Total Pageviews

Sunday, July 29, 2012

What Fuel Price Hikes: No Lessons From February 2008 Strike?


Petrol and petroleum products the world over have led to wars and revolutions. The gulf war and other wars and revolutions in the Arab world have been because of the quest by some western powers to control oil fields in the rich petrol producing countries and then determine world prices of such petrol. Be it in crude form, that is brute petrol or in its refined form, that is fuel for immediate consumption, its price determines the prices of other commodities. This is why the least augmentation of the price of fuel has led to strikes in most countries as it affects the cost of living and the standard of living of the population. It is still fresh in the memories of alert citizens the February 2008 riots in Cameroon that nearly paralyzed the entire nation. The February 2008 riots were because of an increase in fuel prices that provoked a negative rippling effect in the prices of other commodities. Next door Nigeria and far off Tunisia went through similar strikes because of the increase in fuel prices leading to the collapse of the regime in Tunisia. Despite the February 2008 strikes, Cameroon apparently appears to have come out of the crises without learning any lessons.
Fuel price hikes are imminent in Cameroon, as the government has embarked on an information campaign mission to prepare public opinion to swallow the bitter pill of fuel price hikes. This is so because it is legendary in Cameroon that when the government intends to take any unpopular move or a decision that might attract some anger and consequent rioting by the population, people’s minds are prepared far in advanced through specialized information slots on the public media. This is usually called testing the water. When the minds of the public is sufficiently prepared, then the government slides in the unpopular move cushioning it with apparent accompanying measures that are nothing short of blindfold of the unsuspecting public. Since last week government has surreptitiously employed the services of CRTV and Cameroon Tribune to prepare public opinion on an imminent fuel price increase. It is even being circulated in high government circles that the move is even belated for it was earmarked to begin in December when SONARA publicly announced that it was going to temporarily shut down its installations for maintenance. Government intended at that moment to use that as an excuse to increase fuel prices, but the prevailing political circumstances did not favour the move as President Paul Biya who won the Presidential elections whose results were being contested by the opposition did not want to take chances. After consolidating national and internationally the victory of the October 2011 Presidential elections, government it is alleged intends to gradually push through fuel price increases and wants first and foremost to prepare public opinion through tele-guided information dissemination on the public media

CRTV And Cameroon Tribune Fire Warning Shots.
On July 17, 2012 the Director of Information at CRTV Television, Charles Ndongo invited panelists to the programme, “Par ici le débat” to discuss on the sustainability of the subvention of petroleum products by the state since four years and whether the state should continue to subsidize the prices of fuel at the filling stations. During the programme a well selected pro-government panelists went beyond human comprehension to explain why government should desist from continuously subsidizing fuel prices for it was a waste of financial resources and unsustainable. Charles Ndongo’s debate came closely on the heels of the Sunday evening programme, “Scènes de presse” where the issue was also discussed at length in a bid to prepare people’s mind on the imminent bomb shell. Cameroon Tribune dedicated full pages in two editions just to push through governments ideas. The services of Grande Reporteurs like Martin Badjang Ba Nken were solicited as he wrote a well researched article to show that government was wasting money in subsidizing fuel prices. He ended his article by appealing to his readers to support the lofty idea of government to cut subsidies on fuel prices, for the projected FCFA 400 billion that was supposed to be used for fuel subvention in 2012 could be used to realize other major projects like the Lom Pangar Dam and the building of health infrastructures.

Government Missions Abroad
Officials of the Ministry of Finance led by Jean Tchoffo, Secretary General of the Ministry of Finance who doubles as the President of the Technical Committee for the follow-up of Economic programmes and Ibrahim Talba Malla, Director General of the Hydrocarbon Price Stabilization Funds, CSPH travelled to Dakar Senegal some months back to learn from the Senegalese experience in handling fuel prices. After the visit, a reflection workshop was organized on June 14-15, 2012 between officials of the Ministry of Finance and Transport to brainstorm on ways of attenuating the negative effects of an eventual withdrawal of subventions on petroleum products. During the workshop Boniface Ze, Technical Director of CSPH gave an exposé that provoked serious debate amongst participants. From his talk, it emerged that government wants to henceforth embark on what he called “Targeted Subvention” which might be structural, fiscal, and administrative or on custom duties. It emerged during the meeting that government intends to embark on special missions abroad to countries that do not subsidize petroleum products to learn from their experiences and then implant those experiences in Cameroon.

