The recent removal of subsidy on fuel by President Bola Tinubu and its aftermath have become one of the most prominent issues in national discourse lately.
The pronouncement has drawn rage and applause from its proponents and opponents; it has also elicited threats of industrial action from labour unions who contend that their members bear the brunt of the new policy.
Nonetheless Tinubu has acknowledged the attendant variables of the policy, its micro and macroeconomic implications and multiplier effects although the initial its implementation may bring temporary difficulties.
“The decision to remove the subsidy is one decision we must bear to save our country from going under and take our resources away from the stranglehold of a few unpatriotic elements”, Tinubu said.in his Democracy Day address to Nigerians.
Consequently, to address those initial difficulties, Tinubu directed the National Economic Council (NEC) chaired by Kashim Shettima, his vice, to produce palliatives measures to ameliorate the impact of the subsidy removal.
Taking the bull by the horn, in NEC’s first meeting under the new administration on June 15, subsidy removal, palliatives, among other issues were addressed.
Espousing on NEC’s deliberations and resolutions, Gov. Bala Mohammed of Bauchi State said the Council received a proposal from stakeholders for a consequential adjustment estimated at N702.9 billion to cushion the effect of subsidy removal on Nigerian workers.
“NEC has taken very far reaching decisions and deliberations on the issue of the removal of petroleum Premium Motor Spirit subsidy and its general impact on the economy, the federation and the sub nationals, including workers and everybody, that are vulnerable.
“Specifically on the issue of National Salaries, Income and Wages Commission, NEC has received recommendations on the various ways and means that the country can use whatever increases that we have in the revenue to mitigate the impact that is going to make on the lives of our workers and all those people involved.
“They gave us a scenario recommending that there should be a consequential adjustment, estimated at N702.9 billion as part of the allowances that should be given as petroleum allowance to all workers and as well as a N23 or N25 billion monthly offer to cushion the effect on workers.
“There were other suggestion that will go a long way in making sure that there is review of salaries and wages”, he told State House Correspondents.
In addition to the palliative, he said, government looked at all the issues, the challenges and problems holistically.
According to him, consequently it set up a small committee to review and come up with a term of reference to organised areas, specifically where this palliative can go to and how it will be dispensed.
“And some of the recommendations that were made include that the states create platforms having strong capacity to handle the implementation of palliatives.
“Additional funding can be sourced from the Federal Government, World Bank, development partners as well as Nigerian private sector.
“In specific, the World Bank can be approached for additional financing on NG-Cares programme. Discussion can start as soon as possible. So these are the recommendations that were made.
“And, NEC will pursue these recommendations for the benefit of the Nigerian, vulnerable and the poor,’’ said Gov. Umar Radda of Kastina State.
One area of concern to stakeholders is the legality of any framework to alleviate the impact of the policy and Gov. Alext Otti of Abia said it also attracted the attention of NEC members.
According him, consequently, NEC recommended that there should be a legislative backing to the policy to avert litigations.
The governor said that the council reflected on the removal of petroleum subsidy vis-à-vis the floating of foreign exchange.
Otti said that the impact of the two actions definitely was increased prices; hence the need to find a solution to the shock they would trigger on the economy and individuals.
Energy experts say automobiles are at the centre of Premium Motor Spirit (PMS) consumption in Nigeria.
They argue that to ensure that more money is saved through consumption of less PMS some radical changes have to happen in the automobile industry as is presently going on in developed and even some developing nations.
The NEC meeting presented an opportunity for the leaders to brainstorm on the automobile industry through a presentation by the Director-General of National Automotive Design and Development Council (NADDC), Jelani Aliyu.
“It was that about six states in the country, including Lagos, Ogun, Anambra, Enugu, Akwa Ibom, Kaduna and Kano that have benefited from domestic production of vehicles or assembling of vehicles by Nigerian companies operating in Nigeria.
“And these companies include INNOSON, Maikano, Dangote Peugeot, Peugeot automobile of Nigeria, Stallion Hundai, Honda, Elizade/Toyota, Coscharis and Ford, Kojo Motors, Jet Systems motors.
“At the moment, about 50,000 jobs have been created by this simple action of either assembling vehicles in Nigeria or producing them Nigeria.
“A great feat is that some of these companies have gone into the manufacturing or assembly of electric vehicles and vehicles powered by Compressed Natural Gas (CNG).
“The impact of this is that the pressure on the price of petroleum products particularly PMS will be reduced; the more we use electric vehicles and CNG powered vehicles.
“Some of the decisions that we were taken include that legislative support will need to be given to these companies that are doing great things in Nigeria”, Otti said.
He said it was important to underscore the point that former president Muhammadu Buhari had made a commitment that by 2060 that Nigeria would join countries that would eliminate fossil fuel powered vehicles.
Otti said the commitment also entailed switching to electric vehicles in pursuit of the net zero emission that some of the countries in Europe, America and Asia had signed on to.
“So if that must happen, then we need to ramp up the production of electric vehicles and CNG vehicles.
“It is estimated that if we give legislative support to this company, that about a million jobs from the 50,000 jobs that exist in that industry would be created.
“It was also suggested that the funding that is required by most of these vehicle manufacturers and assemblers shall be made available to them; so that we begin reduce the dependence on PMS and other fossil fuel powered vehicles.
“It was also suggested that electric vehicle development plan, will fast track the development of electric vehicles should be supported wholeheartedly by the new government”, he said.
Experts in the petroleum industry say from every indication, including Tinubu’s body language, petroleum subsidy is here to stay so it is important that mechanisms are put in place to cushion its effects on the citizenry.
Given its projected positive implications for various sectors of the nation’s economy such as the automobile, it is important that all stakeholders should embrace subsidy removal and give support to alleviation mechanisms being worked out by the Federal Government. (NANFeatures)(www.nannews.ng)
Source: News Agency of Nigeria