Nigeria and the subsidy sandstorm

Kenechukwu Obiezu

Kenechukwu Obiezu

Sometime towards the end of last year, as if to give Nigerians some twisted end of the year gift, the Federal Government announced that it was removing fuel subsidy. The news hit Nigerians particularly hard as many feared the cost of transportation across the country would be jerked up and with it a stratospheric rise in the cost of goods and services across the country. To soften the crushing blow, the Federal Government announced that it would pay up to forty million poor Nigerians a monthly allowance of 5,000 naira only to support their transportation costs before things come to some stability.

But almost immediately, the flood of questions was fierce and forceful: With what yardstick would the government determine those who are poor and thus most in need of the five thousand naira monthly allowance?

Pounded by a hail of questions many of which it had no convincing answers to, the Federal Government sensing that its homework was poorly done seemingly went back to the drawing board. Only recently, it announced that it was suspending the removal of fuel subsidy for now and leaving the momentous decision to the next government which should be in place by May 2023.

If one needed further evidence of more muddled thinking by a government that has more often than not confused Nigerians with its own confusion, it was here.

The question of fuel subsidy strikes at the root of Nigerias mono-product economy, everything oil has meant to the Giant of Africa since that epic discovery in Oloibiri Bayelsa in 1956 and plaintive discussions on whether one of the worlds premier natural resources and the lifeline of the Nigerian economy had not become a curse to the country.

The argument against the fuel subsidy regime has always been made along the line that it is too expensive, that it fuels corruption, that it benefits the rich more than it would ever benefit the poor, and that if removed, the humongous amounts plunged into it yearly could go into servicing other areas of the economy with a view to strengthening them.

 

 

Even the International Monetary Fund recently reiterated that Nigeria needed to remove the fuel subsidy and instead commit the funds to infrastructural development and social security.

The question of subsidy for petrol has hung over the country for a while now and many Nigerians have no doubt that it is a scheme that has served to corruptly enrich the few who have their fingers in many pies in the oil and gas industry.

However, while the subsidy regime has been prone to corruption, Nigerians also recognize that it is double-edge sword. On the one which on the other hand has served to keep the price of petrol down and consequently the prices of a multitude of other goods and services. Thus, Nigerians are not naïve to know that were subsidy to be remove, the cost of petrol will shoot up, jerking up with it the price of everything else.

The Petroleum Industry Act recently passed after close to a decade of fierce contention provided that subsidy was to be removed after a while. It was on the strength of this that the Federal Government mulled the removal. But under pressure from stakeholders including the NLC whose chief argument is that   the sudden removal of the subsidy would plunge Nigerians into untold hardship, the Federal Government has backtracked initially postponing the inevitable till July 2022 before all together suspending the removal and announcing that it would leave such a momentous decision to the administration to be sworn in on May 29,2023. The morality of leaving another administration to confront what has long been a monster will be debated another day.

It is doubtful that Nigeria`s oil has not been more curse than blessing for the country. The devastation oil exploration has wrought in the Niger-Delta continues to defy remediation efforts. The discovering of oil lulled the country into a false sense of security during which it abandoned other viable means of generating income on its way to becoming the painfully limited mono- product economy that it is today. Then there is the hydra of corruption. It remains incredible how much corruption petrodollars have allowed into the country.

Most tellingly, the whole subsidy scandal is such an issue today because the Giant of Africa has simply refused to put in place the structures that would give it full control over its chief export from exploration to export. Refineries in the country have simply refused to work obstinately defying the efforts of successive administrations to fix them.

The net effect has been that Nigeria`s chief resource has become its chief ruination and every now and then there is an exhumation of the ghosts of Nigerian inequity, inequality and inertia. Unless it is fixed once and for all, the questions will continue to haunt Nigeria.

Kene Obiezu,

Keneobiezu@gmail.com

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