OBSERVATION: Fuel Subsidy Removal In Perspective

 

BY ADEMOLA YAYA

SUBSIDY is a benefit given to an individual, business, or institution, usually by government. It is given to remove some burden in the overall interest of the public to promoting social good or economic policy. It could also be said to be a payment from government to private entities to ensure firms stay in business. Simply put, it is a direct or indirect payment, economic concession by government to private firms, households to promote a public objective.

Although United States operates a full blown free market economy – capitalism – its federal government subsidises some areas of economy. In fact, the biggest beneficiaries of subsidy in US are agriculture, energy and transport. The government subsidises farmers to assure supply of foods all-round the year especially corn, soy, wheat and rice. It subsidises green energy, oil and gas and electric cars.

In Nigeria today, as a result successive governments’ lip service to diversifying economy, oil has become the lifeline of the country and its people. However, things had never been so horrible. We’re blessed with avalanche of crude oil and have four refineries that could process it for our local consumption and excess sold abroad. Under this arrangement, while we could sell crude oil to the international market at international price, we could sell our crude oil at a subsidised local price to our refineries so that our refined petroleum products would be sold at a very affordable price. This alone will stabilise the prices of goods and services and checkmate inflation. In addition, it will drastically reduce agitation for increment in workers wage as increase in the price of crude oil internationally will have no effect on the price of our local consumption.

However, over time, the ruling elite and their accomplices have wreaked all the four refineries. Under this condition, as we sell crude oil abroad, we import refined products. Hence, we are susceptible to the vagaries of increase in the price of crude oil internationally. Simply put, while an increase in the international price of crude oil should be a blessing to us to cash in more dollars, the price of our imported refined oil products will jack up and cause untold hardship to us. Hence, the regime of subsidy.

Already, the spate of insecurity in the land has led to the killings of many farmers on their farms and subsequently forced the lucky ones out of the farms which has immensely contributed to the prohibitive price of foods and other consumables. Furthermore, we are yet to recover from Covid-19 socio-economic disruption. As a matter of fact, the Nigeria Labour Congress has been campaigning for upward review of workers’ wage as inflation has made nonsense of the current salary. Instead of bringing succour to lessen this heavy yoke, National Economic Council (NEC) is set to chastise us with scorpion by recommending total removal of oil subsidy that will lead to increase in the price of fuel from between N162 and N165 to N302 per litre by June 2022 which will literally cut the throats of the mass of the people. Membership of NEC comprises 36 Governors, the Governor of the Central Bank and other co-opted government officials chaired by the Vice President. It meets monthly and its mandate is to advice the President on economic matters of the nation.

By the virtue of their numerical strength in the council, the governors are major decision makers. Therefore, people should, first and foremost, in their respective states, hold their governors responsible for the decision to increasing fuel price. Why should the governors be so insensitive to the plight of their people? Why should Nigerians pay for the dysfunctional state of the refineries administered by the ruling elite who are profiting from the oil importation and subsidy scam?

Given the economic reality on ground, what is needed is more subsidy on oil and agriculture to cushioning the effect of soaring food prices and socio-economic dislocation associated with Covid-19. In fact, removal of fuel subsidy is a pointer to the fact that the President Buhari’s plan to pulling 100million Nigerians out of poverty by 2030 is a bogy and ordinary sloganeering as subsidy removal will condemn more into poverty and penury. Recall that President Muhammadu Buhari had, in 2021, set up a National Steering Committee to oversee the development of the Nigeria Agenda 2050 and Medium-Term National Development (MTNDP) to succeed Vision 20:2020 and the Economic Recovery and Growth Plan (ERGP) with the plan to pulling 100 million Nigerians out of poverty by 2030. We are already in a living hell. The old mantra that money saved from subsidy removal will be used for development of the economy can’t fly again. The children fuel subsidy removal will bear are chaos, poverty, penury and intensified crime.

Although the government has suspended the subsidy removal perhaps because of NLC and Civil Society Coalition threat to mobilise people for rallies and mass protests against the satanic decision, the youth and mass of the poor people should reject electoral bribe but vote in the forthcoming elections on concrete programmes and policies to be implemented; and having given out their mandate, hold these politicians accountable if they derail in fulfilling the promises

Anyway, there seems to be a reprieve in sight as Aliyu Dangote Oil Refinery in Lekki, Lagos State, is poised for processing capacity of 540,000 barrels of crude oil per day by this September and full product by the end of 2022 with installed capacity of 650,000 barrels per day, which will meet Nigeria’s fuel demand and excess exported. The refinery will protect about $16bn Forex revenue and save $10bn yearly via domestic supply of petroleum products and create 250,000 jobs when completed. While Dangote will make his profit, cost of importation of fuel and other miscellaneous will have been saved on the one hand. On the other hand, government should make some concessions to Dangote on crude oil sales, which are in tune with international best practices. All these will lay subsidy to rest, stabilise and boost the economy and remove some yoke off the necks of the poor in the overall interest of the public to promoting social good.