Subsidy Removal: NEC sets up committee on N702.9bn cost of living allowance for workers

By Marvellous Gbadegesin On Jun 16, 2023

Subsidy Removal, NEC, living allowance , workers — Subsidy Removal: NEC sets up committee on N702.9bn cost of living allowance for workers

The National Economic Council (NEC) has set up an ad hoc committee on how to alleviate the suffering faced by Nigerian workers, following the removal of fuel subsidy.

The council, according to a statement by the Office of the Vice President, on Friday, gave the committee two weeks to look into two scenarios suggested by the National Salaries Wages and Income Commission (NSWIC).

The statement noted that the council said this at the first NEC meeting chaired by Vice-President Kashim Shettima after its inauguration by President Bola Tinubu.

The NSWIC Chairman, Mr Ekpo Nta, suggested that the national minimum wage be reviewed to reflect present-day realities and that a cost of living adjustment allowance costing N702.9bn is created to mitigate the impact of the subsidy removal on workers.

NEC also gave an update on the country’s accounts, noting that the Excess Crude Account stands at $473,754.56 and Stabilisation Account at N26.6bn, while the Natural Resources Fund stands at N96.9bn.

See the full statement below:

STATE HOUSE PRESS RELEASE

NEC SETS UP AD-HOC COMMITTEE ON SALARIES/WAGES, VP SHETTIMA URGES COUNCIL MEMBERS TO BUILD A GLOBAL, DIVERSIFIED ECONOMY

The National Economic Council (NEC) after its inauguration today by President Bola Tinubu, has set up an ad-hoc committee to come up with an appropriate road map on salaries/wages which will alleviate the impact of the removal of fuel subsidy on workers taking into cognizance the financial status of the States of the Federation.

The NEC which is chaired by the Vice President, Sen. Kashim Shettima and has as its members the 36 State Governors, CBN Governor held its inaugural meeting at the Council Chambers of the Presidential Villa, Abuja.

In his welcome remarks, the Vice President urged members to “strive to build a globally competitive, strong and diversified economy that is driven by industrialization, education, agricultural transformation, infrastructural development and human capital development.”

Vice President Shettima solicited their “cooperation and commitment in utilizing the Council to resolve our national matters and advance our economy towards prosperity.”

Below are other highlights of the deliberations and resolutions reached at the meeting:

NEC (3rd in 2023) 133rd MEETING 15TH JUNE 2023

HIGHLIGHTS

UPDATES:

EXCESS CRUDE ACCOUNT (ECA)

473,754.57

STABILISATION ACCOUNT

26,631,092,507.96

CURRENT BALANCE OF NATURAL RESOURCES FUND

96,902,033,235.88

NATIONAL SALARIES, INCOME AND WAGES COMISSION (NSIWC) PRESENTED BY THE CHAIRMAN, MR. EKPO NTA

Council was called to note that in line with NSIWC ACT, the Commission highlighted possible scenarios that will alleviate the impact of the removal of fuel subsidy on workers. Accordingly the Chairman of NSIWC has come up with the following recommendation;

NSIWC recommend that Federal Government should be guided by the processes describe in scenario 1 review of the National Minimum wage and note the cost implications yet to be confirmed by the Budget Office and OAGF. Its implication is long term as it will involve rigorous negotiation by all stake holders but it can be concluded on or before April 2024.

NSIWC recommends that senerio 2 cost – of – living adjustment allowance at the estimated cost of N702,919,008,000. Petrol allowance at an estimated cost ranging from 23.5billion to 45billion per month offers and opportunity for immediate implementation of a substantial financial palliative plus25/35% increases already recommended for implementation

III. Any agency especially self funded ones already implementing COLAA or has had a significant wage review recently will need clearance from NSIWC in terms of any further benefits under scenario 1 and 2. e.t.c.

RECOMMENDATION

NSIWC is of the view that the above scenarios and recommendations if approved will go along way in alleviating the effect of removal of fuel subsidy and also ensure industrial harmony especially in the public sector.

COUNCIL RESOLUTION:

After careful deliberations, Council set up an Ad-hoc Committee to look into the modalities as to how to alleviate the impact of the removal of fuel subsidy on workers.

TERMS OF REFERENCE;

Committee is to come up with an appropriate road map taking into cognizance the financial status of the States of the Federation.

