Subsidy removal: We won’t be used as bait to impose new price regime —Wabba
The President of Nigeria Labour Congress (NLC) and International Trade Union Congress (ITUC), Comrade Ayuba Wabba, in this exclusive interview with SOJI-EZE FAGBEMI, speaks on the perennial problem of fuel crisis magnified by importation, price modulation, refineries, vested interests within the system as well as loss of jobs and deaths occasioned by hunger due to COVID-19 lockdown. Excerpts.
THE Federal Government has just reduced the fuel pump price to N121 per litre but the NLC is not commending the government or reacting to this development. Why?
We have clearly made the point because the information we have is that last week, after they paid the so-called arrears of subsidy, which some newspapers captured as almost N168 billion, they also gave the information that marketer would now start the importation of refined products. The marketers on the other hand said forex is not available and therefore they have not started. The whole issue about whether there is subsidy or not is a question that has not been interrogated. Beyond the issue of reduction in price is the need to put the template before the public; because among the derivatives of crude oil, you have kerosene, cooking gas, and diesel.
If they are from the same source, you need to be as transparent as possible, which we have been demanding for. Don’t forget that all the issues and action in the oil sector were actually necessitated because of NLC engagements. One of them is the issue of PPPRA, the body responsible for fixing price. Successive governments had promised that we were going to activate our refineries and produce for domestic use and remove all the bottlenecks associated with price fluctuation. As I speak to you, no Nigerian is happy because we are the only OPEC country that is still importing refined products. Marketers on the other hand are saying that forex is not available. What is the exchange rate today? So, we don’t want to be used as a bait to impose a new price regime which clearly is what is going to happen, because if you say marketers should import and it is going to be at the current exchange rate which is above N400 to a dollar, it means even if the price has crashed to $20, because our money has been devalued, then we are going to buy at exorbitant price. The only way to end this exploitation is for us to refine.
Then, over the years why has it been so difficult for the government to do this, knowing clearly it is the only way out?
Interest groups have made this impossible and government is incapacitated. It is not rocket science, it is just interests. When Dr Ibe Kachikwu came in as minister of state for petroleum, he promised that within four years the refineries were going to work. It is there on record but as we speak the refineries are not working. In fact, the latest approach is that the refineries will be reactivated and privatised.
Is that a good way to go? The obvious answer is no. We need to be competitive even in business. Yes, we appreciate the private refinery springing up but there must be competition, so that we are not taken for granted. It is about Nigerians; it is about the welfare of Nigerians. Power is also very strategic.
Why are our companies not optimally performing today? It is because they depend on generators and if the price of diesel is high, the cost of goods and services will remain high. That is why many businesses prefer importing finished products to having their factories producing here. This is the situation. It is good that they have reduced, but the question remains: what is actually the template that is being used?
The issue of whether there is subsidy or not has not been interrogated. Our position is that subsidy is inefficiency, but don’t transfer it to the consumers, because at the end of the day, that is what they want to achieve by saying that they reduced the price and subsequently, the price will just go up.
And they will say it is because there is now deregulation, or there is now removal of subsidy. No, it is like a bait and we don’t want to be joining the conversation of a bait, we want to join in conversation of what will address this issue permanently, where importation and the racketeering associated with importation will be put to a permanent stop.
Is fixing the refineries feasible, and can they still be effective?
It is not that our refineries cannot work, the four refineries are still new. We brought one of the best petrochemical engineers in the world, a Nigerian, to Lagos where we had a retreat. He informed us that our refineries are among the new ones in the world; that we have refineries that are 100 years old and they are working. Refineries can be upgraded from one capacity to another.
Therefore, if our four refineries are upgraded and serviced, they can actually service our domestic market. Why are the refineries not working? It is because of vested interests. In the importation of refined products, a lot of shady deals do happen, that is the truth. So those interests would not allow the refineries to work. In fact, they prefer to buy the refineries, close them and then continue the regime of importation. But they will tell you that the refineries are not serviceable.
But when President Obasanjo came in, his administration signed an agreement and issued licences to some companies to set up modular refineries. Can’t this be the best way to go?
They will not do that because it is more profitable and shrouded in secrecy for you to import, sell and make quick money than wait for the process of refining products. Let me give you one example of the secrecy and contradiction in our system. In other climes, the cost of exploring one barrel of crude oil is not more than $10. In fact, in some countries, it is between $3 to $7. In our own case, they say because of insecurity, the cost of exploring one litre of crude oil is between $31 and $34. How much are we selling it now? Are we making profit or not? Where do we get our foreign reserves? It is actually from oil and gas? It is the mainstay of our economy. We sell crude oil to fund our budget. In other words, they will use the same amount because money has to be available for marketers to import and they pay the money in dollars. If the exchange rate is going up continuously, it then means we are going in a round circle and we have not been able to address the challenge.
So, our position as NLC is that we have remained very consistent and most of the gains that Nigerians have got in oil and gas arose from our agitations, contestations and policy dialogue. We want NNPC to stage a policy dialogue on this issue, so that the issue can be laid to rest once and for all. But this piecemeal approach of reducing price when we know for sure that if tomorrow, importers are going to import, we will be in the same problem because they are going to import at the new exchange range of more than N400 to the dollar is not the way to go. They are going to source their money to buy. Who is going to bear the increase? It is you and me. So if that will happen, it means this is just like a temporary measure or a temporary arrangement to lure Nigerians into the contradiction of transferring the inefficiency that is called fuel subsidy for Nigerians to continue to bear; which is what we don’t want to hear.
