the pump price, exist in the first
place. This reason is fourfold – the parlous state of our domestic refining
capacity, which necessitates that we have to import refined products, the
floatation of our currency against major currencies, as well as the corruption
in the import regime of the refined products. It is the sum total of all of
these that ensure that the subsidy exists and continues to build up after every
subsidy removal exercise. As long as we continue to depend on importation, and
the value of the naira declines against the dollar, the landing cost of refined
products will continue to rise. If this is coupled with a desire to make the
product easily accessible and affordable because of its centrality to the
economy due to the parlous state of power generation and distribution, then
there will always be a subsidy that will always be on the rise.
Second, is the
whole debate around the actual beneficiaries of the subsidy? Government assumes
and promotes the false idea that only the super elites and the cabal benefit
from the subsidy. In fact the major beneficiary is the overwhelming majority of
ordinary citizens who have access to petrol because it is affordable, in the
midst of crushing poverty (61% of the population according to latest NBS
figures); the overwhelming majority of whom need to use petrol to power their
businesses [small, medium and large scale, as well as formal and informal
sectors of the economy] and earn a living. In reality as the NASS probes have now revealed, the cabal
and corrupt government and industry officials have been corruptly enriched by
the fraud perpetrated and perpetuated in the import regime and in the
management of the subsidy. But this is a criminal benefit, which ought to and
should be subject to prosecution and punishment with fraudulently collected
subsidies recovered and returned to the coffers of the federation account.
Third, there is
the issue around the financing of the subsidy, and it is the issue most
directly connected with the SURE program. If the subsidy is being financed
through deficit budgeting/public borrowing, then the only thing that can be
achieved by hiking fuel prices to the same level as ever increasing landing
cost [which stood at 141 naira per liter as at 31s Dec 2011, and has now risen
to 165 naira per liter as at 29th February 2012] will be to stop
borrowing! No savings would be possible to be made, and therefore there will be
no money for the SURE program. This is basic economics.
The fourth issue
is then directly the argument around freeing money for critical infrastructure
development, what then became conceptualized into the SURE program. And here it
is important to mention that the SURE program in its original form [before its
withdrawal, is at best a deceptive collection of programs into a wish list. A
program that will be implemented requires more serious approach; it requires a
strategic, operational and implementation, as well as investment plan. SURE was
none of these. The SURE program had no sense of the strategic linkages of
the infrastructure projects; there was no prioritization; no costing, and no
timeline for implementation [no start and end dates for the projects]. There
was also no indication of what each will cost to implement, what the total cost
for the entire package is; what part of the budget the subsidy reinvested fund
will cover; what the funding gap will be; and how this funding gap will be
filled. What is even more appalling and an indication of the
shoddiness of its preparation as well as the inbuilt deception in the program
is the fact that ongoing projects for which contracts have been signed were
severally included in the SURE pot-pori of critical infrastructure
interventions! Additionally as we now know thanks to the subsidy probes at
the NASS, the funding regime was based absolutely on guesses not on empirical
information. No body as at the time the program was being put together had any
idea about the true cost of the subsidy fraud, which we now know cost us well
over 2 trillion naira in 2011! Even now no one is certain what the actual daily consumption
rate for petrol is, the actual amount we pay for per day, the actual daily
production rate of existing refineries; much less a sense of determining what
the actual short fall in daily supply is, which will require an actual quantity
of refined products per day! What is perhaps more shocking with respect to revealing the
mind of the regime, is the shocking assumption, that the subsidy program was
designed on the basis of an annual available funding of 478 billion naira over
a four year period! Why is this shocking and scandalous? Precisely because it
assumes no reduction in the quantity of imported refined product per day,
translating into an assumption or rather more appropriately, an intention to
keep current domestic refining capacity at 2011 levels over the four year
period. The implication of this is that no additional domestic
refining capacity will be acquired over the four year period, and we will
continue to be dependent on importation of refined products, at current, if not
at increasing levels over the four year period! It also means that we will have
to remain subjected to higher and ever increasing pump prices of petroleum
products, based on increasing landing costs, due to changes in the value of the
naira in relation to the dollar on the one hand, and as well due to rising
production cost internationally on the other hand. And finally on this issue, where is the sense of strategic
linkage in the SURE program, between the refineries to be built under the
program, the private refining licenses to be issued, and this assumption that
we will remain dependent at the very least on current import levels for the
next four years?
Fifth, there is
also the set of issues around the need for all of us to sacrifice. The fallacy
of this argument is that the overwhelming majority of Nigerians are already
over sacrificing; and have become so thoroughly impoverished by their level of
sacrifice; a sacrifice that actually corresponds to a citizens subsidy of the
opulence and corruption of the ruling political elites, the various cabals and
high officials of the civil/public service. Those who need to sacrifice are the ones that have refused
to demonstrate a willingness to sacrifice while urging the rest of us who are
already over sacrificing to sacrifice more! A critical look at federal and
state budgets reveals these inconsistencies. Since the January uprising we have
been regaled with snippets of such ostentation in the federal budget: 1billion
to feed the president in this year; 1.7 billion to fuel cars in the presidency
[remember that we are paying from public coffers for them to fuel their cars,
while we are expected to pay from our own pockets these deregulated prices for
petroleum products!]; another 1.3 billion naira to fuel generators in the
presidency [does this ruling class have any shame at all?]; etc etc.
Sixth, the issue
around what the real deficit is, which is the deficit of trust. No one trusts
the Nigerian government, and all of the things that have happened since the
January Uprising firmly underlie the reason why we cannot and should not trust
this government. As a government they
have so perfected the act of lying and governing by deceit that they also very
often believe their own lies and act on its basis.
This regime needs to rebuild trust, and nothing in all the
actions it has taken so far indicates that it is willing, able to, or capable
of being trustworthy.
Seventh, there is
the claim by government,[ its supporters, and does who support deregulation,
who may even be in opposition to the way the government is going about it] that
government can not successfully operate refineries, that government has no
business in operating companies in the petroleum [downstream & upstream]
and power sectors; and that it is only the private sector that can successfully
operate these businesses! The fallacy in this argument is obvious in the fact that the
monumental failure of giant corporations/TransNational Corpoarations [including
Enron, Lehman brothers, and banks and corporations across Europe, North America
and Japan/Asia]; as well as the failure, bankruptcy and collapse or threatened
collapse of whole national market economies [from Iceland, through Ireland,
Greece, Portugal, Italy, Spain, etc]; has been the defining character of the
period since 2007; yet no one has said that capitalism, and the system of private
ownership of the means of production, alongside the market on which it is based
has failed! How can such a system that has faced such monumental crisis
of existential proportions be still held up as the only way to run business,
and as the viable alternative to public ownership and management of businesses? Besides, when they shamelessly make this argument while
signing contracts to build and operate refineries, independent power plants,
railroads, including oil and gas exploration contracts, etc with state owned
Chinese firms? And while they try to white wash their own incompetence and
ineptitude in managing the economy, they forget to give examples from
Indonesia, Brazil, and Venezuela, that have built successful transnational
state owned operations in the petroleum sectors. It is obvious that what has
failed is not public ownership, but incompetence, ineptitude and impunity in
the management of our political and economic life by a thieving and looting
ruling class!
Eighth, there is
the other claim by the regime and its supporters, that this debate is not
political, it is purely economic! What can be more political than a situation
where a government avoids all rational economic options, and sticks
dogmatically to a set agenda, aimed at completely ousting the state and the
public administration from the management of the petroleum sector? Refineries can and ought to be made to work, and yes, those
owned publicly? Those who mismanage them, sabotage, or defraud them are
committing economic crimes, and ought to be prosecuted and punished. Those who
are guilty only of incompetence and ineptitude should be sacked and new
managements brought in! Linked with the supposedly non political nature of the
debate, is the claim that this debate is not ideological. What can be further
from the truth? The arguments around the alleged public sector inefficiency vs
alleged private sector efficiency are purely ideological given that they are
made without reference to the deep rooted global crisis of capitalism!
Besides, the insistence by the government and its supporters
that hiking fuel prices would have no impact on the poor and would not
contribute to increasing poverty levels; while also insisting that making
petrol, that is so central to the economy, available at affordable and
accessible price only benefits the super rich and the cabal; can be understood
only within the context of ideological faith and fidelity!
