MY TAKE ON FUEL THE SUBSIDY DEBATE

Written on January 7, 2012

The debate is raging. A lot of arguments have been marshaled for and against removal of Fuel Subsidy. Here's my take.

Preamble: As a policy of Government, Subsidy removal and or Deregulation as the case may be is A GOOD policy by any Government BUT under the right conditions and if the necessary parameters are in place. In Nigeria, we depend on imported fuel 100 percent and what is currently obtainable is that even though we are an oil producing nation, we do not refine what we produce. We export our Crude Oil and import refined finished products which are sold to us at international prices. Government has licensed Oil Marketers to import these products and sell to us the end users at the prevailing international rate. What they have been subsidizing is the rate at which petroleum products are imported to enable us buy it at a cheaper rate and now, having removed this subsidy, the marketers are now free to sell according to the price at which they bought. The argument for subsidy removal is that the funds used in subsidizing what we pay for fuel ought to be used in meeting infrastructural needs.
Now my argument.

1. It is my honest personal belief that Government ought to have first engaged resources in repairing our decrepit refineries and building new ones to enable them produce what we require locally which is about 12Million Litres daily (PMS). After attaining sufficiency in local production, Government can now allow marketers to buy from these refineries via NNPC and then sell according to the prevailing price. Removing subsidy now is akin to making Nigerians pay for Government inefficiency and inability to discharge its obligation.

2. Nigerians are not dumb people. We see evidences of Government profligacy daily. The 2012 budget contains sickening details of a Government which is not ready to curtail its excesses. The votes for food at the Villa, entertainment, a new residence for the V.P and the allowances for Government Officials including National Assembly Members depicts a government with surplus funds. More than half of the N1.3 Trillion supposedly spent on fuel subsidy can be cut from reducing wastages and excesses and they will still be comfortable. Nigerians are crying blue murder because the same Government which is asking Nigerians to sacrifice are not showing any signs of willingness to sacrifice themselves.

3. I run 2 businesses. Each of them employ 10 Staff. In my second business, 3 of my staff came late to work this morning. When I queried them, they said the distance from their home to the office for which they paid N100 in December now goes for 300 (one way). They had to trek half way to be able to pay N200. N300 return amounts to N600 per day. At the end of the month, they would have paid N18,000 on Transportation alone. Their salary is N20,000 per month each. Do the maths! I witnessed the pain first hand today. I stopped at a fuel station to fill my tank. I paid N12,000. It normally would have cost me N5000. While I was buying fuel, a commercial bus stopped to buy fuel also. As the bus was on the queue, a pregnant passenger noticed that the station was selling Kerosene, she alighted to buy the kerosene (which is scarce). By the time she finished, the bus had bought fuel and the driver had driven off. She was stranded as she had no other money on her. Events like this are bound to happen but if that women was able to get Kerosene easily, she wouldn't have needed to hop out of that bus.

4. The timing of the removal was deceptive and callous. Government said it was still consulting widely and hinted at an April removal date. Removing it on January 1st when everybody was out of station is simply indefensible. It shows a disconnect from the plight of the common man. Government should have done more to enlighten Nigerians and the resistance would not have been this vociferous.

5. I could go on but I'm sure I've made my point. My advice to Government is repair or build refineries, produce locally, then deregulate. Appeal to people and not leave them with a fait acompli and lastly, show evidence of your willingness to sacrifice before you ask the common man to sacrifice. Every Nigerian provides for him/herself what government ought to provide. We generate our own power and water, pay alarmingly for private education and healthcare and endure decrepit infrastructures. If Government removes subsidy on fuel, what then are they subsidizing for us? For this and other reasons, I oppose fuel subsidy removal at this time. Ndewo nu.