Subsidy Reinvestment and Empowerment Programme

Potential Benefits from Subsidy Reinvestment and Empowerment Programme (SURE-P)

A few days ago I received a mail on Linkedin from the Minister of Finance, Mrs Ngozi Okonjo-Iweala (Nigeria) trying to sell the Subsidy Reinvestment and Empowerment Programme (SURE-P).

Subsidy Reinvestment and Empowerment Programme

I doubt if the Minister sent this mail personally (it is immaterial who did), what is of importance is that the Minister or her team is taking the time and pain to reach out to Nigerians to generate support for the Subsidy Reinvestment and Empowerment Programme (SURE-P). This is simply called Social Media Marketing at its bestl

Details of the Subsidy Reinvestment and Empowerment Programme (SURE-P)

Against the backdrop of the recent debate on the removal of fuel subsidy and the calculated misinformation being peddled by opponents of this policy, it is pertinent to highlight, in more tangible terms, some of the significant allocations that have been made to essential sectors of the economy, both in the 2012 budget as well as the recently-launched Subsidy Reinvestment and Empowerment Programme (SURE-P). This programme is a 3—4 year programme designed to mitigate the immediate impact of the removal of fuel subsidy and accelerate economic growth through investments in critically-needed infrastructure.

It is noteworthy that, while the 2012 budget allocated the best possible amounts to these critical projects, additional resources are allocated to the same projects in the Subsidy Reinvestment and Empowerment Programme (SURE-P) to ensure that they are completed at faster rates than envisioned in the 2012 budget.

Some of the projects and allocations are as follow:

WORKS

• N11bn is allocated to the Abuja-Lokoja road in the 2012 Budget, with an additional N14bn from the Subsidy Reinvestment and Empowerment Programme (SURE-P).
• N6bn is allocated to Benin-Ore-Shagamu, with an additional N16.5bn to be financed through SURE Programme.
• N3bn is allocated to Port-Harcourt–Onitsha road, with an additional N5bn from the Subsidy Reinvestment and Empowerment Programme (SURE-P).
• Similarly, N18.5bn is allocated to Kano-Maiduguri road, with an additional N1.5bn from SURE Programme.
• Provision is made in the 2012 budget for construction of the Second Niger Bridge (N2bn) and Oweto Bridge (N3.5bn). An additional N5.5bn and N4bn would be spent on both bridges respectively from the SURE Programme.
• Provision of N23.5bn is made for maintenance of roads and bridges across the country through Federal Road Maintenance Agency (FERMA).

POWER

• The total amount allocated to the power sector (including Bulk Trader, Nelmco, and Multi-Year Tariff Order (MYTO) and PHCN privatization) is N248bn.
• A sum of N392 million allocated to Nigeria Electricity Liability Management Company and N650 million for Bulk Trader.
• In the 2012 Budget Proposal, a sum of N3.7bn is allocated to the Kaduna Dual Fired Power Plant.
• Similarly, N2bn is allocated for the completion of the small and medium hydro-electric power plants Oyan Dam Hydro Power (Ogun state).
• A sum of N2.2bn is allocated for feasibility studies regarding the establishment of coal fired power plants.
• Additionally, N155bn will be spent on Power projects (Mambilla power plant, Coal Power Plant and Small Hydro power plants) through the SURE-P over the period 2012-2015.

AGRICULTURE & RURAL DEVELOPMENT

• The total allocation to the sector is N78.98bn
• N4bn is allocated to research and mechanisation
• Provision of N1.22bn is made for the construction of access roads to each of the 6 Staple Crop Processing Zones.
• Value Chain: N720 million is allocated to the development of value chains in cocoa, rice, maize, livestock, cotton and others sectors.
• N1bn is allocated to the Price stabilisation scheme.
• N610 million to facilitate for the access to credit, fertilizers and seeds.
• An additional sum of US$500m is expected from Development Finance Institute to support the sector.

