By Cross Udo, Abuja
As the daily consumption of fuel in Nigeria falls from 66 million litres to 41 million daily, causing hardship, the Federal Government is considering legislative and financial support for motor vehicle manufacturers.
To this end, the authorities are recommending the institution of consequential adjustment payment, estimated at N703bn, as petroleum allowance to all workers, as well as a monthly offer of between N23bn and N25bn, to cushion the effect of the hardship on workers nationwide.
This was part of the decisions reached yesterday by a meeting of the National Economic Council (NEC) presided over for the first time by Vice-President Kashim Shettima.
Speaking with State House correspondents at the Council Chamber of the Presidential Villa in Abuja at the end of the meeting, Bauchi State Governor, Bala Mohammed, said, “And so they recommended that there should be a consequential adjustment, estimated at N702.92bn as part of the allowances that should be given as petroleum allowance to all workers and as well as an N23 or N25bn monthly offer to cushion the effect on workers.”
*As FG considers payment of N703bn to workers
To implement the new strategy NEC said it is considering the payment of consequential adjustment of a total of N702.919bn, based on the recommendation of the National Income, Salaries and Wages Commission to workers to cushion the effect of the fuel subsidy removal scheme of the President Bola Tinubu administration.
The government also said that the recommendation for another payment of an N25bn monthly petroleum allowance to workers to mitigate the effect of the termination of payment of subsidy will also be considered.
The Bauchi governor hinted that the government had looked at all the issues on subsidy removal, including the challenges and problems holistically, “and set up a small committee of the council to review and come up with a term of reference that will help to alleviate the problem of workers and other vulnerable groups.”
According to him, the committee is composed of the governor of Kebbi State, as the chairman. Other states involved are Anambra (representing the South-East geopolitical zone); Benue (North-Central); Kaduna (North-West); Bauchi North-East), Cross River (South-South), and Oyo (South-West).
Mohammed said other relevant agencies include the Budget Office, a representative of the Central Bank of Nigeria (CBN), a representative of the Office of the Attorney-General of the Federation (AGF), as well as those of the Nigeria National Petroleum Company Limited (NNPCL); Trade Union’ Congress (TUC) and the Nigeria Labour Congress (NLC).
The committee, he added, is expected to submit its recommendation within two weeks to the NEC for a holistic decision that will be taken immediately to alleviate the problem that may be encountered by the subsidy removal.
He said, “The NEC had 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 this is going to make on the lives of our workers.
“And so they recommended that there should be a consequential adjustment, estimated at N702.92bn, as part of the allowances that should be given as petroleum allowance to all workers, and as well as an N23 or N25bn monthly offer to cushion the effect on workers.”
Making clarifications, Mohammed said, “I think what I said, maybe I didn’t say it very clearly, is that various scenarios were given by the presenter on the issue of national salaries, income, and wages, and this N702bn-plus was suggested as an allowance for the cost of living adjustment allowance by the Organised Labour, and the other one is a petroleum allowance.
“The governor of Ogun has told you that there are other allowances here and there, but concerning Labour, these are some of the few allowances that they have suggested and that of petroleum, they said will range from N23.5bn to N45bn per month, depending on what is in the kitty for distribution, or sharing.
“So, the N702bn is a suggested sum for Labour to cushion the effect on workers on a new allowance that will be tagged cost of living adjustment allowance.”
He said the input of the committee on palliatives earlier set up and headed by former Vice-President Yemi Osinbajo would not be discarded but integrated into the ongoing process.
*Mulls, legislative, financial support for vehicle manufacturers
Also speaking, Abia State Governor, Alex Otti, said, “As part of the inaugural National Economic Council meeting today, the major focus was on the removal of petroleum subsidy and implied the removal of subsidy on foreign exchange, which has led to some convergence of some sort.
“The impact of these two actions is increased prices. And as a way to solve the problem and reduce the shock, a presentation was made by the National Automotive Design and Development Council on the great things that are happening in the automotive industry.
“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. These companies include INNOSON, Maikano, Dangote Peugeot, Peugeot Automobile of Nigeria, Stallion Hyundai, Honda, Elizade/Toyota, Coscharis and Ford, Kojo Motors, and Jet Systems motors.
“At the moment, about 50,000 jobs have been created by this simple act of either assembling vehicles in Nigeria or producing them in Nigeria. A great feat is that some of these companies have gone into the manufacturing or assembly of electric vehicles and vehicles powered by CNG-compressed natural gas.”
He stressed, “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 were taken include that legislative support will be needed to be given to these companies that are doing great things in Nigeria. It is important to underscore the point that the former president had committed that by 2060 that Nigeria would join countries that will eliminate fossil fuel-powered vehicles and move to electric vehicles in pursuit of the net zero emission that some of the countries in Europe, America, and Asia have 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 these companies, 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 to reduce the dependence on PMS and other fossil fuel-powered vehicles.”
Finally, he stated, “It was also suggested that the electric vehicle development plan will fast-track the development of electric vehicles and should be supported wholeheartedly by the new government. The reality is that we cannot run away from the removal of petroleum subsidies. We should have done it a long time ago.
“But we must salute the courage of the current government to bite the bullet and remove it. Initially, it had reduced the consumption from about 66, 67 million litres a day to just about 40 million. And as time goes on, the consumption will continue to go down.
“We know there are implications, particularly for the poorest of the poor. And that is why this government is seriously looking at palliatives to at least deal with the shock that the poor of our society goes through.”
On his part, Ogun State governor, Dapo Abiodun, said, “What I’ll be speaking on is the contribution by some of the key oil and gas sector heads. We had input from the NNPC, NMDPRA – Nigerian Midstream Downstream Petroleum Regulatory Authority.
“We had from the marketers and of course, it was a robust dialogue, cross-fertilisation of ideas by all the executive governors across the length and breadth of Nigeria today.”
Also offering his input, Katsina state Governor, Dikko Radda, said, “We just had our maiden meeting of the NEC Economic Council. And so many issues were discussed and resolutions were made on some issues. Some issues were sent to various committees for more deliberations. Part of the issues that we discussed today is palliative measures to mitigate the effect of the petroleum subsidy through the NG-Cares programme.”
Radda noted, “As you are aware, the NG-Cares Programme is a programme that started in 2021 running up to 2024. And then, it is to provide some emergency on palliatives, social needs on so many issues ranging from small farmers holders, MSMEs, and other interventions.”
*To approach World Bank for loan
The project, the Katsina State helmsman added, “Is a $750m (loan) from the World Bank. And it was a long time ago. And some of the recommendations that were made include the state Cares platforms having a strong capacity to handle the implementation of palliative to the new and existing poor and vulnerable individuals, households, and farmers; the local economy of operators in the country.
“Additional funding can be sourced from the Federal Government, the World Bank, development partners, as well as the Nigerian private sector. In specific, the World Bank can be approached for additional financing on the NG-Cares programme. Discussion can start as soon as possible.
“So these are the recommendations that were made. And the economic council will pursue these recommendations for the benefit of the Nigerian, the vulnerable, and the poor,” Radda submitted.