The last myth The
ninth one is the made prominent by the CBN governor, around the nature of
subsidies. He, along with the supporters of the government claim, that there
are two broad categories of subsidies: subsidizing production vs subsidizing
consumption! They further claim, that what grows the economy is a subsidy on
production, and that the petrol subsidy is a subsidy on consumption!How fallacious and desperate can these people get! Petrol,
is in the Nigerian economic context, a factor, if not a primary factor of
production! In a context where electricity is conspicuous only by its absence
or epileptic presence, every sector of
the economy: formal and informal, manufacturing and commerce; small, medium or
large scale; is dependent on using generators to provide power. Over 80% of
generators in use require petrol not diesel. How can the availability of such a
central product not be a factor of production? How can a subsidy to make it
accessible not be a subsidy on production?
Where Do We Go From Here?
Since the January Uprising and the probes at the national
assembly of the petroleum sector which it has engendered and energized; several
important revelations has come to light with respect to the lack and or
complete absence of coordination in the management of the economy, inspite of
the fact that we have in place not only an economic team, but also a coordinating
minister of the economy.
Furthermore, although several mind boggling revelations have
come to light, there is as of this moment no serious indication that those
implicated in the fraud will be prosecuted and punished, and looted funds
recovered!
In addition, although several task forces [about four so
far] have been set up to tackle specific challenges that parastatals of the
ministry were established to handle in the first instance, no such attempt at
seriously interrogating the basis of the fraud has been undertaken. And what is
the basis of the fraud? It is the way and manner by which we questimate daily
consumption rate for PMS and other products. As long as there is no scientific,
strategic and empirical way of determining this rate; it would always be
possible to manipulate the figure in other to benefit importers.
And this can be done simply, monitored monthly, to get
monthly averages. The total number of tankers transporting petroleum products
ought to be known, they ought to be registered, along with their capacity.
Likewise petroleum products dispensing stations/outlets ought to be ascertained
and registered along with their capacities. Tankers should check in when
lifting products and check out when they have offloaded the products. Sales at
outlets ought to also be recorded and monitored to determine daily sales and
monthly averages. We can have the first empirically proved figures within a
month with seriousness.
Additionally, there is a need for a strategic plan, with
operational and implementation plans showing how we intend to improve domestic
refining capacity over a given period of time [no more than 24 months], to such
an extent that we would have achieved self sufficiency in domestic refining.
Such a plan, with a budget, will also include a timeline for reducing
importation as domestic refining capacity improves until importation gets to
zero. This is no rocket science, it can be done.
To Conclude:
The most significant indication of the seriousness of any
government with respect to the development of basic infrastructure and delivery
of basic services is the extent of commitment in its annual budgets to the
development of these. Our budgets continue to fail woefully on this score with
recurrent to capital expenditure ratios still in excess of 7:3 in favour of
recurrent expenditures.
No nation grows and develops human capital in this way. If
the wastage, leakage and fraud in management of public resources and budgets
are cut and eliminated, huge amounts of resources can be freed for development
of critical capital projects. If all the looted funds in the power and
petroleum sectors are recovered, culprits punished, impunity in governance will
be dealt a crucial blow, and we can make our money work for us.
One other issue, our penchant for extra-budgetary spending
is once again demonstrated in the design of the SURE program outside of the
budget.
On a final note, if rather than address and tackle these
outstanding issues, if rather than take concrete steps to sanitise the power
and petroleum sectors and implement the recommendations of the probes, the
regime instead goes ahead to increase electricity tariffs and prices of
petroleum products from April as it has severally indicated; then it will have
demonstrated that it learnt nothing from the January Uprising; and it would
have taken steps to provoke another Uprising in April!
For let there be no doubt about this: we shall mobilise
Nigerians to return to the barricades, take over the streets and OCCUPY
NIGERIA, if the issues are not addressed and further hardships are imposed on
Nigerians from April.
And let there be no ambiguity about this too; unless
citizens actively organise and mobilise politically, and challenge the ruling
class politically; unless we take the bold step to take power into our own
hands, and proceed to remake Nigeria in our own interests [the interest of the
majority]; the fundamental problems of governance in our country will not, and
cannot be resolved in favour of the popular masses.
