The Senate, Trade Union Congress, TUC, and experts yesterday disagreed with the Federal Government’s plan to remove fuel subsidy next year and replace it with a N5,000 monthly transport grant to 40 million Nigerians.
While the Senate said there was no provision for such grant in the 2022 budget, TUC expressed shock that government could come up with this when negotiations on subsidy removal between government and the Labour movement is still ongoing, saying it is unacceptable.
The Nigerian Labour Congress on its part, described the development as an open invitation for unrest and revolt.
Meanwhile, Vanguard analysis showed that the implementation of the proposed N5,000 monthly grant to 40 million Nigerians will cost the Federal Government N2.4 trillion annually, which is 81.71 per cent above the average annual subsidy payment from 2016 to 2019.
During the four years, the FG spent N2.93 trillion on fuel subsidies as follows: 2016 – N563.3 billion; 2017 – N144.53 billion; 2018 – N730 billion and 2019 – N1.5 trillion.
However, Minister of Finance, Zainab Ahmed, said yesterday that the Federal Government has not concluded work on the proposed N5,000 transport grant, adding that the duration for the implementation will not exceed one year.
Speaking with journalists yesterday after submission of its committee budget proposal, Chairman, Senate Committee on Finance, Senator Olamilekan Adeola (APC, Lagos West), said that there was no provision for N5,000 monthly grant for 40 million Nigerians for transportation allowance in the 2022 budget currently before the National Assembly.
According to him, before the Executive can embark on such intervention, the proposal must come to National Assembly because it is going to cost N2.4 trillion.
“What are the criteria that would be used to determine beneficiaries of the transportation allowance?”, he queried.
Adeola, who noted that the proposal was still a rumour to him as the Chairman, Committee on Finance, said: “I don’t want to go into details, if there is something like that, a document needs to come to National Assembly and how do they want to identify the identity of the beneficiaries. This is not provided for in the 2022 budget proposal, which is N2.4 trillion.
“For us we still believe it is news because this budget we are considering contains subsidy and if we are passing a budget with subsidy in the fiscal document, we can’t speak because that is the document that is currently before us.
“The Minister of Finance, Budget and National Planning was quoted as saying that 40 million Nigerians will be paid N5,000 as transportation allowance, in lieu of the fuel subsidy.
“I don’t want to go into details for now. I believe that if such a proposal is to come to pass, a document to that effect must be sent to the National Assembly for us to see how feasible this is and how we identify the 40 million Nigerians that are going to benefit from this process. “There are still a lot of issues to be deliberated upon and looked into if eventually this will come to pass and how do we raise the money to pay these 40 million Nigerians?
“So, this is not provided for already in the 2022 budget. We don’t have anywhere in the budget where 40 million Nigerians will collect N5,000 monthly as transportation allowance, totaling N2.4 trillion.
“I know that there must be a budgetary provision for this for us (National Assembly) to consider. That is why I said it is still news out there until it formally comes to the National Assembly for either a virement to the budget or re-ordering of the budget.
“For now, I still want to take it as a rumour and as news until it is formally presented before the National Assembly.”
But the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed yesterday, in Abuja that money to finance it would come from the Federation Account.
The minister, who stated this while responding to inquiries by Vanguard on the modalities of the relief package, said the N5,000 monthly transport allowance will last between six months and one year.
Consequently, the minister said that a committee had been set up to look into it.
According to her, a federal government team, led by the Vice President, Prof. Yemi Osinbajo, has been negotiating with the state governors on the programme.
Mrs. Ahmed said the exact number of poor Nigerians to benefit from the package would be determined by the committee, adding that there would be no cash payment, as beneficiaries would be paid through money transfers.
She said: “The intervention we want to provide is for between 20 and 40 million people and there is still a lot of work going on.
“We have a committee that is chaired by His Excellency the Vice President, state governors and a few of us ministers as members.
“So we have to have a landing as to the exact number between 20 and 40 million. We already agreed it will be N5000 and we have also agreed that the remittances have to be done digitally.
“The e-Naria will help, but so also are the various payment platforms that are currently available.
“What we will not do is pay people in cash. So the transfers that people will receive will be through one kind of electronic money or the other and it’s meant to be for a period of six, nine or 12 months.
“So these are things that we are still in negotiating because it’s still money that would have to come from the federation account. So everybody that is a member of FAAC will have to agree on the numbers. The maximum will be 12 months, the minimum will be six months.
