Opinion (25/11/2021): Subsidy Illogical – By Titus Orngu

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Nigerian governments have over time, been singing the ‘fuel subsidy’ song but it has become more strident with this present administration. When in 2016, the government hiked the pump price of petrol from 97 to 145 naira per litre, PMB told the nation that he had ‘completely removed fuel subsidy’. But events afterwards show the illogical nature of the subsidy regime in Nigeria.

 

Nigeria is blessed with stupendous crude deposits. Since 1954 when Nigeria started exploring these deposits on a commercial scale, instead of the Nigerian being blessed, he appears cursed! And successive governments have ridden roughshod on the backs of the hapless citizenry with tales that sound so fantastic but are believed by some people because they benefit from the milieu.

 

In spite of huge crude deposits, Nigeria depends on importation to service her daily consumption needs. It is akin to a farmer who produces yams and sells them to a food seller only to go to the seller to buy pounded yam! Nigeria sells crude with all its concomitant byproducts and buys refined oil for consumption. This is the number one point of the illogicality of the subsidy regime.

 

The refined oil is bought in dollars. When the dollar is converted to naira, it is huge! The government, therefore, fixes a price lower than the dollar rate and calls the shortfall, subsidy. Why would the Nigerian governments not make sure they refine the crude extracted from Nigeria and sell it to the Nigerian people in Naira? The refineries that have never been working since God-knows -when still have their full complement of staff drawing salaries for idling away. Illogical.

 

When the government wants to talk down on the people, they go to town saying Nigerians pay the lowest for fuel in the whole world. May be. But how about the minimum wage? Does it rank comparatively with even some African countries? What you spend is supposed to be a factor of what you earn. If Nigerians earn in Naira but are asked to pay the dollar equivalent for products, there sure is an economic disconnect.

 

It is because we are not refining our crude that the government has gone to town, yet again, with the removal of fuel subsidy. The government has come out to say that the 150 billion naira that is being expended for subsidy on a monthly basis is unsustainable. In order not to kill the Nigerian nation with the subsidy burden, the government is proposing to ‘completely remove fuel subsidy’ with effect from February, 2022. This is likely going to push the pump price of petrol to 370 naira a litre or thereabouts.

 

The most illogical thing about this whole subsidy is the remedy the government is proposing. The government of PMB, in its considered wisdom, logic or illogic, wishes to pay ‘5000 naira to 400 million poor Nigerians monthly’ to cushion the effect of the removal of subsidy. If 150 billion naira monthly is ‘unsustainable’, is it 200 billion naira monthly this plan translates to that will be sustainable?

 

What has been the success rates of such other proposed interventions in Nigeria? There was a 10 billion-naira-telephone-for-farmers scheme (as if telephone were a farm implement or input) and to this day, no single farmer has come out to say he received the telephone; there was a 6 billion-naira-safe-stove scheme for rural dwellers. Have never come across anyone who got the stove. This current administration had embarked on similar schemes in the past with questionable executions; the most readily rememberable being the ‘school feeding project’ during the Covid-19 lockdown in 2020 when schools were shut and children in their homes with their parents.

 

Now, supposing, without conceding, that the government genuinely wants to give out 5000 naira to the ‘poor of the poor’, what database is the government going to utilize?

 

I had said it before, and I shall continue to say again: So long as Nigeria depends on the importation of refined products from anywhere including Niger, we shall be inundated with talks of fuel subsidy removal even if the price per litre hits 1000 naira. The international oil price is in dollars and not stable. As long as the price of crude changes, there is bound to be a commensurate change in the price of refined products. And so long shall Nigerian governments keep ‘removing fuel subsidy’.

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