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.
He insists that if government is bent on removing the subsidy, it need to convince Nigerians that it is not going to be business as usual. “They should be able to assure Nigerians that if the money is removed, it would be used to improve the infrastructures in various sectors of the country. And they should be confident enough to give the time line”. He said it was very obvious that the Federal Government would remove fuel subsidy going by the 2012 budget presented by President Goodluck Jonathan at the National Assembly.
As if to admit the trust deficit, government has already named Dr. Christopher Kolade, former High Commissioner to the United Kingdom, as head of the Subsidy Reinvestment and Empowerment Programme Board, whose duty it is to implement and monitor the palliative measures promised by government. The Kolade committee is to oversee and ensure the effective and timely implementation of projects to be funded with the savings accruing to the Federal Government from subsidy removal.
Major-General Mamman Kontagora (rtd) will serve as deputy chairman of the board.
This has, however, done little to assuage organised labour and civil society groups who have insisted on embarking on a nationwide strike as from tomorrow.
According to the Nigeria Labour Congress (NLC), government’s action is “a war foretold”, while the Trade Union Congress (TUC) has also vowed that it would resist the subsidy removal.
President of the NLC, Mr. Abdulwaheed Omar, urged Nigerians to prepare for a mass action on the fuel subsidy removal. He said the NLC was collaborating with other mass-oriented organisations to coordinate a “struggle” against the removal of the subsidy.
As Nigerians brace up for another long drawn battle to protest an unpopular government policy, it is yet to be seen whether the ordinary Nigerians is being considered in the equation. The proposed strike, which will shut down all economic activities, will hurt both sides of the divide, no doubt. It is left to be seen if reason will prevail this time.