Letter to President Jonathan

Dear Mr. President I decided to write to you following the announcement yester- day by the Petroleum Products Pricing Regulatory Agency (PPPRA) about the withdrawal of petroleum subsidy. It appears that henceforth, Nigerians will now pay N141 per litre of petrol starting from yesterday, January 1, 2012. The quest to withdraw subsidies on petroleum product […]

Dear Mr. President

I decided to write to you following the announcement yester- day by the Petroleum Products Pricing Regulatory Agency (PPPRA) about the withdrawal of petroleum subsidy. It appears that henceforth, Nigerians will now pay N141 per litre of petrol starting from yesterday, January 1, 2012. The quest to withdraw subsidies on petroleum product pricing has become a wrenching tug-of-war between the Federal Government on the one hand and the Nigeria Labour Congress and its allies in civil society organizations, the media, academia and the citizenry, on the other hand.

The price of petroleum products has been adjusted eighteen times in the 26 years since the military administration of General Babangida broke the mould by raising the pump price of petrol from 3.15 kobo per litre to 20 kobo per litre in April 1985. Through- out this period, while there have been regular increases in fuel prices no government has succeeded in completely removing fuel subsidy. It appears that you believe you have more capacity than the previous governments and that you can achieve what they failed to achieve.

Mr. President, I know that you and your key ministers were consulting with various stakeholders last month to explain the imperative of completely abandoning fuel subsidy in January 2012 and to propose what the fuel subsidy gains would be used for. From all reports, the Minister of Finance, Ngozi Okonjo-Iweala made compel- ling presentations on the imperative of the immediate discontinuation of fuel subsidy. She succeeded in demonstrating that the amount spent on fuel subsidy is so large that it has forced us as a nation to abandon our development goals and is in addition accelerating our indebtedness.our Government has presented an elaborate Subsidy Reinvestment and Empowerment Programme (SURE). The programme proposes ambitious commitments to social safety nets, public works, youth employment, Niger Delta development and agricultural development programmes. Nonetheless, the compelling arguments have not convinced significant components of the society that the time has arrived to stop fuel subsidy. The main reason is that almost nobody believes Government will and can do what it has promised.

At the Lagos Townhall meeting of 22nd December 2011 organised by the Newspaper Proprietors Association of Nigeria, the Minister of Finance passionately appealed to Nigerians to accept the Government’s proposals and thereby give them the opportunity “to rebuild trust” and implement the transformation agenda. Labour was unequivocal in its response – they accused the Minister of being a “liar” and declared that the SURE package was just a shopping list. In a joint state- ment, NLC and TUC asserted that the total fuel subsidy gains could not pay for one-fifth of the SURE programme (Trust, 22/12/11).

The very influential and widely distributed calculations by Dr. Izielen Agbon that the real cost of producing a litre of petrol in Nigeria is N33.36, while the cost of the imported swapped litre is N34.45, has completely undermined the government’s case. The government position that the real cost of a litre is now N141 is being widely ridiculed and seen as part of the largest fraud in Nigeria’s history. Of course the calculation of government is based on opportunity cost while Dr. Agbon’s arguments fit too neatly into the general belief of Nigerians that they have an entitlement to cheap fuel. This has placed support on Dr. Agbon’s rather than Dr. Jonathan’s side.

Mr. President, I believe that you should listen to the response of religious leaders on this matter. The General-Superintendent of the Deeper Life Ministry, William Kumuyi has advised you “to listen to the outcries against the planned removal of fuel subsidy … and consider the interest of suffering Nigerians” (Punch, 26/12/11). The Catholic Archbishop of Abuja, John Onaiyekan addressed the issue of trust extensively, following the Ilorin Stakeholders meet- ing between you and your team and the leading one hundred Christian and Muslim leaders in the country. It is worth quoting extensively from his interview.

“Why is there no trust? It is simply what we see on the ground, not just the oil subsidy which amounts to about 4% of the Gross National Product. We see the whole of Nigeria and we cannot see it being used properly. The roads are still bad and the educational system is still in tatters. What is the magic in fuel subsidy that 4% will achieve what 96% has not done… As a religious leader, I spend most of my time trying to get my people to make acts of faith in God, but I will tell them that this God delivers. If this god does not deliver, if he is a god that betrays you, if he is a god that makes promises that he doesn’t fulfil, I have no business telling anybody to make an act of faith in him. That is the problem that we have with the fuel sub- sidy removal (Onaiyekan adds the words of a Muslim leader at the Ilorin meeting). It seems you have called us together hoping that you will use us to sell the idea of fuel subsidy. Are we going to stake our own credibility on the promises of government which we ourselves are not sure of?” (Sunday Trust, 25/12/11).

Given the lack of trust, the government is yet to close the deal on “whether” the subsidy can be with- drawn immediately. At the same time, we cannot continue with the present fuel subsidy regime. At the Lagos town hall meeting, the Central Bank Governor told us that between January and November 2011, $8 billion dollars was provided to the oil marketers to use in promoting foreign economies. The Minister of Finance told us that we had borrowed N852 billion to fund the 2011 budget mortgaging our future. We cannot continue along this path.

These facts notwithstanding, Mr. President, I personally doubt that you have the capacity to impose fuel subsidy removal in the present context. Opposition parties, notably ACN and CPC, are not on board. The information released on the privileged beneficiaries of subsidy payments has shifted the debate from subsidy withdrawal to the development of a more efficient, transparent and accountable subsidy administration and supply side reforms. You Government have not won the argument that immediately ending subsidy is the ineluctable and urgent option to end the regime of privileges and abuses to public goods. The National Assembly has still not been bought over by arguments from the Executive branch.

My dear President Jonathan, in your New Year Eve’s address to Nigerians on the declaration of the state of emergency in some parts of the country, you emphasised the seriousness of the security threats we are facing as a Nation. You are also aware that the Joint Action Front (JAF) established by labour and civil society is committed to the struggle against fuel subsidy and will mobilise both the masses and the elite to be on the barricades to stop the fuel subsidy removal. Why open too many fronts at the same time? Is your New Year message to Nigerians that the military, through successive declarations of states of emergency, will cripple through force of arms the attempt of the Joint Action Front to stop the withdrawal of fuel subsidy? This, in my view would be promoting war between the people and their government. By completely withdrawing fuel subsidy from 1st January, your government is excluding the option of building trust.

Some of your ministers had announced earlier that you would use the first quarter of 2012 to continue with your consultations with Nigerians. I write to advise you that that is a preferable approach. Consultations must continue with the objective of addressing the key issues of massive waste, inefficiencies and corruption operated currently under the Petroleum Support Fund and its famous template. The long chain of brokerage charges, crude export costs, foreign refining costs, as well as demurrage and landing costs will not be addressed. There is a path that could lead to a win- win situation in which the amount paid on fuel subsidy is reduced massively while at the same time, Nigerians are spared the hardship of paying cut throat prices for petroleum and trans- port costs. The path of reason is that your Government should shift from its position of an immediate end to fuel subsidy and accept negotiation on trust building measures spread over time, while labour and civil society should accept to negotiate reasonable palliatives based on a believable programme that addresses the negative impact of fuel subsidy removal on the poor.

Yours sincerely,

Jibrin