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Nigeria & The Popular Will – An Opinion

Category: Oil Sector


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Nigeria & The Popular Will – An Opinion

 Friday, 13 Jan 2012 / Nasir El-Rufai / Thisday

 

 

Any discerning reader that is familiar with this column will have by now been able to see a common trend that runs through this column in the past 30 weeks or so. This week’s column must of necessity be on a subject of popular will with respect to the political turmoil with which the country is currently bedevilled. Let me first commend and salute the people of Nigeria - young, old, middle aged, labour, civil society, employed, unemployed, market women, and youths for summoning the courage to do that which is perhaps unprecedented in the struggle to make Nigeria better and greater during our lifetime.


It was only a few weeks ago that President Goodluck Jonathan dared Nigerians by publicly boasting that he was ready to confront mass revolt rather than defer  the removal of subsidy on petrol. It is self evident that no well meaning government would affront us all that way when the foundation for the legitimacy for governance derives from the people.

It was George Bernard Shaw that aptly stated that “Power corrupts and absolute power corrupts absolutely”. Most people only know this much about this popular quotation but for those who are able to dig deeper, the above represents, at best, only half of the full quotation which ends with “Except for those who learn from lessons of history” and is read in conjunction with the first part of the quotation.


Thus President Jonathan would not have allowed power to get to his head if he had learned anything from the lessons of history. Some have argued that Nigeria is different and as such the Arab Spring has no place in Nigeria. Do they still think so? To be sure, the ongoing struggle between the executive arm of President Jonathan’s administration and the people is, in the view of this column, for all intents and purposes the Nigerian equivalent of the Arab spring. It is the popular will which shall and must prevail at the end of the day.


So what really is at stake? Is this just about the removal of the fuel subsidy, when to remove it or is it about what a good government should be?   


First, let us examine the economics as well as the politics of the fuel subsidy. As stated in one of our previous articles on this column on the subject of the petroleum industry, there are two schools of thought: (1) That of 'Buhari and Tam David-West' that believes there is no subsidy if actual cost of exploration, local refining and transportation are the constituents of the pump price for refined petroleum products, and (2) The 'government' school that is based on the opportunity cost, i.e., the international quoted price for petroleum products.


Clearly, if domestic refineries are functional and producing enough to meet domestic demand, as the seventh largest exporter of crude oil should do, the difference between the two schools of thought would narrow as it is simply because the actual cost of delivering a litre of petrol to the pump head would have been about N40 that no one in the executive arm of government has yet been able to refute or disprove.  Therefore the fact that the government has to resort to the opportunity cost basis as a rationale for justifying the existence of an "import-based" subsidy is indeed a self induced burden that the Nigerian people are being forced to bear.


This brings to mind a fundamental principle of common law that no one should profit from his or her wrong, which when applied should preclude the government from seeking to pass the inefficiency and incompetence on its part in failing to ensure that our domestic refineries work and jobs are created. Indeed the economic cost to the nation is not just a subsidy element that the Nigerian people are having to suffer but also foreign exchange, well paying jobs and skills that have gone down the drain with importation of refined petroleum products. We can therefore conclude that the economic justification for the withdrawal of the fuel subsidy is self induced and should not stand.


Secondly, even if the Nigerian people should decide that refined petroleum products should be sold at the opportunity cost which is the international benchmark price, the popular will remains that the cost and size of government today is unwieldy and unacceptable.  In 2011 nearly 75 per cent of the entire budget was spent on recurrent expenditure. The people have complained time and again that the salaries and allowances of the executive and legislative arms of government are neither affordable nor sustainable. Why has the government shied away from tackling 75 per cent of the problem whilst devoting energy to the remaining 25 per cent?


The bloated overheads are not only real but have been carried forward into the 2012 budget proposal such that only N1.3 trillion out of the total budget of N4.75 trillion is available for capital expenditure. Meanwhile, the presidency is budgeting N1.8 billion to maintain ‘existing furniture, office and residential quarters’, N1.7 billion for travel (N724 million domestic, N951 million international), a ministry has budgeted N2.5 billion for ‘citizens call centres’ whilst the ministry of agriculture has budgeted N1.2 billion to incorporate commodity marketing companies. Stationery, refreshments and snacks in the Presidency will consume about N2 billion, miscellaneous spending by the Presidential Villa alone totals about N1.7 billion for food, honorarium and something called welfare packages. The SGF and head of service will also receive over N2.5 billion for miscellaneous expenses including about N300 million for welfare and N270 million for security votes. These are nothing but misplaced spending priorities!


Moving on to the components of the so called N1.3tr fuel subsidy (by end of October 2011) the government is bent on removing, we can ignore the fact that no one in government has been able to analyse and substantiate how the amount of the subsidy ballooned or skyrocketed from the earmarked amount of N240 billion or between of N300-N500 billion in the last four years, to the N1.3 trillion now and focus on the fact that both the government and the people have agreed that the process and system of subsidy payments are corrupt and fraught with fraud. So the question is why this government is not as anxious to investigate and charge all those found to have abused the system as it is determined to remove the subsidy.


