Subsidy: Jonathan, economic team meet students

President Goodluck Jonathan

Subsidy: Jonathan, economic team meet students

In a strategic move to douse tension among the National Association of Nigerian Students (NANS) and win support, President Goodluck Jonathan and his economic team have met with NANS leaders in Abuja to calm the ill-feelings of students on the removal of fuel subsidy.

The meeting which had in attendance the president's economic team, dwelt on the need for NANS leaders to mobilise its members rather than pose as a storming block to the removal of the subsidy.

Jonathan, who was accompanied by the Vice-President, Alhaji Namadi Sambo; Ministers, the Secretary to the Government of the Federation (SGF), Senator Anyim Pius Anyim; and the Chief of Staff to the President, Chief Mike Oghiadomhe, hinted that the future of Nigeria would depend squarely on the difficult decisions we make today in growing the economy to create jobs and prosperity for young Nigerians.

Budget deficit

He stated that currently the country runs an annual budget of 26 percent capital expenditure and 74 percent re-current, adding that apart from the fact that this lopsided expenditure pattern cannot meet the economic aspiration of Nigerians, even the 26 per cent capital budget is borrowed annually because of the huge budget deficit government is compelled to implement.

The President told the student leaders that the situation in which Nigeria has to borrow to carry out capital projects as well as part of its recurrent expenses was an obvious road to disaster and portends great danger ahead.

Subsidy burden

Explaining further, Minister of Information, Mr. Labaran Maku quoted the president to have stressed that in the midst of all these difficulties staring the country in the face, the country has continued to bear a huge subsidy burden of N1.3Trillion on fuel consumption.

The president noted that the situation was so precarious that in the first eight months of this year alone, government was forced to dole out N1.3 trillion in payment to offset cost of subsidy to fuel importers.

He said currently, Nigeria which is in desperate need to rehabilitate its infrastructure in all sectors is compelled to spend almost One-Third of its annual budget on fuel subsidy. President Jonathan explained that if this continues, in two to three years, the economy will crash.

Maku stated that in the past, every government avoided taking the difficult decision on this matter and instead resorted to borrowing to carry out government transactions thereby piling up huge domestic debts that today threaten the future of young Nigerians and future generations.

Critical infrastructure

Vice-president Namadi Sambo, in his presentation, said that measures have been mapped out by government to reinvest proceeds that will accrue from deregulation in critical infrastructure, and in welfare programmes for Nigerians.

Allso, the Minister of Finance and Chairperson of the Economic Management Implementation Team, Dr. Ngozi Okonjo-Iweala had briefed the student leaders in statistical terms about the danger signals in the economy which needed urgent measures to address.

She said the deregulation of the downstream sector of the oil industry was only one of these measures, as government was also taking other measures to address issues of leakages in the economy and aggressive strategy to earn more from the maritime and other sectors of the economy.

She said presently, Nigeria offers the cheapest fuel in West Africa and one of the cheapest in the world including among many oil producing nations.

She showed the students statistics of fuel prices in several countries of the world, which showed clearly that even after deregulation, fuel prices in Nigeria will be among the cheapest in the world.

The finance minister explained that the reason why in some countries prices were high after deregulation of their downstream sector was because most countries levy tax on fuel and that in order to keep prices at reasonable levels after deregulation, government has decided not to levy tax on fuel.

Iweala further stated that the President had given the go ahead to deal with all issues of leakages in the economy against which measures are currently being taken.

Reaction

NANS President, Dauda Muhammed said though the meeting took place, there was no agreement reached.
According to him: "The meeting on our part dwelt on ASUU strike and increase in school fees, we discussed about how we can go back to the classroom, because, we are not happy that we are out of school".

"The President discussed the issue of the removal of fuel subsidy, but for us, it wasn't our priority as the NANS Senate has set up a committee on the issue", he said.

According to Maku, the President is expected to continue the dialogue with ASUU to resolve the ongoing dispute between the government and university teachers.

NP/Ehimen