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The Fuel Subsidy Tiff

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Three hundred and forty Naira – yes, N340 – for a litre of Premium Motor Spirits (PMS) by the year 2022!

Unlike other milestones such as the esoteric Vision 20:2020 by which Nigeria was to have been catapulted into the league of the first 20 economies in the world at the finishing line of the last century, the N340-per-litre of what we generally call “fuel” or “petrol” is not a joke.

Right-pricing fuel (the euphemism for subsidy removal on petrol) has been on the card as far back as the Second Republic (1979 – 83). The government of President Shehu Shagari jacked up the PMS pump price from 15.3 kobo to 20 kobo in 1982. That was when 55 kobo would buy one US dollar! Shagari didn’t make it a headline, but his administration bore subsidy on petrol.

The term “subsidy” in relation of fuel became an official Nigerian lexicon four years later when military President Ibrahim Babangida introduced the widely unpopular Structural Adjustment Programme, influenced by the International Monetary Fund. So, the pump price moved from 20 kobo to 39 kobo per litre.

Fuel subsidy removal has since developed into the banana peel of many administrations since then. For instance, those who wanted President Goodluck Jonathan out of power massed against his commitment to kick subsidy in the petroleum sector out of our life. On the first day of 2012, Jonathan gave Nigerians an unusual New Year gift in the form of the cancellation of fuel subsidy. Civil society and opposition politicians rallied protesters in major cities against the policy. “Occupy Nigeria”, as the movement was known, was a major factor in making the statesman from Otuoke un-electable and unable to repeat the class as President of the Federal Republic of Nigeria. He lost and uncharacteristically conceded the 2015 poll. But from N87 per litre where Jonathan left it, the pump price has skyrocketed to N165 today.

From the point that Nigeria’s oil corporation, the Nigerian National Petroleum Corporation was dressed in a corporate garb two months ago following the enactment of the Petroleum Industry Act, it was obvious that the subsidy regime and allied issues would no longer be treated as “business as usual”. Tuesday’s announcement by the Group Managing Director of the new NNPC Limited, Mele Kyari was therefore anticipated. For quite a number of people, the shock was not the increase but that the pump price of fuel would hit the root by as much as 110 per cent early next year!

In a country where the akara seller next door blames her price increase on the existing pump price of fuel even when none of the components of her business justified her claim, tougher times indeed lie ahead. Nigerians are no doubt resilient – aren’t we the happiest people on the face of the earth? – but this is one big hit that may be too hard to bear.

How well have we recovered from the economic setback propelled by the Covid-19 pandemic to be able to navigate the unpleasant economic time the spiralling inflation expected post-subsidy removal will usher in? This is one of the major reasons that organised labour is leading the campaign against the proposed hike.

Government says it will provide a soft landing for the vulnerable through financial support. Finance, Budget and National Planning Minister Zainab Ahmed has been on the rooftop lately, shouting about the N5,000 support for 40 million poor Nigerians.

We have never been faithful with figures. Our last attempt at counting ourselves was 20 years ago! As a result, we have been basing our projections on guesstimation (guess work and estimation). How do we then get the precise data on who gets what? How do we eliminate potential fraud in the system, in which previous policies were enmeshed in? How will the palliative not end up in the wrong hands as experienced in similar initiatives?

Throwing cash into this challenge is not smart. An oil-producing country that depends on other countries to refine its raw product and import it in finished form back to it has prepared itself to sink into the deep shit we now find ourselves. For decades that Nigeria embarked on turn-around maintenance of our refineries, the only things that turned around were the pockets of those in charge with their pockets bulging at the seams. One of the hopes in the horizon is the 650,000 barrels a day by Dangote Refinery. But that massive relief remained only what it is: hope.

Yes, Nigeria is bleeding from the subsidy on fuel, but have we done enough to check leakages in the system through which the country pays for product not supplied?  Have we killed the corruption within the supply chain? Of course, if we don’t kill corruption, the cankerworm will hit back at us ferociously, and kill us. That is the dilemma of the Nigerian situation.


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