- Title: NIGERIA: Country defends fuel subsidy removal to unions, public
- Date: 28th December 2011
- Summary: LAGOS, NIGERIA (RECENT) (REUTERS) TOWN HALL MEETING OF MINISTERS, UNION LEADERS AND THE MEMBERS OF THE PUBLIC NGOZI OKONJO-IWEALA, NIGERIA FINANCE MINISTER AND ALISON MADUEKE, PETROLEUM MINISTER SEATED NEXT TO OTHER DELEGATES GUESTS TAKING NOTES VARIOUS OF SCREEN READING 'KEY FACTS ABOUT SUBSIDY' (SOUNDBITE) (English) NGOZI OKONJO-IWEALA, NIGERIA FINANCE MINSTER SAYING: "When we deregulate and we get government out, it means limited interventions in certain prices by the government and it allows for more transparency in the way things are done in the sector. It also allows for free entry and exit of those who want to operate in that sector because they have the incentive to come in place for better competition." VARIOUS OF PEOPLE LISTENING TO SPEAKERS (SOUNDBITE) (English) ALISON MADUEKE, NIGERIA MINISTER FOR PETROLEUM SAYING: "We are looking not infact at necessarily at subsidy removal, if you want to call it, it is actually a subsidy transfer, because we are looking at the real benefits to the economy and to Nigerians, that can be handed over to Nigerians, that all Nigerians across the spectrum will feel and see from the get go." MEMBERS OF GUESTS LISTENING TO SPEAKER (SOUNDBITE) (English) BEN BRUCE, BUSINESSMAN, SAYING: "If we had a policy, we would only import the most fuel efficient vehicles in the world, a Prius gets 60 miles a gallon, and the car we use gets 5 miles a gallon, if you use the Prius as a taxi, taxi fares would act6ually drop, because you will be spending only five percent of the cost today to get you around. If you use fuel efficient buses, bus fares could actually drop." STREET SCENES (SOUNBDITE) (English) UNIDENTIFIED LAGOS RESIDENT SAYING: "If you allow Nigerians who have money to come into the stuff and be key players in the business to do maybe others independent stuff and all that there will be competition, the price will come down. But we are scared that there will be restrictions they will not allow players to come into the thing and the price might not drop." VARIOUS OF CARS DRIVING ON STREET
- Embargoed: 12th January 2012 12:00
- Keywords:
- Location: Nigeria, Nigeria
- Country: Nigeria
- Topics: Economy,Energy
- Reuters ID: LVA7IERRB9ASRE6HS4IKDIAO8S0H
- Story Text: Nigeria's finance minister, oil minister and central bank governor recently went on a joint charm offensive to defend unpopular plans to remove a fuel subsidy they said was wasteful and would bankrupt future governments if not tackled.
Speaking from a podium at a town hall forum in the commercial capital, Lagos the three tried to persuade labour and transport unions, civil rights groups, and other members of the public - most of who bitterly oppose the subsidy removal.
Letting markets determine the pump price of petrol in Nigeria would push it up to 120 naira ($0.74) per litre, Finance Minister Ngozi Okonjo-Iweala said, from 65 naira, but it would save over 1 trillion naira ($6.13 billion) in subsidies in 2012.
She also added that this would improve things for those who want to invest in the oil sector.
"When we deregulate and we get government out, it means limited interventions in certain prices by the government and it allows for more transparency in the way things are done in the sector. It also allows for free entry and exit of those who want to operate in that sector because they have the incentive to come in place for better competition," said Okonjo-Iweala.
President Goodluck Jonathan wants to phase out the subsidy as soon as possible. Previous attempts have been caught up in rancorous debate.
Many Nigerians feel the subsidies are the only benefit they get from living in an oil-rich state.
Nigeria produces more than 2 million barrels per day of crude oil but a lack of investment in refineries and infrastructure means almost all of this is exported, while refined fuel products such as petrol have to be imported at great cost, making the subsidy a huge drain on public finances.
The Central Bank says Nigeria spent $16 billion of its foreign exchange on costly imported fuel in the first 11 months to this year; $8 billion sold by the bank to petroleum importers and a further $8 billion spent by the Treasury on the subsidy itself which is unsustainable on the government's finances.
The country's minister for Petroleum, Alison Madueke said removal of subsidies would bring more benefits to the common man.
"We are looking not infact at necessarily at subsidy removal, if you want to call it, it is actually a subsidy transfer, because we are looking at the real benefits to the economy and to Nigerians, that can be handed over to Nigerians, that all Nigerians across the spectrum will feel and see from the get go," she said.
Previous attempts by governments to remove the subsidy have been so unpopular they prompted strike action and street protests.
Many Nigerians feel all avenues have not been explored and that the public is possibly going to soon lose out.
"If we had a policy, we would only import the most fuel efficient vehicles in the world, a Prius gets 60 miles a gallon, and the car we use gets 5 miles a gallon, if you use the Prius as a taxi, taxi fares would act6ually drop, because you will be spending only five percent of the cost today to get you around. If you use fuel efficient buses, bus fares could actually drop," said Ben Bruce, a businessman.
A common argument also put forward by Nigerians against the subsidy removal is that they do not trust the government to ensure that their interests will be taken care in future.
"If you allow Nigerians who have money to come into the stuff and be key players in the business to do maybe others independent stuff and all that there will be competition, the price will come down. But we are scared that there will be restrictions they will not allow players to come into the thing and the price might not drop," said an unidentified Lagos resident.
It is likely to be a bitter pill to swallow, although the government has promised to sugar it by providing safety nets to the poor to compensate them for higher fuel costs. - Copyright Holder: REUTERS
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