Labour
…No date fixed for reconvening
…Fuel price should be N181/litre – FG
…Adds lost N10.413tn to subsidy between 2006-2019, N2.193 tn 2016-2019
…Return to status quo before discussion —TUC
…FG has no new thing to say —Wabba
…Endure now to enjoy later, APC tells Nigerians over fuel, electricity tariff hike
…Urges NLC, TUC not to be hoodwinked by opposition
By Victor Young, Johnbosco Agbakwuru & Omeiza Ajayi
The meeting between the Federal Government and Organized Labour to find a common ground on the recent hikes in electricity tariff and pump price of petrol, yesterday in Abuja, ended in deadlock with no fixed date for reconvening.
With this development, the prospect of industrial action and mass protest by labour and its allies is very high as leaders of the Nigeria Labour Congress, NLC, meet today to take a definite action plan on how to respond.
This is even as the Trade Union Congress, TUC, also yesterday insisted it would not sit at the negotiation table with government unless the status quo was reverted to regarding price of petrol and electricity tariff.
TUC had earlier on Monday given the government a seven-day ultimatum to reverse the price and electricity tariff increases.
The Federal Government team at the meeting was led by Minister of Labour and Employment, Dr. Chris Ngige, alongside five other ministers and chief executives of relevant government agencies, while Organized Labour was led by President of NLC, Comrade Ayuba Wabba, and the TUC President, Comrade Quadri Olaleye.
Welcoming participants, Minister of State, Petroleum Resources, Timipre Sylva, recalled that Nigeria lost N10.413 trillion to subsidy between 2006 and 2019, while between the year 2016 and 2019, it lost N2.193 trillion.
Petrol price cheapest here — Sylva
In his presentation, titled “Understanding the Impact of fuel Subsidy on the Nigerian Economy… and the Gains of Deregulation,” Sylva pointed out that if the sector was fully deregulated and the dollar exchange rate was fully factored in, the fuel price would not be N161 but N183 per litre.
He said with the present price increase, the price of fuel in Nigeria at N161 per litre was still the cheapest in the sub-region, compared with Senegal at N549 equivalent; Cameroon, N449; Benin, N359; and Ghana, N332, among others.
He said: “Between 2016 and 2019, we were losing an average of N1 billion a day because it was like a leaking basket. We import the thing, and as we bring it to Nigeria, it will leak out through all the borders. Before that, we are even losing as much as N3.7 billion a day because we would be importing the thing, as you are importing it is not enough because it was leaking out.
“So we now felt instead of this leaking basket that we were trying to manage, why don’t we try to see, so that we can at least make it profitable so that if it is sold at market price in Nigeria, even if it goes out of Nigeria, it is okay, it becomes business opportunity. At least, the government will not be losing from the process of importing.
“But even when we now raised the price, with deregulation today, in Nigeria our price is still N161 per litre, in Senegal the price of petrol is still N549, in Cameroon, it is N449 per litre. You can see that we are still the cheapest in this sub-region.
“Why have we kept it at N161? Frankly speaking, let us face it and this is what I will tell you. One of the things that the President considered; he said if you take it to the full scale of deregulation, today, prices should have been around N183 because you all know this.
“The cost of subsidy at the pump is different from the cost of subsidy at the FX (forex) site. At the FX site, we are still calculating it at N391 to the dollar, that is why you can still have N161. But you know that not all of us know today that the dollar cannot be bought at N391 but it is because we are still trying to see that the government should take some of the burdens.
“That is why you see that it is N161. If you are taking the dollars at the market parity price, and say let us calculate the dollar at N450 per dollar, it would have been N183 per barrel.
“So today, we can say yes, we have deregulated, but we can also tell you here now, we have not fully deregulated because of the concerns that the government have for Nigerians.”
‘Subsidy cost too high’
He explained that subsidy has caused Nigeria a whopping loss, adding that between 2006 and 2019, the government spent a total sum of N10.413 trillion, an average of N743.8 billion per annum; while between 2016 and 2019, the government had spent N2.193 trillion, an average of N548 billion per year.
However, on PMS plus forex (FX) subsidy between 2016 and 2019, he pointed out that the government had spent N3.663 trillion, an average of N916 billion per year.