COMPOSITION:

Governor of Kebbi State – Chairman

Governor of Anambra(south East) – Member

Governor of Benue (North Central) – “

Governor of Kaduna(*North West) – “

Governor of Bauchi(North East) – “

Governor of Cross River (South South )- “

Governor of Oyo (South West) – “

Representative of Budget Office of the Federation – “

Rep of Central Bank of Nigeria – “

Rep of Office Accountant General of the Federation – ”

Rep of NNPCL – “

Rep of Organised Labour (TUC and NLC)

Rukayyat El-Rufai – “

Membership of the Committee is to submit its report to Council in two weeks.

REPORT OF PRELIMINARY ASSESSMENT OF IMPACT OF FLOOD DISASTER ACROSS THE STATES IN NIGERIA

At the 128th NEC Meeting held on 20th October, 2022, the Chairman of the Nigeria Governor’s Forum and Executive Governor of Sokoto State, Rt. Hon. Aminu Waziri Tambuwal, drew attention of Council to the devastating effect of the 2022 flooding which affected about 31 States of the Federation that had resulted in the loss of over 600 lives.

Council then set up a 5-man Ad-hoc Committee on flooding comprising of Governors of Jigawa, Kogi, Anambra, Bayelsa, Lagos and Yobe State and co-opted some Ministers.

The Terms of Reference of the Committee was to “review the current flooding situation in the country and design a template for compensation of victims”.

LIMITATIONS

One of the limitation is Delay or Non-submission of filled template by some States. Only 16 out of the total number of affected States forwarded their submissions to NEC Secretariat to date as expected. About 15 others were yet to do so. The submission from defaulting States are awaited to update the database.

RECOMMENDATION

The plight of victims of the unfortunate flood disaster across affected States of the Federation could be alleviated if the much needed intervention from the Federal Government materialized without further delay. There is therefore the need to expedite release of fund to affected States as recommended by designated Committees constituted by the Federal Government to that effect. This would go a long way in addressing the needs of the victims as well as offset debt incurred by some States to assist their citizens.

RESOLUTIONS

After deliberations, the Council resolved that all States should make a comprehensive submission by next week. Members were also to liaise with Office of the Vice President, Office of the Secretary to the Federation and the private sector to tackle challenge of flooding in the country.

PALLIATIVE MEASURES TO MITIGATE THE EFFECT OF THE PETROL SUBSIDY REMOVAL IN THE COUNTRY BY DR. ABDULKARIM OBAJENATIONAL COORDINATOR NIGERIA COVID-19 ACTION RECOVERY AND ECONOMIC STIMULUS (NG-CARES) PROGRAMME

NG-CARES Programme is a USD 750 Million credit from the World Bank (2021-2024) to provide emergency relief to poor and vulnerable Nigerians.

The NG-CARES Programme is a multi-sectorial intervention that seeks to mitigate the impact of COVID-19 crisis on the livelihoods of poor individuals, farmers, vulnerable households, communities and owners of micro-small enterprises.

Each State is allocated a norminal allocation of USD 20 million, and FCT USD 15 Million. The Federal CARES Support Unit (FCSU) is allocated USD 15 million.

The estimated direct and indirect beneficiaries of the NG-CARES programme is about 20 million Nigerians if successfully implemented over a period of 3 years.

Other shocks which the Programme has been re-designed to respond to include; flooding, fire, disasters as well as impact of economic policies that can trigger social unrest and worsening of poverty among the poor. The financial instrument is Programme for Result (PforR) at the States and FCT.

IMPLEMENTATION STRUCTURE OF THE NG-CARES PROGRAMME

NG-CARES Programme is implemented under 3 Results Areas viz Social Safety Nets, Livelihood Grants and Basic Services, (targeting poor and vulnerable households, poor communities and vulnerable groups)

Food Security ((targeting small holder farmers)

Support for Local economy, MSEs (targeting nano, small and medium scale enterprises) qIt leverages on 158 Delivery Platforms/Agencies across the 36 States and FCT.

ACHIEVEMENTS

Disbursed over N80.6 billion to the States and FCT as at March, 2023

About 2 million Beneficiaries

Enhanced capacity of State CARES staff on Project Management and Monitoring and Evaluation

Packaging of Results for Independent verification by external agency

Peer Learning and Experience Sharing among States and FCT have provided opportunities for improved Project Management and service delivery.

RECOMMENDATION

The State CARES Platforms have a strong capacity to handle the implementation of palliatives to new and existing poor and vulnerable individuals, households, farmers and local economy operators in the country

Additional Funding can be sourced from the Federal Government, World Bank, Development Partners as well as Nigerian Private Sector

In specific the WB can be approached for Additional Financing for NG-CARES Programme, discussion can start as soon as possible.