Meanwhile, government has also budgeted about N1,147 billion (not N922 billion!) for the security sector. Ordinarily, given that security of lives and property is arguably the most important function of government, no one will quarrel with the magnitude of this provision for national security per se but for the fact that like everything handled by this administration, it is riddled with secrecy, lack of transparency and corruption. People are demanding the so called security votes to be made more transparent and for competitive bidding to be the norm for all national procurements in accordance with the Public Procurement Act. So at a time when the entire country is under siege from attacks by insurgents, religious fanatics, armed robbers, kidnappers and militants alike, including the unfortunate and condemnable massacre of innocent citizens in sacred places of worship, the government chose to worsen the mood of the nation by unilaterally removing the fuel subsidy.


In response to the widespread anger, the government in yet another show of insensitivity and incompetence, announced a so called ‘SURE’ package to ostensibly alleviate the suffering of the citizens but if truth be told, the so called ‘SURE’ package is founded on unsure, unsound and uncertain grounds. But for the fact that it may not be politically correct to accuse the government of embarking on a grand 419 scheme, the SURE programme is close to being a mirage if only because not a single naira provision has been made in the 2012 budget for the programme in its entirety. So it is bad enough that the government blatantly violated our constitution by admittedly expending more than N1.3 trillion on fuel subsidy without legislative approval or appropriation, but it is taken to the point of absurdity that the government will now openly announce and publish an elaborate programme of spending as detailed in the SURE programme without any appropriation whatsoever.


This is why the people must see the Jonathan administration for what it is. The excuse that the government plans to submit a supplementary budget is clearly an afterthought that should be out rightly dismissed. In any case, the 2012 revenue projections already assume zero deductions for subsidy and still contains nearly N1 trillion as deficit, so where will SURE get the revenues to fund it? We should cross that bridge if and when we get there if only because a bird in hand is worth 10 in the bush.


For the government to offer a so called palliative that has not even been submitted as a budget proposal is as deceptive as it is a case of medicine after death given that the people’s suffering started as far back as the 1st of January when those that travelled for the holidays were and are probably still stranded. The unaffordable price increases that were occasioned by the removal of the subsidy with which necessities such as transport and food were immediately affected are present and continuing and no one knows how many will not be alive to benefit from the so-called palliatives.


The government needs to apologise to Nigerians and go back to the drawing board. Nigerians, including this writer, are not against deregulation per se and if any example of shoddy government is needed, it is to be found in this current impasse of subsidy removal. Deregulation is a package of transition from public monopoly to competitive market. Necessary ingredients for this transition include at the barest minimum; (1) Well articulated policy review (2) Enabling legislation to de-monopolise the sector (3) A regulatory agency that will supervise the sector and implement the programme (4) Attracting and licensing of private sector providers in the sector. That is what we did in the BPE with the telecommunications sector, and now the electricity industry.


Clearly when the Jonathan administration’s approach to this issue is measured against the foregoing minimum for ingredients, it is glaringly obvious that what we have is, at best, a knee jerk approach rather than a well thought out deregulation programme. If not, who is the regulatory agency for the deregulated downstream petroleum sector? If the answer is PPPRA, is the agency well equipped and ready for this task? And where are its programme? And why was the petroleum industry bill not enacted prior to the subsidy removal? Who are the private sector competitors that will replace or augment the moribund publicly owned refineries? Are we to continue to depend on the imported refined products as a substitute for local value addition and job creation?


These and more are the reasons why the people have embarked on the peaceful protest against subsidy removal. As can be summarised from the foregoing points, there can be no rational economic justification for the subsidy removal until the wastages in government have been curtailed if not eliminated, those that abuse the system have been penalised or sanctioned; just as there can be no political or social justification until a consensus has been reached by the people that petroleum products should be priced at the opportunity cost. It only remains to also state that the legal issue of whether or not the ongoing protest is legal is an issue of semantics simply because the injunction that the government procured from the National Industrial Court (NIC) is only to preclude organised labour from calling for or embarking on a national strike. It is submitted that this is not just a strike but a peaceful protest that goes beyond organised labour.


This in essence is the thesis of this submission that the right to protest in support of the popular will is an inalienable, fundamental human right that can never be abridged or abrogated by any court; such that were organised labour to recall their members from the national strike, this nationwide peaceful protest will continue unabated. The government is duty bound to protect its citizens and see that no protester is harmed, so a situation where thugs are attacking and vandalising the NLC offices or attacking unarmed youths in Abuja should be looked into by the government. Overwhelming majority of Nigerians are not just protesting against the removal of the fuel subsidy but against bad governance that manifests itself in the pervasive insecurity of lives and property, widespread corruption and unacceptable huge cost of running the government.


In conclusion, both houses of the National Assembly have called on the executive arm of government to respect the popular will and not only reverse its position on removal of fuel subsidy but to also begin to address itself to the urgent pressing issues of corruption, insecurity and bloated cost of governance. This is the popular will that cannot be wished away. President Jonathan was wrong to have dared the people’s resolve. Now that he has been confronted with mass protests, it is in the collective best interest for him to begin to show that he is a democrat and a leader by respecting the popular will. The sooner the better. Worse still, the government sought to save about $7 billion from subsidy removal whilst the country is losing between $1 - $2 billion daily by way of lost GDP from the nationwide protests. Is this not a case of penny wise pound foolish? The answer is President Jonathan’s call and not that of his cabinet and advisers.



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