Trade Unions Threaten Strikes
Prior to this vast information campaign to prepare public opinion, government had struggled to woo trade unions to buy the idea of a price increase. On May 18, 2012 government invited road transport Trade Unions and leader’s of the Civil Society to a restitution seminar in Djeuga Palace Hotel in Yaounde. It was to evaluate a World Bank studies that demonstrated that there was some gross injustices in the subvention by government of fuel prices at the filling stations, because the subsidies essentially benefited the rich and not the poor. The leaders of the Civil Society and Road Transport Syndicates sensed that it was a camouflaged subterfuge to increase fuel prices at the filling stations.
Meanwhile, trade union leaders that attended the meeting insisted amongst other measures to be taken by government the eradication of TVA for transporters, the putting in place of a unique counter for the payment of all transport documents, and the provision of comfortable secured resting places along the highways for drivers. But other trade leaders who were not part of the meeting with government officials are threatening strike actions if government dare increases fuel prices. They argued that the meeting was only for interurban transporters and truck drivers. They added that in the transport sector, the demands and problems are not the same and one trade union cannot take a binding decision for all other trade unions. They requested that the same kind of reflection should be embarked upon with taxi drivers and bendskin riders. While the issue is raising a lot of dust in the transport sector, it is alleged that the government envisages other missions abroad to further prepare government officials with methods of instituting price increases without causing the wrath of the population.

Taxes Raise Prices At Filling Stations
Many analysts are of the opinion that government has a large margin to solve the problem of fuel hikes at filling stations without necessary increasing prices by withdrawing subventions. They argue that the prices practiced at fuel filling stations are high because of the various taxes government has imposed on petroleum products. For instance it is demonstrated that between the refinery SONARA and the various fuel filling stations nationwide there are numerous taxes that exist. According to prices for March 2011 homologated by CSPH, a litre of super inside  SONARA cost FCFA 335, 27, Kerosene FCFA 380, 62 and gasoil FCFA 372, 08. Paradoxically, immediately these same products cross the gate of SONARA they undergo through numerous tax impositions that increases the prices. There are 22 tax impositions on petroleum products that leave SONARA for the final consumer. FCFA 235,95 tax is imposed on a litre of super and this brings the retail price at the filing stations to FCFA 569. FCFA 350 for kerosene and FCFA 520 for gasoil. Trade Union leaders requested the suppression of some of these taxes as the panacea to avoiding price increases at the filling stations.

Wrong Timing
Government’s decision to increase fuel prices is ill-timed. It is alleged that the government move will go operational in August, a month most parents are battling out with the payment of school fees and the procurement of school needs for their children. Increasing fuel prices at this moment will affect the prices of everything and might provoke anger. Equally the social climate in Cameroon now characterized by arrests, trails and sentencing of some regime bigwigs do not augur well and any misunderstanding can degenerate to something else. The consequences of the February 2008 strikes should not be forgotten, especially as some people were arrested and jailed.
It is worthy to recall that government decided to subsidize petroleum products in 1986 to avoid price hikes and high cost of living. FCFA 1089 billion is estimated to have been consumed as subvention between 2008 and 2012. In 2011 government spent FCFA 323 billion and projections put it at FCFA 400 billion in 2012. Studies by the National Institute of Statistics on households, dubbed ECAM stated that irrespective of the petroleum product consumed, beneficiaries were those of high income and not those with low income. This is what government is using to back the move to withdraw subsidies from petroleum products, yet the pill seems to bitter for the masses to swallow.

No comments:

Post a Comment