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GIVING FUEL SUBSIDY A BAD NAME


By: Kali Gwegwe
 Published October 19th, 2011

I have, over the last twenty-four months written severally on the need for government to maintain the current fuel subsidy regime. My main argument has been that Nigeria’s socio-economic framework is still too fragile to absorb whatever shock that may arise from further increases in the pump price of petroleum products. I am not unaware of the fact that the income and welfare of Nigerians have not improved for a long time.

As at March 2009, the National Bureau of Statistics (NBS) reported that about 10m Nigerians were unemployed. This figure is disputable. It reported a mere 19.7 employment rate. Sadly, unemployment has continued to be on a steady rise in the country owing to a number of critical factors. The volume of economic expansion has not been robust enough to correct the causes of growing unemployment in the country.  Some of the major factors contributing to high unemployment figures are pandemic corruption in private and public sectors, high cost of doing business, poor power system, insecurity, lack of access to financing, high interest rate, and dilapidated public infrastructure among others.  All of these have in turn helped to promote the negative culture of poverty, hunger, crime, disease, and underdevelopment.

It was in the midst of this sad reality that Goodluck Jonathan contested and won the 2011 presidential election. For one very simple reason, Nigerian masses wholeheartedly welcomed with both hands, the transformational agenda of President Goodluck Jonathan. It was aimed at alleviating the long time suffering of more than 60% of the nation’s population that literally sell their own blood in order to provide food, clothing, housing, transportation, education, and health care for members of their families.

The transformational agenda started well with a “zero tolerance for corruption” posture. For the first time, a large cache of “untouchables” were arrested and docked for issues bothering on graft. Deliberate efforts are also being made by government to diversify the nation’s economy through practical steps to discontinue our reliance on the unpredictable revenue from oil and gas. Another highpoint of the transformational agenda of the Jonathan-led administration is the renewed vigour towards fixing the very important power sector through increased funding and other complimentary instruments and policies. To crown it all, government found it wise to increase the basic salaries of workers after coming to the realization that the nation’s present socio-economic framework was too weak to support majority of households in the country meet their statutory obligations.

Owing to the ignoble activities of a few but powerful persons working with foreign collaborators, four of the nation’s refineries located in Rivers, Delta, and Kaduna States were systematically sabotaged in order to promote a needless fuel importation business. As the world’s sixth largest producer of crude oil, we have no reason to import petroleum products at all. As a matter of fact, Nigeria is importing petrol and kerosene today because government has lost the battle of “will” to a tiny group of people that feed on the common blood of Nigerians. Instead of going after these enemies of the nation, government is being stampeded into harassing hapless citizens through the arrogant attempts to remove fuel subsidy.

Signs suggesting that government have lost the soul of the nation to a small clan of greedy and heartless Nigerians and their foreign accomplices emerged when the governor of the Central Bank, Mallam Lamido Sanusi called for the immediate withdrawal of fuel subsidy shortly after resuming office. His major plank of argument was that only a “tiny cabal” was benefiting from the huge subsidy paid by government. I strongly disagree with Sanusi’s opinion.

It is quite regrettable that the CBN governor will in a cheap attempt to push his opinion through, dismiss and bury the fact that millions of Nigerians benefit from the subsidy government pay on petroleum products. For the few people like him that does not dip hands into their bottomless pockets to buy petrol, he may find it convenient to deny the benefits of fuel subsidy. This kind of attitude displays the mien of the average top government official. The truth is that, there are millions of Nigerians, including bus/taxi drivers, small scale enterprises, Okada riders, hair dressers, restaurateurs, hoteliers, and even religious organizations that save about N90 for every liter of petrol they buy. No person or amount of propaganda can drown this fact in a pool of insensitivity of a few well-heeled government officials.  A lie will always remain a lie, no matter who tells it. This clarification is very important because of the high amount of respect President Jonathan has for his aides and other top government functionaries.

Sometimes, government officials acting the script of third parties, can deliberately give counsels that will put their principals in problem. The president should therefore take heed of this and ignore any policy that will put more holes in the pockets of ordinary Nigerians. In everything, let him stand with the masses. Events around the globe have shown that power actually belongs to the masses. I am tempted to believe that the enemies of Nigerian democracy (they are many) will take advantage of the expected uproar that will greet the removal of fuel subsidy next year to incite the masses to ask for the resignation of the president. These are some of the reasons why the president must be very cautious with the suggestions he receives from his advisers, ministers, and other top government functionaries.   