He said: “You can see what subsidy cost us in 2011, subsidy cost us N2.105 trillion. We are talking of losing job, we are talking of people suffering, in 2010, it cost us N1.355 trillion, 2013 N1.316, and by 2015 the subsidy figure came down to N654 billion, by 2016 we didn’t even have any under-recovery. So, you can see that in 2018, prices came up again.
“So you can see that this is a policy direction that should have been taken long ago. No wonder every government comes to that point when they realized that subsidy was not sustainable but unfortunately some of those government did not have the political will; also the time probably was not ripe and they couldn’t take it because you can see that the cost of subsidy from 2016 to 2019 was N3.6 63 trillion, an average of N916 billion per annum.”
“You can see what subsidy cost us in 2011, subsidy cost us N2.105 trillion. We are talking of losing jobs, we are talking of people suffering, in 2010, it cost us N1.355 trillion, 2013 N1.316, and by 2015 the subsidy figure came down to N654 billion, by 2016 we didn’t even have any under-recovery. So, you can see that in 2018, prices came up again.
“So you can see that this is a policy direction that should have been taken long ago. No wonder every government comes to that point when they realized that subsidy was not sustainable but unfortunately some of those government did not have the political will; also the time probably was not ripe and they couldn’t take it because you can see that the cost of subsidy from 2016 to 2019 was N3.6 63 trillion, an average of N916 billion per annum.”
It’s a recurring issue — Wabba
Responding, NLC President, Ayuba Wabba, said: “With the very thorny issue of fuel price hike, for us as an organization, this is one issue that had been recurring for so many years. I think the only difference at this point in time is COVID-19.
“At the level of NLC, we have done many publications interrogating this issue, using the information provided by government and also putting across options that will be pro-people and also will be able to address the issue.
“The fundamental principle underpinning PMS subsidy is the fact that wholly, we import what we consume, and because of this, what also makes up the price includes issues like taxes, insurance, freights which if we are refining would have actually made the price to come down.
“This is one issue we have to deal with and government must summon the courage once and for all to address this issue and we have provided a lot of information for that to be addressed because the figure you gave us, N161, we don’t even know what constitutes the N161. Those issues that constitute the price is part of the inefficiency in the system which government hitherto has been paying and christened subsidy. Government cannot transfer the inefficiency to the people. Nigeria should refine its products.
READ ALSO: Fuel, electricity hike’ll increase Nigerians’ hardship — SSANU
“At this point, what do you have on the table to cushion the effects on workers, their families because they have been pushed to the wall and already at the edge? Do you have anything for us, so that we can now say that despite these challenges, this is what I have for Nigerian workers that they can be able to have something that can cushion this effect for them?
‘Minimum wage, purchasing power eroded’
“Already the value of minimum wage had been eroded. The purchasing power parity, when you compare with all West African countries, we are already on the ground. That is the reality. In Ghana, compare their minimum wage with our own, in all West Africa countries, including Niger, that has just started refining recently, they are now serving us with products. That is not how we ought to be.
“ I will talk briefly on electricity and to say if the other ministries and agencies had done what we are doing now through consultation, they would have been in a position to equally talk to others and we won’t be where we are today.
“I want to tell you that this is the first time I am seeing the NERC chairman and he does not know me. We are talking of a sector where the workers are critical stakeholders. Without the workers, we cannot generate electricity and we have spent many years on this.
“I am not sure we have met with the minister of power. We have spent so many years and we don’t know the challenges, we don’t know what they are passing through. Beyond that, we are consumers as other Nigerians. Beyond the power sector reform, the workers are supposed to control 10 percent shares.
“Therefore, we are equally owners. We heard the increase in tariff on air, how do we think that such a system could go on? This is about the fifth tariff increase since we started, and each increase does not go with increase, even in salaries.
“To you, the cost of production has to do with machine, it does not affect workers and your regulatory framework does not include whether the person working there is trained, whether he is feeding, whether he has conditions of service.
“These things are affecting us that each time we see increases, we seem to suspect that the regulatory commission has been hijacked. I want you to deny this because, if what you are talking of is profit maximization, you are tailoring towards the owner and not for the interest of the masses. And you know that there is 40 percent government ownership of the DISCOs and you need to inform this house when you declared dividends on government’s 40 percent.
