Fuel Subsidy: Reasons behind its removal

It is important that we understand why Government has decided to remove fuel subsidy.
Reason No. 1:
Government do not have the capacity to generate enough revenue to fund national budget. This is due to the fact that our economic experts and fiscal policy formulators are dry of ideas. If not so, there are many other ways to generate revenue without hurting the masses. The removal of fuel subsidy is killing the masses. Democratic governance is not all about Naira and Kobo. Let us think of better ways to fund national budget.

In this regard, government should reduce the size of governance, cut the salaries and allowances of elected and political office holders by 50%, introduce a Wealth Verification legislation, and tax the wealthy. Visit my blog http://nigeriademocracywatchtower.blogspot.com for more details on this issue.

Reason No. 2:
Government is unable to curb corruption in the oil sector. A minority but powerful cabal has taken over the NNPC and all its subsidiaries. This cabal actually decides the fate of Nigeria, since we depend on oil for national development. The cabal is so powerful that no one dares them. They have systematically ruined our refineries so as to promote the fuel-import business where they make billions of naira in illegal deals. Though, government is aware of this, there is no courage to confront them. The safest thing it could do was to remove subsidy. In doing this, government is using the masses as cannon fodders to fight corruption in the NNPC. This is wrong. We cannot afford to sacrifice the poor suffering masses to fight the cabal. We are all aware of the pains Nigerian masses are suffering owing to the jump in the prices of goods and services.

The palliatives as announced by government will not do much. This is because, Nigeria is still largely rural. This will make it impossible for the palliatives to get across. Take for instance the issue of 1,600 diesel powered buses that will be distributed across the country. Apart from the fact that many rural areas do not have roads that these buses will ply, who will regulate the fares that the transporters will charge since the loans will be paid back in five years time?

It is most painful that while other nations are designing fiscal policies that will strengthen the purchasing power of citizens, we are doing the direct opposite here in Nigeria.

The governor of the CBN, Lamido Sanusi said 70% of Nigerians are living below poverty line. Ironically, this same Sanusi believes that these poor Nigerians can withstand a further weakening of their purchasing power. My opinion is that Nigeria's socio-economic framework is still too weak to withstand any devaluation of the pocket-worth of the 70% poor Nigerians. Government should first fix the power problem, make our four refineries operate at optimum capacities, reduce corruption, and make our public infrastructures functional to stimulate economic growth. This will reduce poverty and create new jobs that will be sustainable.

I also do not agree that it is only the rich that benefit from fuel subsidy. We do not need to tell lies in order to make our argument look attractive. Based on the meager resources at their disposal, it is the poor that actually benefit more from the fuel subsidy. Now that it has been removed, we can appreciate the wisdom in my argument.