The unilateral position of Sanusi concerning the removal of fuel subsidy was emboldened by the coming of Dr. Okonjo-Iweala as the Minister Finance in August, 2011. She too has been in the forefront of calls for the removal of fuel subsidy. I am not surprised owing to her background as a senior World Bank staff. The World Bank is a tool used by the West to promote and protect their economy. Unknown to many, the economic independence of Africa will be a threat to the West. They will hide behind any veil to destabilize the continent’s polity and economy. Some of these veils include Austerity Measures, Structural Adjustment Program, and Currency Devaluation.

Currently, attention has been shifted to the National Assembly. The minister of Finance is investing so much energy trying to convince the legislators on the need to remove fuel subsidy. Let them not be deceived by paper logic. Governance is more of a practical thing than paper logic. They should not be swayed by the beautiful pictures Okonjo-Iweala usually paints about Europe and America. If Nigerian workers earns as much as their contemporaries in those countries, nobody will complain about buying fuel even at N200 per liter.

Sadly, the latest call for the removal of fuel subsidy came from the Nigeria Governors Forum (NGF). According to its chairman and governor of Rivers State, Rotimi Amaechi; the fuel subsidy was enriching only a few people. I strongly condemn the series of lapses that have led to Nigeria becoming a petrol-import-dependent country. However, there is no way those who import petroleum products will not make profit. It is the huge profits these importers make that cause Sanusi and Amaechi to argue that only a tiny number of Nigerians are enjoying the benefits of fuel subsidy. This is a very faulty way to analyze issues and draw conclusion. It will be too wrong for government to sacrifice Nigerian masses just to “fight” those who milk Nigeria through the subsidy they receive from importing petroleum products to service the high demands in the local market.

There is also this suspicion that some persons and companies involved in the importation of petroleum products do collaborate with some government officials to engage in sharp practices that is costing the country trillions of Naira. There are also cases of smuggling of petroleum products out of the country. All of the factors enumerated above are reasons why the CBN governor, NGF, and minister of finance want fuel subsidy removed. If our refineries are working at optimum capacity, we would have no reason to import fuel and spend huge amount on subsidies. The Nigerian masses should not be forced to pay for the inefficiencies of government officials and organizations.

One fact that has emerged clearly from all the calls for the removal of fuel subsidy points to one direction. The nation’s fiscal policy formulators and advisers do not have regard for the Nigerian masses. They are therefore easily persuaded to take a pro-elitist stand each time the need for national transformation arises. In fact, they see the masses as inconsequential in the greater Nigerian Project. This is one strong reason why President Jonathan must be quick to dismiss whatever idea or suggestion that will cause him not to stand with the masses.   

It is also a huge fact that the nation’s policy formulators, special advisers, and senior special assistants to the president are either lazy or ran out of ideas. The only option left for them is to take hold of the jugular of hapless masses by rooting for the removal of fuel subsidy. They see it as a short cut to fixing the nation’s frail socio-economic framework. Like I have suggested elsewhere, the phase has come for government to make the affluent bear the burden of nation’s transformational agenda for the first time in the history of the country. Since independence in 1960, it has been the suffering masses that carry the burden of the nation’s political and economic experimentations.

There is no doubt about the fact that the withdrawal of fuel subsidy will save billions of Naira for government to invest in other critical areas. However, the other side of the coin is that majority of Nigerians are too poor to buy a liter of fuel at N150. These are persons that earn less than $2 a day. It is with this $2 that they pay for the feeding, rent, clothing, education, and medical expenses of their family members. Withdrawing fuel subsidy at this time will definitely increase the level of poverty in Nigeria. The gains of the new minimum wage of N18,000 will be rubbished by the hike in the pump price of fuel.

Like I have suggested in my other write-ups on this same issue, those pushing for the removal of petroleum subsidy would sing a different song if they were earning even N100,000 a month. Many persons in the “president’s team” are not on the same page with him. Ordinarily, their opinions are supposed to be shaped by the pledge of the president, which is to “stand with the masses.” 

Instead of strangulating the poor and hapless masses to raise additional money to service the nation’s socio-economic framework, government should pay more attention to the development of the non-oil sector of the economy. This should be done by energizing the private sector to perform at optimum capacity. This will however mean having a robust power groundwork, cheap access to credit facilities, lower interest rates, improved security of lives and property, friendly tax regime, and a sound transport infrastructure among others. With these fiscal policies, the economy will pick up and help create jobs and improve the welfare of the citizenry. It is at this point that government can contemplate the removal of fuel subsidy. By then, the nation’s socio-economic framework would be able to absorb the shocks that would come with it.

Kali Gwegwe

CEO, Nigeria Democracy Watchtower

2, Greenvilla-Customs Link Road

Biogbolo-Epie

Yenagoa

Bayelsa State

0806 407 4810


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