AN OVERVIEW OF THE PETROL SUBSIDY REGIME & APPROPRIATE PRICING MECHANISM BY FAROUK AHMED

IMPACT OF SUBSIDY IN NIGERIA

Negative economic impact due to loss of revenue & undue pressure on forex availability

Unsustainability of petroleum product supply due to the increasing burden of funding the subsidy regime > N4t in 2022

Constrained Investment in Midstream & Downstream

NMDPRA STRATEGIC ACTIONS

Short Term:

Ensure adequate supply of quality petroleum products

License new suppliers of PMS

Protect consumers from exploitation of profiteering by Oil Marketing Companies

OTHER INTERVENTIONS

Food Vouchers for Extra Vulnerable Populations (Senior Citizens, Households with Children) to meet immediate food and nutrition needs

Food Distribution to Rural and Displaced Populations

Soft Loans (Interest & Collateral Free)

Release of Seedlings and other input to farmers

Deploying Social Information Services (SIS) Application for Easy Access to Interventions, Information and Rapid Grievance Redress Mechanisms

Continuation of NSIP programs.

RECOMMENDATION

u Adopt and Expand the Plans proposed by the FMHADMSD

u Enhance Implementation Structures at State and LGA Level.

PRESENTATION TO THE NATIONAL ECONOMIC COUNCIL ON HUMANITARIAN/SOCIAL STRATEGIES AND MEASURES TO MITIGATE THE EFFECT OF PETROL SUBSIDY REMOVAL BY NASIR GWARZO, FEDERAL MINISTRY OF HUMANITARIAN AFFAIRS, DISASTER MANAGEMENT AND SOCIAL DEVELOPMENT

The Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development (FMHADMSD) acknowledges the long-term socio-economic benefits of the Petrol Subsidy removal and recognizes this key decision by the Government as being instrumental to sustainable economic development of the Nation.

In noting the emerging Socio-economic effects of the removal on Nigerian citizens specifically on the most vulnerable in Society, the FMHADMSD is strategically positioned to deploy interventions to cushion the effects on the these groups. This is made possible through its programs, policies, departments and agencies as well as experience gained over the years dealing with disasters, managing humanitarian crises and helping to build resilience to shocks in millions of vulnerable households and communities in the Country.

Vulnerable Groups Targeted by FMHADMSD Programs, Policies and Agencies

Poor and Vulnerable Households in Rural Communities

School Aged Children in Public Schools and in Vulnerable Households

Vulnerable Rural Women

Small Holder Farmers (Especially Subsistence Farmers)

Senior Citizens

Persons living with disabilities

Displaced persons and other migrant groups of concern

Urban Poor and Daily Wage Earners

Non Graduate Youth

Unemployed Graduates

Small and Micro business Owners
Etc

Mid –Long Term (3- 12months

Scaling up of Interventions (listed in the Immediate Phase)

Scaling Up National Social Investment Programs

Impact Assessment

RECOMMENDATION

Adopt and Expand the Plans proposed by the FMHADMSD

Enhance Implementation Structures at State and LGA Level.

THE NATIONAL AUTOMOTIVE DESIGN AND DEVELOPMENT COUNCIL ELECTRIC VEHICLES AND COMPRESSED NATURAL GAS VEHICLES JELANI ALIYU , MFR, DG/CEO NADDC

The New Nigeria Nigeria presents opportunities for new beginnings, for innovation in its truest form. Nigeria presents an unparalleled destination for strong automotive companies, it gives them an opportunity to be part of an exciting journey in the provision of relevant advanced and value added transportation solutions for the upliftment of the lives of millions of people.

ACHIEVEMENTS

Over $1bn/N500bn has been invested into Nigeria by credible local and international investors in setting up automotive production and assembly plants in the country. The facilities are located in the states of Lagos, Ogun, Anambra, Enugu, Akwa Ibom, Kaduna, Kano.

Top investors are Innoson Motor Manufacturing, Dangote-Sino Trucks, Dangote-Peugeot, Mikano-Geely/Changan, PAN, Stallion/Hyundai, Honda, , Elizade/Toyota, Coscharis/Ford, Iron Products, Kojo Motors/Omaa, Jet Systems Motors. Combined installed capacity of 400,000 units per annum has been achieved.

Vehicles Assembled/Produced in Nigeria include Sedans, SUVs, Pickups, Buses, Trucks, Military/Security, Ambulances/Special Purpose.

