Payment of subsidy not efficient, Saraki

While the Presidency wavers on what to do about the fuel subsidy regime, it appears the Senate’s is resolved on its removal.

Speaking in Lagos Tuesday, Olusola Saraki, Senate President, said retaining of fuel subsidy is the most inefficient way of spending, as it does not add value to anybody.

Saraki, who spoke at the Lagos Business School  (LBS) Breakfast meeting further said that some areas involving wastages would be reviewed by the National Assembly.

This further highlights the difference in outlook between President Muhammadu Buhari and some of the key helsmen in government with him and how it could affect the direction and pace of governance.

Buhari’s outlook, observers say, tends towards a state-led economic model, while some of his key ministers and others in governance are reform minded and private sector-led economy crusaders.

Describing the different outlooks, Olisa Agbakoba, a senior advocate of Nigeria (SAN) and former national president of the Nigerian Bar Association (NBA), said  “The interplay between market efficiency and state regulation is an old concept. It is a very difficult policy, managing market efficiency and social regulation,” .

Senate President, Saraki said the National Assembly is engaging the executive to explore ways of removing impediments to the passage of the Petroleum Industry Bill (PIB) so as to unlock the potential investment in the oil and gas industry.

He further promised that the Senate would look at the vexatious aspect of the social media bill when it comes to them at the committee level and when it eventually returns to the floor of the Senate for debate.

“There is nothing like social media bill at the Senate. What we have is the Frivolous Petitions Prohibition Bill, although we have discovered that there is a portion that dwells on social media, but I can assure Nigerians that the Senate will not pass any law that seeks to deny Nigerians their freedom.  I’m sure that the controversial part of the bill will be expunged when it returns for debate,” Saraki said.

This is even as Rewane sees the PIB being broken down next year and replaced with the law that will overhaul the Nigerian National Petroleum Corporation (NNPC) into two entities.

Prompted by business to be categorical on government’s stand on subsidy, he said

“I can’t be categorical, What I can tell you is that we will review if there are wastages or inefficiencies.

If something doesn’t make sense, it doesn’t work. All of us as Nigerians need to review it. When you are spending half a trillion on capital expenditure and spending one trillion on subsidy, you ask yourself, is it the most efficient way of spending? What is most important now is that we must spend money that will add values to all of us.”

He said the National Assembly has been holding informal meetings with the executive on priority bills like PIB, adding that the first part of the bill is about being introduced for first reading in the house.

Other institutional impediments to doing business in sectors like transport, transactions will be amended or repelled where necessary.

“We are engaging the executive on the issue (PIB) informally with a view to removing all the institutional problems for its passage

“we have identified several priority bills. One of these bills is the Petroleum Industry Bill (PIB). As we speak today, we are on the verge of introducing the first part of PIB for first reading. This sets out a new governance and institutional structure for the oil and gas industry.

The emphasis of the bill is to create a world class oil and gas sector, competitive, open and simple, that would enable the emergence of an efficient oil and gas sector, comparable to any other in the world. The new industry when fully implemented will see government saving over $4bn annually on the current Joint Venture Cash Call arrangement, thus freeing up funds for critical sectors like health, agriculture, education and road maintenance,” saraki said

The Senate President assured the nation that the National Assembly would be guided by national interest and would ensure that the economy is private sector led.

“Within the next few weeks, we will be passing the Bankruptcy and Insolvency Act Amendment Bill and the Electronic Transaction Bill. These bills have significant implications and play key roles in the new economic framework we are forging.

“ Similarly, the Electronic Transaction Bill will provide the legal framework setting out the regulatory scheme for protecting consumers and guaranteeing confidence in a market which experts have said has the potential of netting over $10billion annually in the country.

“The 8th Senate is today at an advanced stage of carrying out one of the most far-reaching legislative reviews ever embarked upon by the legislature in Nigeria with the Doing Business Development Project which is aimed at eliminating obsolete business regulatory laws that have outlived their usefulness and in their place, provide adequate legal, institutional and regulatory mechanisms to drive a new modern economy.”

He said that in doing this, they have had formal and informal meetings with stakeholders including the NBA, the SEC, RMFAC, the ICPC, FIRS, and many other relevant agencies of government and critical industry leaders, with a view to using gathered information as a critical tool to fashioning out what will make Nigeria a favourable investment destination.

Rewane, in his presentation said, “PIB will be broken up and replaced with a law to overhaul the NNPC. The move seeks to block loopholes that breed corruption.

“The contentious areas of PIB will be removed for easy passage, while NNPC is to be split into two, a National oil company (NOC) and Nigeria Petroleum Assets Management Company (NPAM).”

He foresees that the economy’s growth will be driven by the non-oil sector, such as construction, agric, manufacturing, but added that “but this will be limited by reduced confidence, slower government expenditure growth, exchange rate volatility and high inflation.”

On the consumer stable, Rewane predicted that “With the two big catalysts, accommodative monetary policy ‘lower interest rate and increased liquidity’ and expansionary fiscal policy ‘bailout payment and N6tn proposed budget’ to reflate the economy – turbulence likely to persist in HY’16 due to disposable income contraction but positive earnings after economy adjustment phase.”

He also predicted that regulatory scrutiny would intensify in the banking sector.

“Net Interest margin compression, COT takes full effect in 2016, bank’s profitability will be called to question,” he said.

John Omachonu