Jonathan: Why Private Refineries Can’t Work

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President Goodluck Jonathan yesterday expressed regret that the 20 licensed private refinery owners have not been able to commence operations in Nigeria because of government’s price control mechanism on fuel.

The president, who was represented by the minister of information, Mr Labaran Maku, stated this at the maiden annual lecture of the National Mirror newspaper tagged “Law as an instrument of transformation: what challenges for Africa?”

Jonathan said the companies, having exhausted their patience on Nigeria’s inability to open up the downstream sector, decided to move to neighbouring countries.

Also at a Christmas Carol at the State House, Abuja, the president said that Nigeria could not continue to miss investment opportunities and vowed that subsidy on petroleum products must be removed.

President Jonathan reiterated that the government was poised to go on with the deregulation of the downstream sector, adding that if such was not done “we will be in economic crisis”.

He also added that if the oil subsidy is retained, the resultant effect in the long run will be the riots and protest experienced in some parts of Africa and the Middle East.

“ What the government has targeted is to open up the sector so that private technology can come in and develop the sector.

“In the last 10 years we have issued 20 licences to people who wished to set up their own refineries. They have been unable to do so because of government price control mechanism on fuel.

“Those companies have been waiting on government and now, they are moving to Niger Republic, Chad, Ghana, Benin because those countries have discovered fossil fuel and are managing their resources, taking into account the mistake that Nigeria has made.

“Recently, you heard that Niger Republic opened a new refinery. They did not only open a refinery, they also increased the cost of fuel in Niger so that they will target Nigeria for export of their own product.”

He cited the successes and impact of deregulation in other sectors like aviation, telecommunication, banking, cement on the sub-region, stating that if same was done in the oil sector, Nigeria will emerge as the hub of petrol-chemical industries exporting finished products to other countries in Africa.

The Senate president, David Mark, on his part, said while it will be a milestone to have Nigerian refineries across Africa and Europe, the presidency should let Nigerians know what they stand to gain from the process.

Represented by the Senate’s spokesman, Enyinnaya Abaribe, Mark said: “We want to see Nigerians own fuel and gas stations all over the world. That is the type of transformation we want to see.

“And as long as the government is on that path the Nigerian Senate and National Assembly will always give its full support.

“What we do not want to see is where Nigerians suffer and a few people will become beneficiaries of any new government initiative. We support you, we support the government but, in the spirit of transparency, please let Nigerians know what they stand to gain from this initiative.”

On his part, former president Olusegun Obasanjo said democracy and good governance can only be entrenched by transparency. He called for sound and good policies in order to provide wealth in the country.

Former justice minister and attorney-general of the federation, Chief Richard Akinjide, noted that the lack of good governance in Africa was a major challenge to the development of the African continent.Akinjide, who delivered a lecture entitled: “Africa and the Challenges of the 21st Century” at the National Mirror’s maiden lecture, said the challenge has to be overcome if the continent is to be transformed.

“A widespread development of education and the ability of Africa to turn her huge human potential into large intangible assets is undoubtedly the major challenge which the continent must face in the next 40 years,” the legal luminary stated.

Speaking at the lecture, the Chief Justice of Nigeria, Justice Dahiru Musdapher, said the initiated judicial reforms include the strengthening of the media. “The initiated judicial reform is to structure the strategic relationship between the judiciary and the media to ensure transparency in governance,” he stated.

Also, the attorney-general of the federation and minister of justice, Mr Mohammed Adoke (SAN), represented by Prof. Adedeji? Adekunle, stated that, before initiating law reform, there is need to adopt a holistic approach to law reform in order to get the needed social engineering.

In his remarks, at the event, Mike Ozhekome, SAN, suggested that the National Assembly should be operated on part-time basis, saying it was regrettable that the National Assembly had become the centrepiece of the nation’s excess wastages over the years.

The constitutional lawyer called for sitting allowances only for lawmakers, stressing that it was unfortunate that, due to the lucrative nature of such public offices, the battle to get to such offices had become scary, with all manner of people abandoning their calls and jumping into the political fray.

“Lawmakers should be paid sitting allowances only, as it has become the greatest-paying industry overnight. People who were riffraff have become multi-millionaires and thereby encouraging other dutiful professionals to think that it is only a money-making enterprise,’’ the human rights activist.

Ozhekome stated that even the Constitution of the Federal Republic of Nigeria recognises part-time sittings, arguing that it would go a long way in curtailing the wasteful expenditure of government.

