Nigeria: FG, States On War Path – Tension Over Sharing Of Subsidy Funds

There were strong indications over the weekend that the Federal Government and state governments may be heading for a collision over the sharing formula of the yet to be withdrawn subsidy on Premium Motor Spirit, PMS, otherwise known as petrol.

Information available to Sunday Vanguard suggests that this is sequel to last week’s move by the Federal Government on the expected allocation of the funds that would be realized from the subsidy once they are withdrawn.

But the leadership of the Nigeria Labour Congress, NLC, is already kicking.

The NLC is insisting that there “would be nothing new or markedly different from what had happened in the past when the Federal Government increased the prices of petroleum products in the name of removing subsidy”.

Meanwhile, the Initiatives, a body comprising some of the best minds in the House of Representatives, working with some leaders in the country and cutting across ethno-religious and political leanings, rose from its 10th National Roundtable, warning that should the subsidy removal issue be mis-handled, Nigeria risked the Arab-Spring-type of revolution.

FG, states on war path
Sunday Vanguard reliably gathered from one of the governors in the southern part of the country that the “Federal Government has sent a document to us”, on how the proceeds from the petrol subsidy removal would be shared..

“The document contains the allocation that would likely come to my state in the form of subsidy allocation”, the governor added.

However, the parameters employed by the Federal Government in determining the sharing of the funds remained foggy.

For instance, whereas the 2010 budget reportedly had a built-in subsidy funds amounting to N500billion (but which was overshot), the 2011 budget reportedly had an in-built funds for subsidy to the tune of N240billion.
Yet, information available and for which the Federal Government continues to insist that it cannot continue the subsidy funding is that a whopping N1.45trillion has already been spent outside of the N240b.

According to another state governor during a discussion, on Friday, “the N1.45trillion has been spent by the Federal Government without recourse to the National Assembly or even the state or local governments.

“The money, the N1.45trillion, is our commonwealth and the Federal Government spent it without recourse to any of the two other tiers of government; neither was there any appropriation from the legislative arm. We cannot continue like that”, the governor said.

“What that meant”, the palpably angry governor continued, “was that the National Assembly did not know about it neither did the state governments buy into the deal”

Sunday Vanguard discovered that the frenzy now, which verges on tension, is that state governments are seeking clarification on the issue of authentication of the figures

Questions being asked include but are not limited to the following, according to Sunday Vanguard sources, “Why should the state governments agree to the figures being thrown around by the Federal Government?

“How did the Federal Government do the computation to arrive at the figures it has sent to the states?

“What is the corresponding quantity of petrol that was moved the preceding year and the amount that would be consumed in the coming year that gave vent to a situation that would equate, in monetary terms, the cost of subsidy that has been sent to the states?
“There is also the seeming disequilibrium between the real fuel consumption in some states as against the assumed consumption pattern leading to the subsidy cost shared out to the states”.

It’s business as usual, NLC
Meanwhile, the Secretary General of the NLC, Owei Lakemfa, in a chat with Sunday Vanguard, sought further clarifications on the matter.

Lakemfa’s words: “What we see is that this Jonathan administration is not about to transform anything; it is just business as usual.

“The story the Federal Government is selling is that it would save about N1.2trillion naira by removing subsidy, but when you look at the 2012 budget and the allocation to sectors, there is nowhere that the N1.2trillion has been captured in such a way as to suggest that the masses would benefit.

“If you look at the area of public works, how much was allocated such that you can then begin to imagine the employment that would be likely generated?

“Even Mr. President that had declared that a body of prominent Nigerians would be instituted to help manage the resources, from the way the budget has been packaged, we do not see where those eminent Nigerians would come in.

“Now that you are talking about the share of the funds, once the funds have been shared, what roles would those eminent Nigerians then play and where would they be able to play the roles?

“You remember that the state governments had made it clear that one of the conditions for the payment of the minimum wage would be the removal of subsidy on petrol. So, the question to ask is: When did the state governors change their stand on that?
“In 2011, government said it set aside N50billion for job creation, apart from sloganeering, where were the jobs created? On paper?

“Government is now talking about increasing tariff on rice and the question we ask is, is there any plan afoot for increase in local rice production that is a national staple?
“That is why we say that it is business as usual and nothing is about to change”.

Initiatives’ warning
Rising from its 10th National Roundtable, the Initiatives warned of the possible consequences of a mishandling of the subsidy removal issue.
Part of its communiqué at the end of its Roundtable on “Deregulation in an emerging economy”, reads:

1. That the issue of subsidy is a very sensitive one, which has deep and overriding implication for the welfare of the majority of Nigerians, and so must be looked at dispassionately and its merits and demerits properly considered, rather than the on-going play to the gallery;

2 That the government should embark on massive sensitization programme in order to gain the confidence of the citizens and avoid any backlash that would be similar to or replicate the ‘Arab Spring’ experience;

3. That the government should encourage and put in place mechanisms for continuous public discourse on the deregulation processes with a view to ensuring adequate public information and enlightenment as a way of eliciting public confidence and trust.

Source: Vanguard

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