This Unending Fuel ‘Subsidy’

Each time the federal government desires to increase taxes, it talks about removing subsidy on petroleum products.  Last week, the managing director of the International Monetary Fund, Ms Christine Lagarde, was widely quoted as requesting the Nigerian government to do “the right thing” by removing fuel subsidy. It was time to obey the IMF, and finance minister Zainab Ahmed briefly echoed Lagarde. Many fuel stations started hoarding the commodity. Queues returned.  And Minister Zainab had cause to “clarify” that the federal government had “no plan to remove subsidy now”. In other words, it had a plan to remove it later.

The government should quickly remove what it calls “subsidy” on all petroleum products without delay, so Nigerians could stop dying in installments. The downstream sector of the Nigerian petroleum industry has since been deregulated. Yet we hear the lie that government retains subsidies on petrol and kerosene. As has become self-evident, the “subsidy” has been a clever web of graft through which billions and trillions of naira have been shared among thieves. At least that was the view canvassed by the present leaders of Nigeria until May 2015.

When the Goodluck Jonathan administration announced that the subsidy had been removed on January 1, 2012, the current APC leaders raised hell, sponsoring mass protests against the then ruling government. After the “Occupy Nigeria” protests, several panels of inquiry found that close to N2trillion had been stolen in the name of subsidy between 2010 and 2011. And, in 2012, about 123 private jets bought and brought into Nigeria were all traceable to the same people purportedly importing subsidised fuel. In 2014, the nation was regaled with tales of kerosene “subsidy” that gulped N700 million daily. Yet, the kerosene supposedly sold N50 per litre was found only in the land of ghosts.

Under Jonathan, the 36 states’ finance commissioners had already reached an agreement on the removal of all subsidies on petroleum products. Then APC presidential candidate Muhammadu Buhari was among those who said there was no subsidy in the first place. Bola Tinubu was in Lagos railing against “tormentors” of the common man.

After the announcement of January 2012, the price of a litre of petrol jumped from N65 to N140 in many places. But after the protests and the Jonathan government’s surrender, it was increased by only N10 from N87. With the APC in government, we were told the “subsidy” had been removed when the price jumped from N97 to N145 per litre. Which subsidy, then, are we hearing again in 2019?

It is time to let them have their way and for ordinary Nigerians to gird their loins for harder times. Likely, a litre of petrol will cost as much as N400 when, eventually, the subsidy is removed. But we expect that the high price will be temporary. The existing cartel may unite to keep the products’ prices high, but new players/importers will inevitably force the prices down. With competition from both importers and private refineries, the fuel prices are not likely to remain higher than N300 per litre, after a year or two. And once a more purposeful government that can manage our God-given resources more efficiently emerges, the prices may reduce further.

A clear proof of sabotage lies in the irony that an oil-rich country imports almost all of its fuel needs. The four refineries have been crippled and the Greenfield refineries promised by the Jonathan administration have yet to see the light of day. All talk of privatising the existing refineries has been muted, apparently because the managers of the petroleum sector have not been sincere all along. While crude oil’s importance is declining worldwide as other energy sources are being harvested, the NNPC is wasting billions of scarce dollars on a wild goose chase in the Chad Basin.

In supporting the removal of “subsidy”, therefore, we are not asking that more pains be inflicted on already traumatised Nigerians. We have only taken notice of the monumental corruption, lack of transparency and inefficiency existing in both the nation’s oil industry and government apparatchiks. When the phantom subsidy is removed, one pipe through which looters siphon trillions of naira each year will be blocked.  Then, we shall see a reason to block other pipes — such as security and defence expenditures –also deliberately invented for stealing public funds.

With: The Oracle Today

Most Popular

To Top