“So this exercise of the registration on the part of the Federal Government, the Ministry of Humanitarian Affairs already has responsibility; they’re already developing this register, but the states are also going to be actively involved in providing this electronic register through which the transfers will be undertaken.
“How long will this intervention last? Okay, six months to 12 months. And we’re saying the committee is still working. So we’ll know on Monday, how long, how much and then the procedure on a state by state basis.”
Also reacting yesterday, the Nigeria Labour Congress, NLC, rejected the transport grant, saying government was inviting anarchy.
NLC in a statement by its President, Ayuba Wabba, warned that the government was planning to set the nation on fire, contending that government’s new position was being anchored by the International Monetary Fund, IMF and the World Bank.
The statement read: “A few hours ago, the Group Managing Director and Chief Executive Officer of the Nigeria National Petroleum Corporation (NNPC), Malam Mele Kyari announced that the price of petrol could jump as high as N320 and N340 from February 2022.
The NNPC GMD/CEO said that the price increase would be consequent on the plans by the Federal Government to remove subsidy on Premium Motor Spirit also commonly referred to as petrol or fuel. The grand optimism of the NNPC GMD was predicated on the claims that the removal of the fuel subsidy is now backed by an act of parliament probably the Petroleum Industry Act which was recently signed into law.
“The assertion of the NNPC GMD was re-echoed on the 23rd of November 2021 by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, at the launch of the World Bank Nigeria Development Update (NDU), titled ‘Time for Business Unusual’ where she announced government’s plans to disburse N5000 to 40 million poorest Nigerians each as transport grant to cushion the effect of the planned removal of the fuel subsidy.
‘’The disclosures by the NNPC GMD and the Minister of Finance were in symphony with the positions of the World Bank Country Director for Nigeria, Mr. Shubham Chaudhuri and the International Monetary Fund urging the Federal Government to do away with fuel subsidy.
“The response of the Nigeria Labour Congress is that what we are hearing is the conversation of the Federal government with neo- liberal international monetary institutions. The conversation between the government and the people of Nigeria especially workers under the auspices of the trade union movement on the matter of fuel subsidy was adjourned sine die so many months ago.
‘’Given the nationwide panic that has trailed the disclosure of the monologue within the corridors of government and foreign interests, the Nigeria Labour Congress wishes to posit that it continues to maintain its rejection of deregulation based on import driven model.
‘’It is difficult to convince Nigerian workers why our dear country is the only country among the OPEC member countries that cannot produce its own refined petroleum products and thus adopts the neo-liberal import production model of refined petroleum products.
“We wish to reiterate our persuasion that the only benefit of deregulation based on import driven model is that Nigerian consumers will infinitely continue to pay high prices for refined petroleum products.
‘’This situation will definitely be compounded by the astronomical devaluation of the Naira which currently goes for N560 to 1US$ in the parallel market. Thus, any attempt to compare the price of petrol in Nigeria to other countries would be set on a faulty premise as it would be akin to comparing apples to mangoes.
“The contemplation by government to increase the price of petrol by more than 200% is a perfect recipe for an aggravated pile of hyper- inflation and astronomical increase in the price of goods and services. This will open a wide door to unintended social consequences such as degeneration of the current insecurity crises and possibly citizens’ revolt. This is not an outcome that any sane Nigeria wishes for.
“The argument that the complete surrender of the price of petrol to market forces would normalize the curve of demand and supply as is being wrongly attributed to the current market realities with cooking gas, diesel and kerosene is very obtuse.
‘’The truth is that these commodities which Nigeria can easily produce have been priced out of the reach of most Nigerian families with majority of our people resorting to tree felling and charcoal for their energy needs.
“We wish to warn that the bait by government to pay 40 million Nigerians N5000 as palliative to cushion the effect of astronomical increase in the price of petrol is comical, to say the least.
‘’The total amount involved in this queer initiative is far more than the money government claims to spend currently on fuel subsidy. Apart from our concerns on the transparency of the disbursement given previous experiences with such schemes, we are wondering if government is not trying to rob Nigerians to pay Nigerians. Why pay me N5000 and then subject me to perpetual suffering?
