Labour leaders on Wednesday vehemently rejected the Federal Government’s removal of subsidy on petrol, saying that it would bring hardship on Nigerians.

The government on Wednesday announced a new pump price for petrol, which it said should not be sold above N145 per litre.

The development marks an effective increase of the fuel product from N86.50 to N145, following consultations with critical stakeholders like Nigeria Labour Congress, Trade Union Congress, NUPENG, and PENGASSAN, which had initially opposed the deregulation policy.

According to Ibe Kachikwu, Minister of State for Petroleum Resources, the price regime is hinged on a broad-based approach to deregulate the downstream oil sector and find lasting solutions to persistent fuel scarcity in the country.

Kachikwu said government was aware of the ripple effect the new price regime would cause Nigerians and has made provisions in the 2016 budget to cushion the effects.

The minister, who wore a sombre look, also hinged the policy on the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the Federal Government.

With the new price regime, oil marketers will be allowed to import fuel on the basis of forex procured from secondary sources while adhering to the Petroleum Products Pricing Regulatory Agency’s (PPPRA) template.

“In order to increase and stabilise the supply of the product, any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by regulatory agencies.

“All oil marketers will be allowed to import PMS on the basis of forex procured from secondary sources and accordingly PPPRA template will reflect this in the pricing of the product.

“We expect that this new policy will lead to improved supply and competition and eventually drive down pump prices, as we have experienced with diesel. In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector. It will also prevent diversion of petroleum products and set a stable environment for the downstream sector in Nigeria.

“We share the pains of Nigerians but, as we have constantly said, the inherited difficulties of the past and the challenges of the current times imply that we must take difficult decisions on these sorts of critical national issues. Along with this decision, the Federal Government has in the 2016 budget made an unprecedented social protection provision to cushion the current challenges.

“We believe in the long term, that improved supply and competition will drive down prices.

“The DPR and PPPRA have been mandated to ensure strict regulatory compliance including dealing decisively with anyone involved in hoarding petroleum products”, the minister said in the statement.

PPPRA on Wednesday said that in furtherance of its mandate to ensure the efficient supply and distribution of petroleum products NNPC retail stations on the outskirts of major cities are advised to sell at price lower than N145/litre.

The agency said that the review became imperative in the face of extreme difficulties faced by petroleum product importers in sourcing foreign exchange, adding that to meet the consumption demand of the nation, importers will henceforth be permitted to source for their foreign exchange requirements from the secondary sources.

The PPPRA has on its template put the landing cost of petrol at N119.74, while the distributor’s margin, including retailer, N6; transport allowance (NTA) N3.36; dealers, N2.36; bridging fund, N6; marine transport average (MTA) N0.15; and admin charge N0.15, totaling N18.37, bringing the total cost of the product to N138.11.

The PPPRA, however, put the retail price band at N135 – N145.

Meanwhile, labour leaders said they reject the removal of the subsidy because of affordability and insensitivity on the part of government.

Ayuba Wabba, president of the Nigeria Labour Congress (NLC), in a telephone conversation with Independent, said: “We reject the removal of fuel subsidy by the Federal Government in totality because it is not affordable.

“It is the highest level of insensitivity by the government to increase fuel by over 70 percent, considering the facts that increase in electricity tariff and minimum wage for workers in the country have not been sorted out between the organised labour and the government.

“We have called on stakeholders in the labour movement for an emergency meeting where appropriate decision on the next action will be taken in the next few days,” he said.

Wabba described the development as unacceptable as government cannot take such decision unilaterally.

Wabba, who made preliminary remarks on Federal Government’s deregulation of downstream sector, frowned at the prevailing socio-economic challenges facing Nigerians especially the working class, queried the rationale behind the unnecessary burden placed on Nigerians ranging from hike in the electricity tariff to rising price of food items and now the fuel price.

He said: “That is certainly unacceptable because the reality of the economic situation is that majority of the citizens cannot afford three square meals a day. So that does not portray that it is acceptable.”

Dr. Peter Ozo-Eson, Secretary General of NLC, in a statement said, “The unilateral increase in prices of petroleum products today (Wednesday) by government represents the height of insensitivity and impunity and shall be resisted by the Nigeria Labour Congress and its civil society allies.

“With the imposition on the citizenry of criminal and unjustifiable electricity tariff and resultant darkness and other economic challenges brought on by the devaluation of the naira and spiraling inflation, the least one had expected at this point in time was another policy measure that would further make life more miserable for the ordinary Nigerian.

“The latest increase is the most audacious and cruel in the history of product price increase as it represents not only about 80 percent increase but it is tied to the black market exchange rate.”

The NLC said it has called a meeting for Friday, May 13, 2016 to decide on the next line of action, saying that all its affiliates, state councils and civil society allies are requested to commence mobilisation immediately.

Also, the Trade Union Congress President, Comrade Bobboi Bala Kaigama, said: “Nigerians are cut unawares by the insensitive decision of government to remove subsidy on fuel.

“We are consulting with the stakeholders in the labour movement on the next line of actions to take,” he said.

However, Mr. Muda Yusuf, the Director General of Lagos Chamber of Commerce and Industry (LCCI), the decision of the Federal Government to liberalise the petroleum downstream sector is inevitable given the acute resource constraint that the country is faced with at this time.

According to him, “The overregulation of the sector and the subsidy regime had put enormous pressure on government finances and on our foreign reserves.  It was evident that the policy choice was not sustainable. The review is in the long term interest of the economy and the people.

“Petroleum subsidy management has been characterised by serious transparency issues for several decades. There are two components of the subsidy phenomenon. The first is the actual subsidy, which is the differential between the pump price and the landing and other costs of fuel. The second and more disturbing component is the blatant corruption inherent in the fuel subsidy regime.

“For several years, the Nigerian economy suffered severe bleeding from this phenomenon with subsidy payments in the one trillion naira threshold, and even more. In an economy with huge deficit in economic and social infrastructures, it was simply scandalous. It is in the overall interest of the economy and citizens for it to be discontinued.”

Also speaking, President of Manufacturers Association of Nigeria (MAN), Frank Jacobs, said that the way to go is to deregulate fully to solve the lingering fuel crisis confronting the country unendingly.

According to Jacobs, government must ensure that the refineries work at full capacity to satisfy local demands and even export to get more foreign exchange and strengthen the naira.

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