Home Viewpoint Subsidy: Much Ado About Nothing. BY RICHARD ODU

Subsidy: Much Ado About Nothing. BY RICHARD ODU


President Muhammadu Buhari rightly read the mood of the nation and took the decision to postpone the planned removal of the contentious fuel subsidy. To that extent, he played a fatherly role to the people, aware that the removal was going to bring about a heavy upheaval in the economy and send many Nigerians further down the poverty lane.

It is not to say that all is now okay with the Nigerian economy, even as the trillion naira fuel subsidy packages have been allowed to flow, as usual, into the pockets of both the real and the imaginary petroleum importers. What has come as a dilemma to the nation is that economy watchers have posted a dismal picture of the country, with our without fuel subsidy. They are seeing the suspension of the removal as postponing the evil day.  In other words, Nigerians today find themselves losing head or tail at the toss of the coin. 

It’s a disappointing paradox that petroleum which is in abundance beneath the Nigerian soil, rather than be the oil in the country’s wheel of progress, has become the reason for the nation’s slow march to development.  Our prayer, however, is that oil should not grind the country to a halt. Before the New Year stress arising from uncertainties over the subsidy removal, successive governments had shown how benevolent the state of Nigeria has been to its citizens by subsidizing the petroleum products that they use.

Occasionally, these governments had threatened to remove this subsidy, like an ill-tempered dad would want to snatch a lollipop stick from his naughty child. But the masses insist that it is their right to enjoy whatever benefits that are affordable by the government.The military regime played this game of subsidy removal and handed the baton over to the civilian administration.

In succession, each of the governments had, in one time or the other, grumbled about how the subsidy had remained an albatross to its operations.Subsidy simply means that as the market price of fuel is often higher than what the people currently pay in filling stations, the government has always intervened by paying the difference, aware that fuel price is a major determinant of the price of other goods and services that are transported across the country.

This subsidy is counted as one of the factors that brought down the Goodluck Jonathan administration as it attempted to take it away, claiming that it had constituted an avenue for high sleaze in the nation’s petroleum industry.  During that period, Nigerians embarked on a series of mass protests and demonstrations they termed “Occupy Nigeria”.

Undaunted and convinced that it was the best way to go, Jonathan went ahead to remove it at the risk of losing some political fortune, shooting the price of petrol to N140 per litre about ten years ago.The Nigerian Labour Congress (NLC), alongside prominent members of the society, , however, forced the price down to N97 per litre after negotiations with government, meaning that a bit of the subsidy was brought back into the system.Opposition politicians then declared that there was nothing like subsidy, and that it was just corruption going on in his government.

Despite this claim, the present administration has retained the subsidy while petrol pump price has since risen to N165 per litre following the devaluation of the naira these few years. The truth about it is that if this seeming lollipop is not on the lips of the masses, it will be enjoyed by unscrupulous importers who, sometimes fraudulently smile to their banks with trillions of naira. 

What irks the people in the whole affair is that a nation that had three major refineries of repute, refining crude that is easily obtainable from the nation’s soil, suddenly found itself importing the petroleum products at huge cost and in a regime where the value of the naira had dipped so drastically. If the common knowledge that some past rulers of the country had built refineries outside the country is indeed true, then no one would blame the people when they think that these powerful past rulers have their hands in the sordid situation of the country with regard to petroleum products. 

Years ago, when it became public knowledge that our refineries were no longer working due to some convoluted turnaround maintenance deals in which money was consistently paid to some powerful persons for work not done, an official of the government told the nation that refining was being done abroad and that there was a deal to swap crude oil with the refined one. Crude is what we have in abundance, making the deal a cushioning one, just in the interim. The implication was that money was not explicitly involved in the importation of the petroleum products. 

What really happened to that arrangement?Again, many years after our refineries had grounded, why is there no visible and frantic effort on the part of government, especially the present government that professed change, to fix these refineries and stop the importation that drains our foreign reserves, leaving us disadvantaged in the international trade?The situation gradually led to the springing up of illegal refineries in the south south region, a development that had serious environmental implications. We recall again that incumbent Vice President Yemi Osinbajo had flashed a solution to this in the way of licensing a few of these illegal setups as modular refineries and bringing them under government control. 

This proposal is yet to take off, just as the various licensed private and state government refineries are yet to assume form.  The two sides of the subsidy issue have left Nigerians in a quandary. If removed, the spiraling effect of the higher cost of petrol would send food and other commodity prices to the rooftops, thereby increasing the poverty level of the masses as well as raising the inflationary rate. If not removed, the hawks in government collaborate with unscrupulous business men to suck public coffers dry, using subsidy as conduit pipe.  

Some have suggested that the subsidy be transferred to other areas such as health and education. That in itself is more susceptible to fraud as funds injected would almost be difficult to track or even quantify, just as in the days of military President Ibrahim Babangida who invested the saved funds into the transport sector. And, how is it that the various increases in the past had not taken care of the subsidy?It appears that the more we look at subsidy, the more confused we become. The trend is that every government plotting to remove subsidy usually woos the masses with promises of palliatives. 

This time, the people were told that some millions of Nigerians would be receiving N5,000 every month if subsidy is removed. Pundits punched buttons and discovered that the N5,000 proposal was going to cost the government more money than the subsidy.  This raised some suspicions as to the sincerity of an administration that has gathered far greater distrust than its predecessors. In any case, the scenario appears to be, whether subsidy is removed or not, money would be spent. Wise counseling has, however, made the government to let the sleeping dog lie. 

The area an earnest administration would concentrate on is in the speedy resuscitation of our refineries to meet the people’s appetite for petroleum products, as well as in electricity supply to cut excessive consumption of petrol and diesel in private generation of electricity. In other words, our struggle over subsidy could be seen as making much ado about nothing since these solutions are within reach.   

 Oil has been at the centre of Nigeria’s problems since it was discovered in 1956 at Oloibiri, in the present Bayelsa State, putting the country among oil producers in 1958 when its first oil field produced 5,100bpd. It sent us into a war and made enemies of brothers. It has spilled our blood and rendered us lazy enough not to look for alternative sources of revenue. It has brought out the oppressor inside us and created feudal lords that are mindless of the people’s feelings. Because of oil, the nation is disunited. This must change.

Dr. Odu writes from Owerri



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