While scoring the federal government low on the provision of security for life and property in the country for which investments have been affected, the human rights activist said he supported the removal of fuel subsidy as only a minute cabal of the entire population were criminally benefitting from the subsidy at the expense of the nation.

He charged the nation to be proactive in resolving social issues as the masses in Nigeria were getting disenchanted with events in the country which, if not handled, could get out of control.

Still on the subsidy on petroleum products issue, the president said, “the pains will be temporary. After few weeks or few months, Nigerians will be better off. The economy will be repositioned; we must aggressively pursue agriculture, we must aggressively pursue industrialisation for jobs to be created in the economy”.

He said, “I know the pains Nigerians are passing through. Yes, I am here in the State House and being fed by government but that does not keep me so far from the people. There is no day that I don’t interact with Nigerians, both low and high and I appreciate the pains of the people. We are facing challenges but we must take certain decisions to reposition our economy so that things will ease out.”

Jonathan continued: “If we don’t have the courage to do so, then we will continue to be dying in pains until God knows when. So my belief is that at a particular time, people must be courageous to take the rightful decisions. We may experience some minor pains for some months but people will want to exploit, ordinarily if people don’t want to exploit us, it is supposed not to be so. When you look at the chart, even if you remove subsidy on fuel on the world average, the price of fuel in Nigeria will still be among the last 30 percent. The charts are there because most countries add a lot of tax on fuel but we are not adding any tax.”

On public education of the issue, the president disclosed that the government will have town hall meetings where people will ask questions and receive answers. “This is not a proper forum (referring to the Carol) to begin to talk about it, we will have town hall meetings where we will talk and answer questions. I have to use this opportunity to day so because it is becoming a part of discussions in the religious places and it is only good for people to be clearly informed, I promise Nigerians that there is hope, the pains will not be the way people are thinking,” he said.

In another development, President Jonathan has signed the Personal Income Tax Act (PITA) into law, the first major amendment to the income tax law since 1979.The bill sent to the National Assembly in 2004 was sent to the president for assent after passing through both chambers of the 6th National Assembly. The new tax law provides for more disposable income to the lower income earners following the amendment of the income tax table and adjustments in the applicable income tax incremental bands, which brings it in line with current income levels.

It is believed that the development will support the use of taxation as a tool for income redistribution and wealth creation by imposing lower tax burden on low income earners and higher tax burden on the higher income earners, as well as widening the tax base by bringing in a huge number of potential taxpayers, especially in the informal sector, into the tax net.
The Act, according to a statement issued by the Federal Inland Revenue Service (FIRS), also removes obsolete, unrealistic and outdated reliefs and allowances associated with the former Act, replacing the previous reliefs and allowances with enhanced consolidated reliefs and allowances

Principally, section (5), sub-section (1) of the Act states: “There shall be allowed a consolidated relief allowance of N200, 000 subject to a minimum of 1 per cent of Gross Income or whichever is higher plus 20 per cent of the Gross Income and the balance shall be taxable in accordance with the Income table in the Sixth Schedule to this Act.”

The Schedule provides tax exemption on National Housing Fund (NHF) contributions, National Health Insurance Scheme, Life Assurance Premium, National Pension Scheme and Gratuities.

Sub-section (3) of the Schedule also provides a graduated tax rate of Gross Income or whichever is higher on first N300, 000 at 7 per cent, next N300, 000 at 11 per cent, the next 500, 000 at 15 per cent, next 500, 000 at 19 per cent, Next N1.600, 000 at 21 per cent and above N3.200, 000 at 24 per cent.

The Act also supports government’s intention to implement a shift in focus from direct to indirect taxation, by lowering the overall income tax burden so that there is more disposable income in the economy, leading to higher value added tax collection and higher economic activity, amongst others.

Under the new Act, it is now obligatory for government agencies, professional bodies, and trade associations to provide information to tax authority that would assist them in the performance of their duties.

The Act also provides greater leverage to the minister of finance, tax authorities and the accountant-general of the federation in administering the law, including the power to deduct at source from its budgetary allocation, unremitted taxes due from ministries, departments and agencies (MDAs) and transfer such deduction to the relevant state upon request by state.

However, analysts say with Jonathan signing the tax law, workers in the country, particularly low income workers, will have more money at their disposal to spend.

But the state governments, according to Ayodele Adigun, past president of the Chartered Institute of Taxation of Nigeria (CITN), will have to be more creative to be able to generate more income to pay their bills.

Adigun said, with the new tax law, all state governments were bound by law to adhere to following the tax regime to the letter.

He also maintained that the law simply followed the old principle of the more you earn, the more you pay.

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