“Clearly, government thoughts on the so-called removal of fuel subsidy are cloudy and appear to be a ‘penny wise-pound foolish’ gamble. It is clear that the palliative offered by government will not cure the cancer that will befall the mass of our people who suffer the double jeopardy of hyper-inflation while their salaries remain fixed.
“As we had done several times, we call on the federal government to consider various options that can help Nigeria navigate out of the quagmire constructed by the failure of successive governments to embrace developmental governance and accountable leadership.
‘’Some of the viable options that can help insulate the domestic consumers from the market pressure brought about by the free fall of the Naira by making arrangement with contiguous refineries not far from Nigeria to swap crude oil with refined petroleum products; to accelerate work on the rehabilitation of Nigeria’s four major refineries which are all currently operating at near zero installed capacity; and establish empirical data on the quantity of refined petroleum products consumed daily by Nigerians.
‘’ It is unfortunate that this record remains a myth and a huge crater for all manner of official sleaze and leakages in the downstream petroleum sub- sector of Nigeria’s oil and gas industry.”
Reacting, the Trade Union Congress of Nigeria, TUC, said the government’s new position on fuel subsidy was totally unacceptable, warning that the government is looking for trouble.
Secretary-General of TUC, Musa Lawal, said Labour was shocked with the government pronouncement on Tuesday because it was a unilateral decision without the input of labour.
He said: “We are surprised and shocked with the government pronouncement. We do not know how the government came about it. The government is calling for trouble if they think they can go ahead with subsidy removal without labour.
“The Presidential Committee made up of government representatives and Labour has not concluded its assignment. Our last meeting was in April. This new position is totally unacceptable to us.
“Let us look at the issue of N5,000 for about 40 million Nigerians. How did the government arrive at the figure? How did they determine the targeted beneficiaries? Most Nigerians are aware that similar money was given out, the identities of the beneficiaries have remained a subject of controversy and debate among Nigerians.”
Also opposing the transport grant, National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said the implementation will bring about corruption.
He said: “It makes sense to deregulate the downstream sector for improved stability. It will also attract serious investors into the sector.
“But paying N5,000 to 40 million Nigerians would not make sense as it could bring about corruption. The government should look at other ways of impacting Nigerians and the nation’s economy.”
Immediate past chairman, Major Oil Marketers Association of Nigeria, MOMAN, who doubles as the Managing Director, 11PLC, Adetunji Oyebanji, called for a more realistic project to be created, rather than the planned N5, 000 distributions to the poor.
Speaking to Vanguard, Oyebanji stated that the planned fuel subsidy removal was long overdue as such funds should be used to support other sectors of the economy.
He said, “I have been an advocate of the removal of fuel subsidy because it is not benefiting the ordinary man rather the elite who drive cars. So, I was pleased with the planned removal.
“However, the idea of disbursing N5,000 to Nigerians is not sustainable and cannot be adequately monitored. What is the difference between what was and what is suggested?
“I would think that such a fund would go to supporting primary school students with books and feeding as well as fees. That would encourage and grow the education sector and its citizens in the long run. Also, the Federal Government can inject such funds to the transport buses so that Nigerians can pay low fare on the BRT buses. To me, these are projects that are feasible and accountable.
Also speaking, human rights activist and program officer, Rights Protection and Accountability Network, Dr. Siyanolu Abegunde, said: “This government lacks economic thinkers, how can they think N5,000 monthly hand-outs will make a difference in today’s Nigeria when inflation is riding to the sky and cost of living is very high?
“Besides, the process of executing the cash transfer will, as usual, be controversial and riddled with corruption, nepotism and all the negatives associated with this country.
“As for me, the government should have invested in heavy constructions that can give some hope to the vulnerable in the form of jobs as we see in rail construction.”
Similarly, the Director of Entrepreneurship at Redeemers University, Ede, Dr. Olufemi Omoyele, questioned the success level of previous social intervention schemes of the government and wondered why Nigerians should be optimistic about the new proposal.
He said: “All the previous and ongoing social interventions schemes of this administration such as Conditional Cash Transfer, TraderMoni and others, what have been their impact on the poor and vulnerable?
‘’These schemes are poorly thought out, poorly executed and highly politicized. Tell me, how did they come about the 40 million to benefit from the scheme? What are the parameters?
“These people are extremely poor, so in what way will N5,000 alleviate their sufferings in the midst of spiralling inflation and high prices? This government should come down from its high horse and face reality.”