TRANSPORT

• Rail lines: The 2012 budget allocates N3.95bn, N3.15bn and N3.35bn to the construction and completion of Abuja-Kaduna, Lagos-Ibadan and Ajaokuta-Warri rail lines respectively. In addition, the Subsidy Reinvestment and Empowerment Programme (SURE-P) allocates N11.6bn to the Abuja-Kaduna line and N9.3bn to the Lagos-Ibadan line.
• Provision of N800mn is made for the procurement of wagons, coaches and locomotives.
• Dredging project: N1.2bn is allocated to the dredging of Lower River Niger (Warri-Baro).

EDUCATION

• The total allocation to the sector is N400bn
• N11.6bn is allocated for existing universities.
• N7.7bn is allocated for the restructuring to Unity Schools.
• National Teachers Institute: The 2012 budget allocates N3.5bn to the retraining of teachers for basic education and training in innovative teaching.
• Moreover, an additional N24.6bn will be spent on vocational training centres from the Subsidy Reinvestment and Empowerment Programme (SURE-P).

HEALTH

• N4.6bn is allocated to the Polio eradication programme
• N3.5bn is allocated to the procurement of HIV/AIDS Drugs
• The sum of N174 million is allocated to Integrated maternal, newborn and child health strategy, including capacity building, and promoting school health initiatives.
• N8.42bn is allocated to Federal University Teaching Hospitals.
• N6bn and N3.6bn are allocated to the procurement of vaccines and midwifery service scheme respectively.
• An additional N73.8bn will be spent on Maternal and Child heath from Subsidy Reinvestment and Empowerment Programme (SURE-P).

AVIATION

• Various Airports: N22.2bn is allocated for the modernization of airport terminals and upgrading of facilities in the six geopolitical zones of the country.

FEDERAL CAPITAL TERRITORY ADMINISTRATION

• N3.1bn is allocated to the construction of a 20,000m3/hr lower Usuma dam Water Treatment Plants.
• N2.5bn is allocated to the construction of Cultural and Millennium Tower.
• N1.25bn is allocated to the Development of Idu Industrial Area (1b Engineering Infrastructure).
• Various road projects including the completion of roads B6, B12 and circle road (N4bn), rehabilitation and expansion of airport Expressway (N7.53bn).

NIGER DELTA

• East-West Road (Section I—V): The 2012 budget allocated N22.2bn to this road. In order to accelerate its completion, an additional N21.7bn is allocated in 2012 from the SURE programme.

WATER RESOURCES

• N1.2bn is allocated to the construction of Central Ogbia Regional Water Project.
• A total of N4bn are allocated to the construction of dams.
• Other provision for water facilities (i.e. regional water supply scheme) of N8bn.
• Rehabilitation of river Basin authorities (12 nos) of N13.91bn.
• Moreover, over the period 2012-2015 an additional N205.5bn will be invested in rural water scheme, water supply scheme, irrigation scheme and other water related projects from Subsidy Reinvestment and Empowerment Programme (SURE-P).

These projects will not only significantly improve the country’s infrastructure, but will also create millions of jobs for Nigerians. This struggle is not between the government and Nigerians, because government is squarely on the side of the people. The fight is between the government and Nigerians on one side, and persons who are bent on continuing their age-long “milking” of the system for their personal benefits on the other side.

Please let us support government’s efforts at defeating these persons, and creating a better country for all Nigerians.

***The End

My question to you is simple; should we give this Government a chance and monitor them using Social Media?

Facts about Fuel Subsidy you must know by Pastor Tunde Bakare

The fuel subsidy debate is currently the most burning National issue and I think it will remain that way for a while. I got wind of Pastor Tunde Bakare’s thoughts on fuel subsidy and decided to publish it.

Please read, digest and share. I recently wrote “My Thoughts on the fuel subsidy removal policy.”

…… from Pastor Tunde Bakare
fuel subsidy

1) DEFINITION

To subsidise is to sell a product below the cost of production. Since the federal government has been secretive about the state of our refineries and their production capacity, we will focus on importation rather than production. So, in essence, within the Nigerian fuel subsidy context, to subsidise is to sell petrol below the cost of importation.

2) THE UNSUBSTANTIATED CLAIMS OF THE FEDERAL GOVERNMENT

The Nigerian government claims that Nigerians consume 34 million litres of petrol per day. The government has also said publicly that N141 per litre is the unsubsidised pump price of petrol imported into Nigeria. (N131.70 kobo being the landing price and N9.30 kobo being profit.)

