This Fuel Subsidy Debate

Ever since the Federal Government indicated that it intended to stop subsidizing the price of petroleum products from next year, everywhere has been set ablaze with passionate arguments about this controversial move: newspapers, blogs, social networks, etc. There have been arguments for and against the move, mostly against the move. The FG has supported its move mainly by stating that the cost of subsidies which have now risen annually to N1.3trillion cannot be further sustained, especially as when other critical needs are begging for financial attention. It claims to intend to use the cost savings to invest in other developmental projects while part of it would be deployed into “providing safety nets for poor segments of the society to ameliorate the effects of the subsidy removal”. The FG has also found support in the Governors’ Forum, Organised Private Sector (or rather, a select group of big businessmen) and some federal legislators.

Most of the arguments about this move are not based around its economics, but the politics of it. That the cost of subsidies is high is not in doubt, neither is the fact that we need money to invest in critical infrastructure, such as power and rail networks. However, it is the brazenness with which the FG is asking us to let go of about the only thing that Nigerian masses benefit from their country’s wealth, in the name of cost savings, while there are other ways to achieve same. If the government is genuinely interested in reducing the cost of government expenditure, why don’t they start by reducing the size of government? A government with 42 ministers, numerous Special Advisers and Senior Special Assistants, each with a retinue of aides, overheads and perks has no justifiable moral right to ask us to tighten our belts while it is loosening its own. We are looking at a government with 500 MDAs (ministries, departments and agencies), many of them duplicating roles and overlapping and overstaffed, yet is at a loss at where to put the knife to trim the fat other than increase the suffering of its already impoverished populace. This is not even to start talking about the ridiculous salaries of federal legislators, which consume up to 25% of the budget, or the budget of The Presidency, for instance, where N47million is budgeted monthly for the feeding of the families of the President and the Vice President, or that almost half a billion naira is earmarked for medical supplies and services (about N2million daily), and yet they are flown abroad for almost the slightest ailment.

The multiplier effects of removing fuel subsidy are not without doubt: increase in the pump price of petrol, which in turn raise the cost of transportation, and onwards unto the price of everyday items such as foodstuff. We are likely going to see the number of people below the poverty line increase and those already under it, pressed further down under. Even the promise of using the savings to ‘providing safety nets for poor segments of the society to ameliorate the effects of the subsidy removal’ is not reassuring, as it is a very vague and ambiguous statement with no specific plans. We might likely end up seeing another pipe drain project such as the National Poverty Eradication Programme (NAPEP), which has ended being middlemen for the sales of Bajaj tricycles.

Also, the shouts of the proponents of the fuel subsidy removal of a ‘cabal’ holding the nation by the jugular and being the ones benefitting most from the subsidy is at best, very ridiculous. How can it be that the members of this ‘cabal’ are not known? Licenses to import petrol are issues by the NNPC, a government parastatal, while the subsidies are paid to them by the Petroleum Products Pricing and Regulatory Agency (PPPRA), another government agency. How then can it be that they do not who they are issuing licenses and paying billions to yearly? It is almost an insult to our common sense to claim so.

This seems like a case of ‘low-hanging fruits policy’, where the lowest hanging fruits are plucked when juicier ones are up. They should not just go for what is expedient, but what is most benefitting, especially in the long-term.

Moves to reduce or remove the subsidies will only make sense when the Federal Government first tightens its own belt: reduce the size of the government; reduce or stop security votes, which are just a cover to embezzle funds; reduce the salaries and allowances of political office holders, and lastly, be prudent with expenditure. Then, and only then, would a fair amount of the populace see the sense in putting the knife to trim off the little fat that Nigerian masses have. Until then, the government would be expending its energy pushing the wrong things. Even if this move should succeed, all they would have gained would be a pyrrhic victory, as the little remaining trust and confidence people have in the government would be completely eroded.


6 Comments on this post

  1. its sad that the people pushing for the removal are the benefactors of this venture. every day we hear a new minister is appointed, he comes with his aides and they come with their aides who are all taken care of from the government coffers. new schemes to being introduced to spend money(new national ID) without proper planning then later dumped for another scheme with the same purpose and more money budgeted for it. Its not rprayers we need, its a government that thinks of its people and not their pockets.

    wuyah / Reply
  2. Mark, i share in your views absolutely but, pls relate this subsidy with d policies of d IMF and Nigeria’s place in world politics.

    Uchenna Obani / Reply
  3. Thumbs up.

    jason / Reply
  4. […] the larger numbers. Personally, I started by being vehemently against its removal as indicated in this October blog post of mine. After reading endless articles and engaging in debates about it, offline and online, I somewhat […]

  5. […] the larger numbers. Personally, I started by being vehemently against its removal as indicated in in this October blog post of mine. After reading endless articles and engaging in debates about it, offline and online, I somewhat […]

  6. […] the larger numbers. Personally, I started by being vehemently against its removal as indicated in this October blog post of mine. After reading endless articles and engaging in debates about it, offline and online, I somewhat […]

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