Despite the
criticisms, nationwide debates and talk shows, the Federal Government
went ahead and removed the controversial fuel subsidy Putting the
country at crossroads. In this report GEORGE OKOJIE examines the
implications of the subsidy removal.
State institutions across the world exist primarily to address
economic, social and political realities. When such realities border on a
country's viability as a sovereign entity, the sense of urgency in the
quest for solutions means that the best and most conscientious efforts
must be brought together to realise it.This sort of coordinated response seems to have eluded Nigeria as
there has never been any form of committed support from the executive,
organised labour, and indeed, civil societies right across the three
tiers of government.
A glaring example is the wasted effort in the International Monetary
Fund (IMF's), Structural Adjustment Programme (SAP) debate in 1986.
Apart from the initial chaos it elicited across the country, the burden
of the loan was enormous. The resultant effect was the removal of all
subsidies in all social sectors of the economy. Education subsidy was
removed with fees introduced at secondary level and in some states, at
primary level.
After so much talk shops and demonstrations by Nigerians from all
spheres, the government still went ahead to introduce IMF reforms
through the back door. Many students from poor families dropped out of
school. Health was then privatised making it only affordable to the
rich. Not even minor pain killers were available in public hospitals.
Now, the latest gaffe by government is to throw an issue as sensitive
as petroleum subsidy removal in the court of public opinion, and while
Nigerians are still deliberating on the merits and demerits, the
government, unannounced, pulls the rug off our feet.
As Nigerians are confronted with the twin problem of high price and
chronic shortage of petroleum products caused by subsidy removal, they
remember once again that the source of their problem is lack of
functional refineries in the country, whose function is to convert crude
oil into finished petroleum products and raw materials for other
industries.
The parody of fuel subsidy removal has been on since 1976 and each
time it is done in one form or the other, the ordinary Nigerian is the
worse for it. Thus, we have watched the cost and standard of living in
Nigeria depreciate over the years and the majority of Nigerians
pauperized. Despite this, the cost of maintaining those in government
has been on the increase, at the expense of critical development
indices.
In other countries, government is cutting down on expenditure in
order to devote more funds to developmental issues. Just last week,
Singapore's prime minister, Lee Hsien Loong accepted a 36 per cent cut
in his annual income while his compensation will be reduced by 51 per
cent. Such cut will trickle down all government office holders as part
of moves to cut down on recurrent expenditure and revive the economy.
Yet, while governments in other countries are taking pay-cuts, in
Nigeria, the reverse is the case. Recurrent expenditure, which is the
amount used to service the machinery of government is a massive 72 per
cent of the entire federal government budget for 2012.
The ratio is worse in some states.
Nigeria has four refineries all working below capacity, a sad
reminder of the incompetence of government and the corruption in the
system.
After several years of turn-around maintenance (TAM), and several
billions of dollars later, the government, in exasperation, has pushed
the burden on the people.
Before the eventual deregulation of the downstream sector by the
government, it was the expectation of Nigerians that the refineries
would be fixed first, but again that did not happen. Ever since the four
refineries had been intentionally left to rot, massive fuel importation
has become unavoidable, with Federal Government claiming to have lost
over N1.3 trillion to a faceless cabal in the sector.
Unable to continue in this direction, the Federal Government after
'wide consultation' with different segment of the society, last Sunday,
officially jerked up the pump price of Premium Motor Spirit (PMS),
popularly called petrol, to N141 per litre, a 116.9 per cent increase
from the previous price of N65 per litre, even as this is the highest
single jump in the history of fuel price hikes in the country.
The New Year surprise package simply posted on the website of the
Petroleum Products Pricing Regulatory Agency, explained that it
represented the Maximum Indicative Benchmark Open Market Price, with
clear warning that no subsidy would be paid as from January 1, 2012.
Ever since the government and its agencies took this decision it has become obvious that tougher times awaits Nigerians in 2012.
Many Nigerians who spoke on the issues told LEADERSHIP SUNDAY that
apart from crippling so many businesses, the abrupt removal would ruin
lives.
Samson Anayo , a Barber said few days after the removal, patronage
has dropped drastically in his barbing shop that used to be very busy.
According to him, "I now buy a litre of Fuel for N141 and can
no-longer be barbing for N150 per an adult. I increased it to N250 and
no one is coming to my shop again to barb. They have 'spoilt' my
business that I use to take care of my family".
A truck driver who gave his name as Seun Adebanjo said the effect of
the subsidy removal is that many small scale businesses will no longer
be as lucrative. "Before they removed subsidy, I used to buy N2,000 or
N2,500 fuel for my small truck now it is almost N4,000 and when I charge
my customers they just abuse me and leave".
The multiplier effects of the removal did not spare Evans Idioro, a
Vulcaniser who said, "I need to buy petrol to run my engine to pump and
patch tyres but it has increased now and people do not want to
understand; they still want me to be patching tyre for N150 but that is
not possible for me. I now charge them N300 and they do not want to pay.
Some will even want to fight me".
David Molokwu, a Civil servant, told LEADERSHIP SUNDAY that he use to
spend N550 to and back from work daily which has now increased to
N1,100. "You can see the N18, 000 minimum wages is useless", he
responded.
As Nigerians listen to the songs of sorrow, many other Nigerians both
at home and diaspora reason that building refineries and fixing power
sector ought to have preceded the removal of the subsidy.
According to them, the so-called palliatives have not yielded any
positive result in the country. It cannot stop the high cost of food
stuff or transportation cost which has, expectedly, risen.
The blame of the fuel subsidy removal conundrum hinged on the paucity
of ideas on the part of government and its functionaries, seemed to
give credence to the unresolved puzzle as to why successive government
have been unable to get existing refineries working optimally, let alone
build new ones.
Kayode Ajulo , a Lawyer versed in Oil and Gas matters opined that the
Federal Government should have given priority to removing corruption in
the sector, as wastage due to leakages in the system would go a long
way in financing the building of new refineries. "Going by audit report
on the Nigeria National Petroleum Corporation (NNPC), several crimes
have been committed. It behoves on the agency of government concerned to
be proactive and do its statutory work of considering the report,
investigate and prosecute where necessary".
All these anomalies have eroded the social capital which governments
rely on to push through difficult decisions. Senator Olugbenga Ashafa,
an Action Congress of Nigeria (ACN) candidate representing Lagos East
senatorial zone at the National Assembly believes that many of the
opponents of the removal are doing so not so much on the basis that it
is wrong, but on the fact that government has consistently demonstrated
that it cannot be trusted to manage the wealth of the country. He cited
example of the recent windfall as a result of the increase in the price
of crude oil in the international market, which, instead of translating
to development, was frittered away.