3) ANNUAL COST OF IMPORTATION

Daily Fuel Consumption: 34 million litres Cost at Pump: N141.00 No. of days in a regular year: 365 days Total cost of all petrol imported yearly into Nigeria:

Litres Naira Days 34m x 141 x 365 = N1.75 trillion

4) COST BORNE BY THE CONSUMERS

Nigerians have been paying N65 per litre for fuel, haven’t we? Therefore, cost borne by the consumers =

Litres Naira Days 34m x 65 x 365 = N807 billion

5) COST OF SUBSIDY BORNE BY THE GOVERNMENT

In 2011 alone, government claimed to have spent N1.3 trillion by October – the bill for the full year, assuming a constant rate of consumption is N1.56 trillion.

Consequently, the true cost of fuel subsidy borne by the government is: Total cost of importation minus total borne by consumers, i.e. N1.75 trillion minus N807 billion = N943 billion.

Unexplainable difference: N617 billion

The federal government of Nigeria cannot explain the difference between the amount actually disbursed for fuel subsidy and the cost borne by Nigerians (N1.56 trillion minus N943 billion = N617 billion).
fuel subsidy

6) BOGUS CLAIM BY THE GOVERNMENT

A government official has claimed that the shortfall of N617 billion is what goes to subsidising our neighbours through smuggling. This is pathetic. But let us assume (assumption being the lowest level of knowledge) that the government is unable to protect our borders and checkmate the brisk smuggling going on. Even then, the figures still don’t add up. This is because even if 50% of the petrol consumed in each of our neighbouring countries is illegally exported from Nigeria, the figures are still inaccurate. Why?

WORLD BANK’S FIGURES: POPULATIONS OF WEST AFRICAN COUNTRIES

NIGERIA: 158.4 million BENIN: 8.8 million TOGO: 6 million CAMEROUN: 19.2 million NIGER: 15.5 million CHAD: 11.2 million GHANA: 24.4 million

The total population of all our six (6) neighbours is 85.5 million.

Let’s do some more arithmetic:

a) Rate of Petrol Consumption in Nigeria: Total consumed divided by total population:

34 million litres divided by 158.8 million people = 0.21 litres per person per day.

b) Rate of Petrol Consumption in all our 6 neighbouring countries, assumed to be the same as Nigeria:

0.2 litres x 85.5 million people = 18.35 million litres per day

Now, if we assume that 50% of the petrol consumed in all the six neighbouring countries comes from Nigeria, this value come to 9.18 million litres per day.

7) PATHETIC ABSURDITY

There are two illogicalities flowing from this smuggling saga.

a) If 9.18 million litres of petrol is truly smuggled out of our borders per day, then ours is the most porous nation in the word. This is why: The biggest fuel tankers in Nigeria have a capacity of about 36,000 litres. To smuggle 9.18 million litres of fuel, you need 254 trucks.

What our government is telling us is that 254 huge tankers pass through our borders every day and they cannot do anything about it. This is not just acute incompetence, but also a serious security challenge. For if the government cannot stop 254 tanker trailers from crossing the border daily, how can they stop importation of weapons or even invasion by a foreign country?

b) 2nd illogicality: Even if we believe the government and assume that about 9.18 million litres is actually taken to our neighbours by way of smuggling every day, and all this is subsidised by the Nigerian government, the figures being touted as fuel subsidy still don’t add up. This is why:

Difference between pump price before and after fuel subsidy removal = N141.00 – N65.00 = N76.00

Total spent on subsidizing petrol to our neighbours annually = N76.00 x 9.18 million litres x 365 days = N255 billion

If you take the N255 billion away from the N617 billion shortfall that the government cannot explain, there is still a shortfall of N362 billion. The government still needs to tell us what/who is eating up this N362 billion ($2.26 billion USD).

8) ILLOGICAL ASSUMPTIONS

i) We have assumed that there are no working refineries in Nigeria and so no local petrol production whatsoever – yet, there is, even if the refineries are working below capacity.

ii) Nigeria actually consumes 34 million litres of petrol per day. Most experts disagree and give a figure between 20 and 25 million litres per day. Yet there is still an unexplainable shortfall even if we use the exaggerated figure of the government.

iii) Ghana, Togo, Benin, Cameroun, Niger, and Chad all consume the same rate as Nigeria and get 50% of their petrol illegally from Nigeria through smuggling.

These figures simply show the incompetence and insincerity of our government officials. This is pure banditry.

9. The simplest part of the fuel subsidy arithmetic will reveal one startling fact: That the government does not need to subsidise our petrol at all if we reject corruption and sleaze as a way of life. Check this out:

a) NNPC crude oil allocation for local consumption = 400,000 barrels per day (from a total of 2.450 million barrels per day).

b) If our refineries work at just 30%, 280,000 barrels can be sold on the international market, leaving the rest for local production.

c) Money accruing to the federal government through NNPC on the sale, using $80/bbl – a conservative figure as against the current price of $100/bbl – would be $22.4m per day. Annually this translates to $8.176bn or N1.3 trillion.

d) The government does not need to subsidise our petrol imports – at least not from the Federation Account. The same crude that should have been refined by NNPC is simply sold on the international market (since our refineries barely work) and the money is used to buy petrol. The 400,000 barrels per day given to NNPC for local consumption can either be refined by NNPC or sold to pay for imports. This absurdity called fuel subsidy should be funded with this money, not the regular FGN budget.

If the FGN uses it regular budget for subsidising petrol, then what happens to the crude oil given to NNPC for local refining that gets sold on the international market?

10) TACTICAL BLUNDER

The federal government is making the deregulation issue a revenue problem. Nigerians are not against deregulation. We have seen deregulation in the telecom sector and Nigerians are better for it, as even the poor have access to telephones now right before the eyes of those who think it is not for them.

What is happening presently is not deregulation (so called fuel subsidy removal) but an all-time high fuel pump increase, unprecedented in the history of our nation by a government that has gone broke due to excessive and reckless spending largely on themselves. If the excesses of all the three tiers of government are seriously curbed, that would free enough money for infrastructural development without unduly punishing the poor citizens of this country.

Let me just cite, in closing, the example of National Assembly excesses and misplaced spending as contained in the 2012 budget proposal:

  • Number of Senators = 109
  • Number of Members of the House of Representatives = 360
  • Total Number of Legislators = 469
  • 2012 Budget Proposal for the National Assembly = N150 billion
  • Average Cost of Maintaining Each Member = N320 million
  • Average Cost of Maintaining Each Member in USD $2.1 million/year

Time has come for the citizens of this country to hold the government accountable and demand the prosecution of those bleeding our nation to death. Until this government downsizes, cuts down its profligacy and leads by example in modesty and moderation, the poor people of this country will not and must not subsidise the excesses of the oil sector fat cats and the immorality cum fiscal scandal of the self-centred and indulgent lifestyles of those in government.

Here is a hidden treasure of wisdom for those in power while there is still time to make amends:

“Getting treasures by a lying tongue is the fleeting fantasy of those who seek death. The violence of the wicked will destroy them because they refuse to do just.” – PROVERBS 21:6&7

A word of counsel for those who voted for such soulishly indulgent leadership:

“Never trust a man who once had no shoes, or you may end up losing your legs.”

This is the conclusion of the matter on fuel subsidy removal:

i) “If a ruler pays attention to lies, all his servants become wicked.” (Proverbs 29:12) ii) “The Righteous God wisely considers the house of the wicked, overthrowing the wicked for their wickedness. Whoever shuts his ears to the cry of the poor will also cry himself and will not be heard.” (Proverbs 21:12&13)

Thanks for your attention.

God bless you all.

Pastor Tunde Bakare is a fiery pastor cum politician.

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What is your opinion on the fuel subsidy removal policy?

fuel subsidy removal

My Thoughts on the Fuel Subsidy Removal Policy

The recent fuel subsidy removal by the Government has created so much tension in the country and I am sure the Goverment must be regretting her actions (and inactions) in some way.

The heat is on at the moment and I thank God for the Internet that has helped to cause a re-awakening in our Nation. People are angry and I mean very angry about fuel subsidy removal and have hit the streets to show that.

fuel subsidy removal

Kudos to Organized Labour and Civil Societies Coalition for creating the platform on which people have told Government how angry they are about the fuel subsidy removal policy. Hope this platform would not be dismantled soon, it is needed to solve more pressing National problems.

I have not made any public statement yet because I am very mindful of what I say due to the viral nature of the Internet which is my primary constituency 🙂

Below are my thoughts on the fuel subsidy removal policy

I am no Economist or Professor of business, so I speak as a layman, having listened to both sides of the argument, I wish to comment briefly as follows;

I agree with Organized Labour on the following points:

  1. The timing of the fuel subsidy removal is totally wrong – there should more consultations since Government earlier said that everyone will be carried along.
  2. The legal framework should be put in place i.e. the Petroleum Industry Bill (PIB) should be passed by the National Assembly and more credible people engaged for all the necessary oversight functions.
  3. If the fuel subsidy removal policy must work then NNPC and PPPRA are high headed corruption dragons that have to be cut down.

According to Peter Esele, President of TUC, getting NNPC right solves 40% of the problems in the industry.

NNPC is simply a huge joke, an organisation that has earned multi-billion dollars yet looks so unserious.

NNPC cannot be a regulator, player, a manager of the refineries… 🙂 – there is no way the petroleum industry can get to the next level with this arrangement. So before the removal of fuel subsidy goes, NNPC should either be scrapped or restructured.

  1. The issue of corruption must be tackled and the cabals brought to book.

It is likely that this so called Cabal might have people in Govt. as part and parcel of the racket, which is why the subsidy goes from 300 Billion Naira a few years ago to 1.3 Trillion Naira in 2011 (Crazy indeed) and this definitely makes the issue of corruption difficult (not impossible) to tackle in this case.

  1. The cost of running Government is extremely high, so our leaders have to lead by example by ensuring that the cost of running Government is brought down drastically.

Let me quickly state, that the Presidential system of Government we have adopted is pretty expensive to run. For instance, what do we need 2 legislatures for? Why does the constitution make it mandatory for each of the 36 states to produce a minister? What about the federal character “crap” in parastatals and other commissions? How about the yearly religious pilgrimages that the Nation sponsors?

That said, I also agree with the Government on the following points:

  1. One of the best ways to fight the so called cabal is to remove the incentive completely.

This can only work if the proper framework is put in place otherwise the smart cabal will put heads together and find a new way to exploit the fuel subsidy removal policy

  1. Nigeria is better off with deregulated petroleum sector, PHCN, Water ways etc.

For me, wealth is better created in the hands of the private sector than the shameful public sector. It is time to encourage our Small Business Owners.

I understand that Nigeria has earned over 600 billion dollars from the sales of crude oil and we have nothing to show for it. But see how the likes of Aliko Dangote, Mike Adenuga etc have created massive wealth and have employed thousands of Nigerians.

Public Private Partnership (PPP) as opposed to full deregulation

The Eleme Petro-Chemical company is an example of a workable PPP arrangement. The company has gone from operating below capacity to operating above capacity and now, a planned (close to) 2 Billion Dollars expansion.

Which do you prefer Deregulation or PPP?

The Internet can build Trust for the Government

Government should not underestimate the power of the Internet. Social Media has made the fuel subsidy removal protests very successful, therefore, I suggest that the Govt. uses the Internet more for information dissemination and updates.

An Example of What Government can do to build trust

For Instance, starting in 2012 a website can be set up that will be used to inform the public how the budget funds are expended. It is not enough to just say it, Government should also state the name of the official (Government department), who receives the fund including the date and time – all these would have to be uploaded to the site.

Consequently, the Government official or department should then report back with the exact details of how the monies were expended, which should also go online.

This strategy won’t eliminate corruption completely but trust me it will demystify how Government is run. Imagine, if say you visit the site I talked about above and see a project that has been paid for in your area and then you go the location and see nothing…… all you need to do is visit the website and check the name of the officials, and then make some viral noise about it.

I doubt if Government at all levels would have the guts to implement this kind of strategy or do you think they would?

Sad to say, we have no opposition in the country. Opposition parties unlike labour should not just say No to the fuel subsidy removal policy, they should come up with their own alternatives and have it distributed online.

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