Vehicles Assembled/Produced in Nigeria include electric powered, petrol powered, diesel powered, CNG powered.

Over 50 thousand direct and indirect jobs have been achieved.

On Friday, February 5, 2021 the Nigerian Automotive Sector reached new heights with Hyundai Nigeria’s unveiling of the first Nigerian Assembled Electric Vehicle, the Hyundai Kona Electric, ushering in an exciting new era of advanced technology in the sector.

The NADDC has developed and built four Solar powered Electric Vehicle Charging Stations at its headquarters in Abuja, and at three universities, 1) University of Lagos, 2) Usman Dan Fodio University, Sokoto and 3) University of Nigeria, Nsukka.

Innoson in 2020 expanded its operations with a semi-automated bus assembly line. Innoson Vehicle Manufacturing and Omaa Motors are now actively producing CNG Powered Buses and Trucks.

KEY RECOMMENDATIONS FOR EV AND CNG VEHICLES DEVELOPMENT

The following recommendations are aimed at establishing a highly effective ecosystem for the exponential development of Electric Vehicle and Compressed Natural Gas Vehicles:

Provide legislative support in passing the 2023 National Automotive Industry Development Plan Bill. This will strategically position Nigeria to attract significant FDI in the Automotive Sector and also put in place the necessary levers for exponential growth in vehicle production to feed the Nigerian, African and global markets.

Approve the implementation of the Electric Vehicle Development Plan and Policy to fast Track the development of Electric Vehicles in Nigeria.

Commit the necessary funding and support to the NADDC for the development of the Ultimate Nigerian Vehicle, the Pride of the Nation, one in tune with the culture, terrain and economic structure of Nigeria, perfect balance of affordability, practicality and advanced features.

Provide dedicated funding for the Vehicle Finance Scheme with special emphasis on EV and CNG vehicles, to enable affordable nationwide purchase of locally produced vehicles by Nigerians, thereby boosting production and further growth of the sector.

Target the creation of 1 million jobs in the Automotive Sector.

Enable attainment of 40% local content production in the Automotive Sector through strategic funding and provision of affordable infrastructure at dedicated industrial parks and clusters.

Enable the attainment of 30% local production as Electric Vehicles.

Enforce stricter Vehicle Emission Regulations to achieve environmental targets as per the 2015 Paris Accord (on the mitigation of greenhouse gases) and the nation’s commitment to net zero by 2060 as pronounced at the 2021 COP26 in Glasgow.

PALLIATIVE MEASURES TO MITIGATE THE EFFECT OF PETROL SUBSIDY REMOVAL BY MAJOR OIL MAKERTERS ASSOCIATION OF NIGERIA

Timelines – Short Term (3 – 6 Months)

Short-term palliatives have a time frame of 3 – 6 months for ease of implementation. Any period longer than this might be unmanageable. ❑ We recommend that the government initiate public awareness campaigns to: ▪ Educate and sensitize the population on the need to reduce energy consumption ▪ Highlight the benefits of cutting energy costs ▪ Move citizens towards mass transit and pooling transport resources ❑ Institute a subsidy bridging scheme targeted at state transport unions, associations and vulnerable groups, using Oil Marketing Companies’ payment cards to keep low transport fares. This scheme would be funded by state governments in their respective states.

Timelines – Mid to Long Term (6 months and beyond)

Investment in research & development in the agricultural sector. ▪ Infrastructure Development: To enhance the availability of CNG and LNG, the government should prioritize the development of infrastructure, including pipelines, refueling stations and LNG terminals, across the country. ▪ Tax incentives, duty waivers, and low-interest loans should be put in place to encourage solar and other renewables. ▪ Tax incentives, duty waivers, and low-interest loans should be put in place for the purchase of CNG and LNG powered vehicles and equipment. Additionally, partnerships with financial institutions can provide favorable financing options for businesses and individuals looking to transition to CNG and LNG. ▪ Training programs and schemes can be implemented to equip mechanics and technicians with the necessary skills to service and maintain CNG and LNG-powered vehicles.

Proposed areas of intervention:

SOLAR ENERGY

BIO-FUELS

TRANSPORTATION

PUBLIC AWARENESS & ENLIGHTENMENT CAMPAIGNS

RESOLUTION:

After careful deliberations on various issues about the palliatives measures to mitigate the effect of petrol subsidy removal raised by the different stakeholders, Council agreed that the Governor of Ogun State chair a sub-committee on the matter.

Released by

Olusola Abiola

Director Information

Office of the Vice President

15th June, 2023