1st May, 2012
Ayorinde Oluokun/ Abuja
The Nigeria Labour Congress, NLC has advocated for a comprehensive reform of the downstream oil sector while vowing to resist any further increase in the price of petroleum products in the country.
Speaking at this year’s May Day celebration in Abuja on Tuesday, Comrade Abdulwaheed Omar, President, NLC argued that described the increase in price of a litre petrol from N65 to over N144 by government last January as a “bad policy”, a fact which he said was reflected in the overwhelming response of workers and indeed Nigerians to a call for national strike over the issue.
Omar insisted that Labour position is that the N97 per litre government agreed to after the six days national strike is still too high. He also lamented that the Belgore Committee set up by government for negotiation with Labour over the issue of petrol price “has remained till today moribund”.
The President of NLC however warned Nigerians to remain vigilant because of those he described as elements in government adamant on effecting increase in price of petrol despite the massive protests of January. “Some of them are already drawing up strategies for a further increase in the price of petrol in the guise of removing the remaining subsidy”, said Omar.
“Our position is that the initial price of ₦65 per litre is sustainable if we purge the subsidy scheme of corruption and graft and pursue a programme of domestic refining. The recent report of the House of Representative Committee on the Operation of the Subsidy Scheme has clearly demonstrated the monumental sleaze in the scheme and indeed the entire downstream sector”, he added while maintaining that the findings of the committee constitute only a tip of the iceberg of the monumental corruption in the oil sector.
To keep the price of petrol for domestic consumption low, Labour put forward a proposal for a comprehensive reform of the downstream sector which it said will embodies three crucial elements: A revival of domestic refining through existing refineries and promotion of new refineries, a re-institutionalisation of a policy of differential between the price of crude for domestic consumption and for export, and promotion of Competition.
“We believe that our domestic refineries must be made to work. Appropriate incentives need to be worked out to attract new investment in refining.
“While domestic refining by itself is not sufficient to guarantee product price stability, there are clear gains to be derived from domestic refining as opposed to imports.
There are the overall gains in employment and general economic activity. There are also the obvious savings in freight and insurance costs.
“In addition to these, domestic supply of products will relieve the destabilizing pressure of import dependence on the exchange rate. It is worth emphasizing that a reform policy based on importation of refined products is inherently destabilizing for the domestic economy.
“Importation necessarily puts pressure on the exchange rate of the naira. Since the exchange rate is one of the two major determinants of the domestic price of petroleum products in an import based reform regime, a destabilizing mechanism becomes automatically a feature of the system.
“As long as the domestic prices of products continue to be tied to the international price of crude, the crisis will remain. It is in recognition of this that we propose a re-introduction of a modified policy of guaranteed crude price for domestic consumption.
“Rather than returning to the fixed guaranteed price as earlier operated, we propose a price band within which the price of crude for domestic consumption can fluctuate.
“As for the specific band, we propose the cost of extraction and delivery to the gates of refineries as the floor plus a fluctuating factor which is the target inflation rate set by government policy in the current year.
“The adoption of this mechanism will ensure a stable price regime that will allow economic actors plan.
It should be emphasized that the guaranteed price should not be on offer to only NNPC, but to all refiners and to the limit of the crude actually refined for domestic consumption.
“Given that in the short run, there are no domestic refiners, tenders should be opened for the domestic crude for potential refiners to bid with clear timelines on domestic refining.
“In the short term, which should not exceed two years, bid winners will be allowed to arrange off-shore contract refining.
“The downstream sector as presently constituted is characterised by industry dominance by NNPC and general monopolistic tendencies. Recommendations need to be made on how to open up the sector to competition.
“We need to design strategies for opening up monopoly assets and infrastructure (such as import receptacles, storage depots and pipelines) to competitors, who must of course pay economic fees.
“It needs to be recognised and emphasized that the implicit subsidy implied by the guaranteed crude price scheme need not undermine competition and deregulation”, NLC President said.
He also argued that governments all over the world have continue to subsidise different areas of their economy.
The theme of this year’s May Day is “Right to Work, Food and Education: Panacea to Insecurity.” Omar said the theme was chosen based on the huge challenges of insecurity the country is facing today, especially the escalation of the Boko Haram threats that have manifested in several bombings and attacks across the country, resulting in the loss of hundreds of lives.
“While we have unequivocally condemned these senseless attacks, whenever they have occurred, we are, nevertheless, convinced that the ease with which terrorist ideologues are able to recruit foot soldiers to carry out their nefarious acts has roots in the decaying social conditions in our nation. Joblessness, hunger and poverty, as well as lack of access to education are creating a social quagmire among our youths, thus making them easy prey” said Labour.
“We call on governments at all levels to constructively engage with citizens to urgently design and implement policies and strategies on job creation, food security, mass and qualitative education and overall poverty eradication.
“The people need to be part and parcel of this process so as to avoid the pitfalls of the present, where huge sums are spent annually on social programmes with virtually no progress to report as illustrated by the results of the recent survey by the National Bureau of Statistics which shows that 69 percent of Nigerians continue to live in abject poverty.
“This shows that more than a decade of the Poverty Eradication Programme and the huge resources committed to the programme, the proportion of Nigerians living in poverty has actually increased from 59 percent in 2000; a ten percent increase in twelve years.
The Congress also deplored what he described as jobless growth being recorded by the country.
“We continue to report annual rates of growth of the Gross Domestic Product in excess of 7 percent even while unemployment continues to swell. Just last month, we were told that we were now the third fastest growing economy in the world, after Mongolia and China. Yet, the ranks of the unemployed continue to grow. Conservative estimates put the unemployment rate at 25 percent. On average, graduates of the nation’s universities and polytechnics remain unemployed four years after the National Youth Service Corps discharge”.
The Congress noted that despite its campaign since last year, many state government in the country are yet to implement the National Minimum Wage which it described as a constitutional matter and a right of the Nigerian working people.
“While it is unfortunate that governors in states like Enugu, Anambra, Ebonyi and Kwara have continued to deny workers their legitimate wages, and the struggle continues in Oyo State, it is tragic that the Federal Government has been reluctant, or failed to pressure such governors not to continue their violation of the country’s constitution by failing to pay workers their legitimate salaries in line with the law.
“ There is also a contagious revisionist movement being initiated in states like Kebbi and Kogi to reverse the gains of the new Minimum Wage struggles while the Adamawa State government is violating the constitution and labour laws by tempering with the aspects on labour which is on the Exclusive Legislative List”.
The Congress however said it will continue to campaign for the implementation of the N18,000.00 national minimum wage and if necessary, will call out its members for a national strike over the issue.Reply to: