Nigeria - Governors of the 36 states have asked the Federal Government to remove subsidies on petroleum products so that the states would save funds that could be used to implement the newly-approved minimum wage for workers. Removal of subsidies could see the prices of fuel products shooting up since government subsidies are used to stabilise the prices at current levels. Funds for the subsidies are drawn from accounts jointly owned by the states and the Federal Government. The Nigeria Governors Forum, in a communiqué issued yesterday on their meeting held Tuesday night in Abuja, said they would begin discussions with labour unions on the modalities of the implementation of the new wages, including "immediately remove the petroleum subsidy."

The communiqué, presented by Rivers State governor and chairman of the forum Rotimi Amaechi, said, "On the issue of the new minimum wage, members recognised the amended Minimum Wage Act as a valid law. However, the implementation will pose considerate challenge to a number of states. Consequently, members resolved to:

"Engage labour in a holistic manner so that they can jointly agree to a common implementation framework; review the revenue allocation formulae; immediately remove the petroleum subsidy; constitute a committee to determine the financial implications and work out the implementation details; and to examine the realities this law imposes on the states and its implication for workers."

At the moment, government is subsidising petrol by about N78.51 per litre by pegging the pump price at N65, therefore a litre will cost about N145 if the subsidy is removed, calculations made by Daily Trust show.

With a barrel of crude oil in the international markets selling at about $115, the landing cost of petrol as on Monday was N130.31, while the expected market price (that is the landing cost plus the margins) was N143.51, according to data posted by the Petroleum Products Pricing Regulatory Agency (PPPRA).

Kerosene in a popular market is partially deregulated. Although there is no official price by government, NNPC stations are currently selling the product at the rate of N50 per litre while other marketers are selling above that price.

NNPC is the sole importer of kerosene in the country. The landing cost of kerosene was as at last Monday N143.74 while the expected market price was N156.94.

Diesel is the only product deregulated fully by government. The price per litre of diesel is around N170 to N200 in the market while the landing cost was as on Monday N139.50k and the expected market price was N156.46.

Labour unions yesterday said their position against withdrawal of fuel subsidies still remains unchanged.

Reacting to the demand of the governors, President of the Nigeria Labour Congress (NLC) Abdulwahed Omar said the congress' opposition to deregulation remains and he would not make any comment until he sees the document stating the governors' position.

"Well, that is where we are apart, where we differ. We spoke even today because the version I heard was that they said they were ready to open negotiation on the issue of minimum wage which, if it is true, is something I call tactical blunder because something that is now a law of the land, if highly placed people like governors will now say no, they want to ditch that and do something else, I think it calls for a lot of concern.

"But now that I am hearing this version, we will also wait and see and then react appropriately. But you know congress has a position on deregulation and this is something that as far as I know has not changed until maybe if we look at government policy," Omar told Daily Trust.

Among the other resolutions of the governors forum, according to Amaechi, was that they "condemned in very strong terms, the recent spate of bombings across the country and ask the Federal Government to invest heavily in intelligence and technology. The forum, further resolved to decisively address the security challenge through dialogue."

The meeting, which lasted for about three hours, was held at Rivers State Governor's Lodge.

Hamisu Muhammed, Muideen Olaniyi & Francis Okeke

Daily Trust/23/06/2011