THE TRUTH ABOUT FUEL SUBSIDY IN NIGERIA

THE TRUTH ABOUT FUEL SUBSIDY IN NIGERIA

I have in the past, and will continue to disagree with the minority elitist clan of bureaucrats calling for the removal of fuel subsidy. I do this just for one simple reason: Nigeria’s present socio-economic framework is too weak to carry the additional burden that will arise owing to any further hike in the pump price of petroleum products. The removal of fuel subsidy will for sure leave millions of hapless Nigerians at the mercy of international market forces. This is not only dangerous, but undemocratic.
Let it be understood that subsidy is an indirect way of putting money in the pockets of citizens. It should therefore not be seen as waste of money as the Central Bank of Nigeria (CBN) and Federal Ministry of Finance (FMF) would want us to believe. Furthermore, the removal of fuel subsidy is just one among the several means through which government conserve funds. Despite this fact, most developed countries still subsidise critical sectors of their national economy. For instance, agricultural subsidies alone accounts for more than 40% of the total budget of EU. This has not only helped the agro-allied sector to grow; it has equally promoted food security in the EU. The message here is that, subsidy is not as bad as is being painted.
Like in every other country on the face of the earth, activities in the petroleum sector are strongly tied to international market forces. Apart from the fact that Nigeria does not have influence over the pricing of crude oil in the international market, our local currency is too weak against the US Dollar. Those campaigning for the removal of fuel subsidy must also take into account the fact that Nigerian workers are not paid the Dollar equivalent of what their contemporaries earn in developed countries. This fact alone should rubbish the bases for anyone to assume that the income of the average Nigerian workers can withstand the effects of removal of fuel subsidy. The very wide disparity in the wages of Nigerian workers and their contemporaries in developed countries where fuel subsidy was removed should act as bumps along the economic road Sanusi Lamido and Olusegun Aganga are driving. President Goodluck Jonathan is also reminded that there are inherent dangers associated with leaving the fate of the down trodden masses at the mercy of international market forces, which Nigeria does not have any influence over. This is the major reason why fuel is still being subsidised all over the world.
The Economist reports that over half of the world’s population enjoy fuel subsidies. However, the level of subsidy varies from country to country. For instance, the official pump price of a litre of petrol in Nigeria is N65- about US45₵. However, petrol marketers sell a litre of petrol for as much N100 in the riverine areas of the Niger Delta region due to the dearth of major marketers. Venezuela is reputed to be the nation with the cheapest fuel. There, a litre of petrol goes for just 4₵. It is 79₵ in China, 15₵ in Saudi Arabia, 30₵ in Kuwait, 29₵ in Egypt, 16₵ in Libya, 24₵ in Qatar, and 13₵ in Iran. Compare this to the $2.77 in Britain, $2.62 in Germany, $2.69 in France, and $1.15 in the United States. The percentage of subsidy is mostly influenced by government’s evaluation of the country’s socio-economic framework.
While it is true that the subsidisation of petroleum products is costing the country huge sums of money annually, it must also be noted that democracy has a distinct fundamental character- good governance. Under normal circumstances, this character is not supposed to be killed on the alter of narrow and shallow economic theories, strongly influenced by lack of practical ideas by fiscal policy formulators and economic advisers.
In every democratic society, leadership is mostly about offering selfless service. On the other hand, politics is a democratic exercise aimed at securing the mandate of the electorates in order to offer quality leadership for the good of man and society. There is no doubt that sound political leadership is the hallmark of every healthy constitutional democracy. Fortunately, Nigeria is gradually adjusting to the culture of good governance. Eleven years of uninterrupted democratic governance is indeed a huge achievement. The important need to sustain this political culture cannot be overemphasised.
It is sad to note that for more than one year now, there has been an orchestrated pressure on the federal government to withdraw fuel subsidy. This pressure has been mostly from the leadership of the FMF, CBN, and membership of the Nigeria Governors’ Forum. It is necessary to note that by virtue of their remuneration and accompanying entitlements, this category of government officials can afford to buy petrol even at N500 per litre. They are definitely not representing the interest of the over 60m unemployed Nigerians. Even among the employed citizens, how many can rely on their salaries for feeding, transportation, rent, medical, and academic needs of their families?
In calling for the removal of fuel subsidy, the two ministers in the federal Ministry of Finance, Governor of the CBN, and membership of the Nigeria Governors’ Forum failed to look at the nation’s socio-economic framework critically. Quite frankly, an average Nigerian family (father, mother, and three children) would need about N5,000 daily in order to escape poverty and withstand the negative effects of increase in prices of petroleum products. Of this amount, feeding alone will gulp N3,000: N200 x 3 meals x 5 persons. Transport will take another N1,000: N200 x 5 persons. Another N1,000 would equally be needed to cover rent, medical, academic, and miscellaneous expenses. Unfortunately, a large chunk of the nation’s workforce is earning in a whole month, what they would need for just a day. It is in this very sad situation that highly informed persons in government are calling for the removal of fuel subsidy, which will no doubt drive up the price of transportation, rent, essential commodities, and services.
I am of the opinion that the inability of fiscal policy formulators and the several teams of economic advisers to find appropriate solutions to the nation’s poor socio-economic infrastructure are forcing them to look for shortcuts. The removal of fuel subsidy is by all indications a dangerous short cut to our economic recovery. Rather than rely on the immediate gains from subsidy removal, the nation’s fiscal policy formulators and economic advisers should encourage government to diverse the economy by opening up the non-oil sector. Through this way, the already battered Nigerian masses would not be forced to carry the burden of a few corrupt officials and inefficient team of economic advisers and fiscal policy formulators. There are abundant potentials in the agro-allied sector alone. In case Aganga, Sanusi, and Babalola need help, I would offer it free of charge for the sake of our dear nation. Government can raise huge sums by rejigging the nation’s anti- corruption protocols. Corruption is costing Nigeria more money than fuel subsidy. They should also advise government to embark on a thorough review of all contracts and audit the activities of the NNPC. It is very clear that most contracts have been inflated to oil the wheels of corruption. The fact that the activities of the NNPC have been shrouded in secrecy for decades is an indication that Nigeria was being milked dry by a few dishonest people in the system.
Worse still, it is a huge shame that government officials have had to resort to blackmail and propaganda in order to stampede government into withdrawing fuel subsidy. From a safe distance, the anti-subsidy apostles appear as though they love Nigeria so much. Far from it! They are only trying to cover up their abysmal lack of credible ideas. Why must anyone deceive the Nigerian public just to score a point?
Only recently, the Executive Secretary of PPPRA, Mr. Abiodun Ibikunle told the world that the 2009 payments for fuel subsidy was N450b and not N1trillion as alleged by the CBN Governor, Mallam Sanusi Lamido Sanusi. This is ridiculous and calls for an immediate investigation. It could be that some persons are short-changing the country. Ordinarily, the operation of Petroleum Support Fund (PSF) is so detailed that corruption cannot find root except more than three key players are involved. The agencies involved in the activities of the PSF are Nigeria Customs Services, Nigeria Port Authority, Department of Petroleum Resources, Federal Ministry of Finance, Office of the Accountant General, marketers, security bodies, external auditors, and inspection agents.