“You announced before this house that you spent N1.5 trillion plus 40 per cent government ownership and that you are doing it for the private sector, a sector you say you have privatized and you have subsidised in trillion.
‘’I equally want you to give information on what was the tariff before privatization? How much was the megawatt being generated before privatization? How much was government spending before privatization? Let’s see whether government is spending up to N200 billion.
Now after privatization, we now subsidize with N1.5 trillion, still government’s 40 per cent ownership and you think all is well. We now have what is called private sector monopoly which is more dangerous than public sector monopoly.
“This thing has continued and I want you to tell us the module you used in increasing tariff, where you privatize without metering. It is important we get this at this critical point in our history because with this India module you adopted, you can go to the store to buy metre.
“Metre is not in short supply but here, you increase tariff, you do not metre. Even the woman that sells garri in the market brings the cup for measure. If you want to buy fuel, there is metre. It is not the duty of the consumer to provide metre.
Reverse fuel price, TUC says
On his part, TUC President, Comrade Quadri Olaleye, said the first solution was to reverse the fuel price hike and electricity tariff, pointing out that the TUC had already written the Federal Government and gave seven-day ultimatum for these demands to be met.
He said: “Government should take immediate steps to reverse the hike in prices as it affects Electricity, Petrol and all other social services in the country to the prices they were prior to the increase.; and provide adequate and quality healthcare and education for all to save the poor and the vulnerable at all levels.”
Endure electricity tariff hike, fuel price increase — APC
Meanwhile, ruling All Progressives Congress, APC, has asked Nigerians to endure the current hardship brought about by the recent hike in fuel pump price and electricity tariff, promising that the people would in the nearest future begin to reap the benefits of the deregulation policy.
It also urged organized labour not to be swayed by the antics of the opposition whose narratives it described as skewed.
The party in a statement by its Deputy National Publicity Secretary, Mr Yekini Nabena, yesterday, said it was not oblivious of the financial strains brought by the increase in fuel pump price and electricity rates, and urged Nigerians to endure now and enjoy the gains soon.
Noting that the reviews were crucial and hard-thought decisions by government., APC said: “On the positive side, the short and long-term benefits on the citizenry and our national life will become obvious and directly felt in critical sectors such as health, education, infrastructure and social services targeted at the poor.
“We point to shocking estimates by the Nigerian Institute for Social and Economic Research, NISER, which reports that the budget for fuel subsidies in 2019 was sufficient to enrol the entire population of Nigeria in the National Health Insurance Scheme, NHIS. Further, fuel subsidies took over N10 trillion of our national resources since 2006.
“At least, the generality of Nigerians and stakeholders agree on a thousand and one reasons fuel subsidy has become unsustainable. The perceived benefits of fuel subsidies have long been overtaken by the previous corruption and drain on scarce resources that should be directed to other critical sectors.”
The party added that in line with the current administration’s deregulation drive and move to increase private-sector participation in the petroleum sector, ‘’the task before us now is to improve our local refining capacities which we are already on course to achieving and maintain a competitive, market-driven, transparent and accountable petroleum pricing template which meets global best practices, particularly in a developing country such as ours.
“While government works assiduously to solve the country’s electricity challenges permanently, it realizes that many Nigerians and businesses still rely on alternative sources for power supply to meet electricity needs, hence its current focus on improving electricity and service delivery, while also protecting poor and vulnerable Nigerians from arbitrary and estimated electricity billing.
“As with government’s decision to increase Nigerian worker’s minimum wage and other social investments, the President Muhammadu Buhari-led APC administration takes the welfare of the citizenry seriously.
“We call on all stakeholders, government at all levels, private sector organizations, labour unions, civil societies, students and youth groups to support government’s decision on the ongoing deregulation exercise as the citizens will be the ultimate beneficiaries. We urge stakeholders, particularly organised labour, such as the Trade Union Congress, TUC, and the Nigeria Labour Congress, NLC, not to be hoodwinked by skewed opposition party narratives on the deregulation and electricity tariffs.
“The same partisans have failed to account for and return trillions of naira stolen from national coffers in the guise of subsidizing fuel and the degrading of the electricity sector under their watch, despite huge allocations and subsequent theft of the resources meant go improve the sector. We urge all to support the current administration’s economic policies to uplift Nigerians.”