NLC does not want to hear this agitation because it will be based on two parameters. One, the price of crude oil at the international market. Two; the issue of exchange rate. These are variables that are not under our control; and if they are variables that are not under our control, how do we put them under our control in order to be competitive? It is for us to look inward to see how we will be able to refine. They claim that part of the high cost of exploration in Nigeria is because of insecurity. The person we brought, that expert, told us how to secure our pipelines.
As you just said, securing the pipeline is a major issue; then the government may be justified considering a way out, such as privatizing the refineries? They are talking of privatizing the refineries. Why should the government privatize them?
There are companies in the world whose main business is to maintain pipelines; you enter into contract with them, their main business is to transfer either goods or refined products from one part of the country to another and you pay them for it. This can be calculated and Nigerians can be part of the process. This is our argument. So, to us, we cannot celebrate what we think is not clear and it is not also a lasting process. This is just like a bait, to say that if now importers are to import, then they will import under a whole regime of high exchange rate of more than N400 to a dollar. You know how much that will translate to in the local market despite the fact that the price is falling. This is what the World Bank and the IMF have succeeded in doing. It means when your currency has been devalued, you are going to buy the product at a very high price. The fact they failed to understand is that many Nigerians cannot afford it.
But must we always be at the mercy of the World Bank and the IMF?
Yes, because you are borrowing from them, you have to listen to them. If you are borrowing from the World Bank, it has to be on their terms. Every administration that has come in, in Nigeria, World Bank will come in with three policies – to devalue the currency, privatize and remove subsidy. These are the three items, consistently from the time of Obasanjo to date and we have not seen an end to it yet.
We have continuously devalued our currency. You remember from N22 to a dollar, from N1 to a dollar, from 75 kobo to a dollar. Today, we are talking of N450 to a dollar. Are we making progress or we are at a stagnant position or going round the circle. This is the argument that we need to interrogate before we say we are appreciative or celebrating.
You spoke of vested interests and interest groups that have incapacitated the government and made all efforts impossible. Can they be more powerful than the government or we have a government that is not up to the task?
They are not more powerful than the government, but if people have inherent interests in a particular system that works to their benefit, and they have employed so many people to be part of it, it then means it will be difficult to put a stop to it. But if there is the political will, I believe that turning around our refineries cannot take more than two years and every person knows that. We need the political will that will make the refineries work; which is what we should address.
What constitutes the so-called subsidy? If we are producing (refining) at home, that subsidy will go naturally. That is what we are advocating for, don’t transfer it to Nigerians. If we refine products domestically, that would go. You don’t have to pay tax. If you pay, it would be minimal. You don’t need to pay for freight. You don’t need to pay for demurrage. All of these would go. That is our argument. We have remained very consistent on this because we have more information about the sector. That is why our argument is not either to celebrate or to appreciate. No, it is to interrogate. How long will it take to build a new refinery? It is 18 months.
Look at the entire Niger Delta, they are refining illegally. If they are refining illegally, can’t we organise them into cooperatives, into small and medium size refineries? We can organise them and then it will add to the product we require. Some of the products in the market are actually refined illegally. Why must we continue to do that?
You have consistently kicked against retrenchment and sack of workers under the guise of COVID-19, but it seems it is becoming more rampant as more companies are laying off workers. How will you react to this situation?
The situation as you are aware is a global challenge and what we are trying to do is to mitigate the challenge, and in mitigating the challenge we need to have some responses in place. That is what we are doing. In some cases, we have been able to raise responses that have saved salaries cut and also job losses. But in some cases like those in the private sector, it has been very difficult for them because these are businesses that have to run on a daily basis. It is on the basis of what they have been able to sell that they will be able to retain their workers. So, it has been a very difficult situation and that is why we have conversed that we should just find a way of opening things up because whether we like it or not, this is a disease that will have to stay with us for a very long time. Even the World Health Organisation has said so.
Take for instance, the important sector; the road transport. It has been on a stand still for more than two months and these are private businesses. They have lost means of revenue. Some cannot take care of their families. The so-called palliatives are not reaching them.
This is where we are. So, that is why our idea from the beginning has been how do we manage the economy in such a way that we don’t also put many lives in jeopardy? People are dying because they don’t have what to eat. They cannot take care of their families, not even because of COVID-19. People are dying because of hunger.
So, it is to strike a balance between continuous lockdown and how we can open up gradually so businesses can kick off, so that we can save the little jobs that we have because unemployment is a challenge in Nigeria. Our position still remains the same. Yes, we will continue to respond, but there is an extent to which you can also force an employer that has no money to pay wages, to continue to retain workers. There is an extent he can go. There is an extent the goodwill can go. But some of them like the multinationals we know that over the years they have accumulated profits, and what we have advised is that they use their profits now to also appreciate those workers that made the business to blossom over time. That is what happened in the banking sector where the Federal Government and the CBN came in very strongly and said they should not retrench because when they were in difficulties, it was our common patrimony that was used to bail out the banks.
Some of the states too are trying also to reduce workers but we have been up and doing with it. Where they have unions, the unions should also be able to step up discourse and contestation and scale it up to us where we can then come in. It is a very precarious situation, we just have to manage it because it is a global issue and we have to find a way and means in our own clime to manage it.
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