The Emir of Kano, Alhaji Muhammadu Sanusi, has said that the administration of former President Goodluck Jonathan abandoned plans to remove the fuel subsidy because of fears of Boko Haram attacks.
The Jonathan government had considered scrapping the fuel subsidy, but widespread opposition — organised by political opponents — thwarted the move.
The Occupy Nigeria movement staged a series of rallies in Lagos to force the government to withdraw the proposal.
Speaking at the Oxford Global Think Tank Leadership Conference, themed “Better Leaders for a Better Nigeria,” Sanusi, then governor of the Central Bank of Nigeria (CBN), said the government did not want terrorists to exploit the situation.
“It was not a subsidy; it was a hedge. A subsidy, by definition, is when the government says I’ll pay X per cent of the price. That’s the subsidy. I’ll pay 20 per cent of the price — whatever it is. If the price goes up, you pay more; I pay more. If the price goes down, you pay less, and I pay less. What we have in this country is what you call a naked hedge in risk management — the worst possible derivative you can have,” ARISE TV quoted him as saying.
“The government effectively told 200 million Nigerians that they would not pay more than X amount per litre for petrol, no matter the international price. So the federal government paid the difference when the price rose from $40 to $140.
“When the exchange rate moved from N155 to N300, the government paid the difference. The government paid when interest rates moved from 5 per cent to 15 per cent. Remember the price of petrol and what the calculations include: the cost of crude, the cost of the by‑product, transportation, interest charges and demurrage.
“If you examine the template, all of those costs were being absorbed. The federal government was acting as if it had an unlimited purse. We moved from using revenues to pay subsidies to borrowing to pay subsidies, to borrowing to pay interest on the borrowed money, and we became bankrupt.
“Anyone who takes a naked hedge ends up bankrupt, especially with a commodity where you don’t control the price. That was the situation in 2012. It would have been painful if Nigerians had allowed the Jonathan government to remove the subsidy in 2011.
“But that pain would have been a tiny fraction of what we face today. This is the cost now. At that time, we worked out the numbers at the Central Bank, and I stood up, put my credit on the line, and said, ‘Remove the subsidy today; inflation will rise from 11 per cent to 13 per cent. I will bring it down a bit later.’ Oh — that was about 30-something per cent inflation.
That was where we were.”
On Jonathan’s decision to suspend the planned subsidy removal, the Emir said: “And you know, the only reason the government compromised at that time — maybe you should know this — the only reason the government compromised and did 50 per cent not 100 per cent was Boko Haram, because thousands of Nigerians were on the streets in Lagos, Kano, Kaduna and elsewhere. We had suicide bombers in the country.
“And it was like: if one day one of these suicide bombers targeted those Nigerians and detonated, and you had 200 corpses, it would no longer be about subsidy. So I must give President Jonathan credit. He was determined to do it.”
He added that Nigeria is a classless society, explaining: “If you take the people you call leaders — go to the Senate, go to the House of Representatives — you could pick 109 Nigerians at random, without election.
“Put them in the Senate chamber, and the results might not differ from what you are getting. The truth is, you have highly educated people in government, but they live like illiterates. They leave their education behind.
“When you speak of praise‑singing, why would an educated and accomplished man sing the praises of anyone? Why would he not be able to face his boss and say that we are not doing very well — this is the truth? And how can a person in government lack the confidence to listen to those around him and accept criticism?
“You have people who are supposed to represent society’s values. By the time you become a governor, honestly, you should be beyond looking for money. You have been entrusted with the lives of millions — to educate children, save lives, provide healthcare, build infrastructure — while all you are thinking about is a house? I mean, are you really that small-minded?”
