Thursday, January 12, 2012

Occupy Nigeria: Fuel Subsidy Crisis & Way Out

We understand Labor and Government are finally talking after much prevarication by our stubborn President. A starting point of compromise and negotiation should look like this:

1. Immediate reversion to the ex-fuel price of 65 naira up until the end of current budget year of March 31, 2012.

2. Empowerment of a joint task force of the EFCC, ICPC, CBN and Nigeria Police under a Sitting Judge to investigate the cabal that have milked fuel subsidy in the last 10 years, recommending fines and jail terms where appropriate. Tax fraud, racketeering and forgery should all be on the table for use to nail the offenders. 

3. Implementation of the following in the new budget:

a. Drastic reduction in the allowances and payments to political in both arms of government with a view to reducing net overhead expenditure to 45% of budget size. This includes removal of security votes, removal of constituency projects, reduction in number of advisors/assistants, reduction in the size of the presidential fleet, and reduction in the size of pools of vehicles maintained by the FG.

b. Law to mandate the RMAFC to tie basic salaries of political officers to the minimum wage (as a multiple) and remove ALL allowances. All benefits to political officers are to be provided as line items in budget, and must be justified by MDAs and agencies. Nigeria's president (as the highest paid) should not earn more than the equivalent of $200,000 per annum and should feed his family from it. Period. 

c. Immediate dissolution of the PPRA, and transfer of powers to meet domestic fuel demand shortfall due to NNPC's moribund refineries to a new agency governed by a board of 2 Representatives of the Executive, 2 Representative of Labor, 2 Representative of Civil Society and 1 Representative of Fuel Marketers. All organizations present their nominee.

d. KPMG or Price Water House is invited to recruit true professionals into this quasi agency. Also, Agency accounts is to be audited by KPMG every three months. 

e. New Agency to put out invitation to tender on supply contracts for open bidding by local companies only- investors in "under construction" private refineries being given preferential treatment, 3 months ahead of anticipated demand shortfall. Where good prices are not secured by bids, agency is empowered to negotiate for direct consignment from international refineries. 

4. Upon implementation of the above in six months, labor shall engage with government with a view of securing some contribution from Nigerians towards reducing the cost of subsidizing importation, in return for elevated level of investments in new local refineries with 3 years. 

5. Pass the Petroleum Industry Bill immediately, split up NNPC into manageable parts-separating the refineries into various companies while commercializing them.


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