A measure to rejig the economy

Progressive development happens in a society where the commonwealth of a nation appears to be fairly distributed. Without doubt, crude oil is the backbone of Nigeria’s economy and whatever is done with it reflects on the life of its citizens. In the inaugural speech of the 16th President of the Federal Republic of Nigeria on May 29, 2023, Bola Tinubu, he re-echoed his intention to abide by his manifesto by declaring that petrol subsidy is ‘gone.’ Ever since the statement was made, it has raised dust which had yet to settle.

In a normal sense, subsidy is expected to be for a particular timeframe to soften the effect of a policy. But fuel subsidy in Nigeria has changed meaning to something else. To some people, it is believed that as long as the country exists, subsidy must go on.  In practical sense, fuel subsidy has done more damage to the Nigeria economy than what it intends to correct, especially in the last 10 years or thereabout. Besides the mind-blowing corruption in it, it benefits more of the few and wealthy than the larger of the indigent ones. In fact, neighbouring countries were feeding fat at the expense of the Federal Government as a result of subsidised fuel in Nigeria.

Having seen the rot in the fuel subsidy arrangement and policy, President Goodluck Jonathan on January1, 2012, announced total withdrawal of fuel subsidy. The price per litre jumped from N65 to N140 almost immediately. The withdrawal was rebuffed by mass protests tagged ‘OccupyNigeria’ across the country. Various stakeholders led by the Nigeria Labour Congress and the Federal Government later shifted ground and settled at midpoint – N90. To clarify some of the points raised by the NLC, the Senate constituted a committee to look into the amount claimed for fuel subsidy in the previous year. The little report that got to the public domain was disgusting. In fact, it opened a can of worms.

Human capital and Nigeria’s institutional and development agenda

Now that everybody has seen that fuel subsidy no longer sustainable economically and that few people are the principal beneficiary of the so-called fuel subsidy, is it not better for the government to take its hands off and be a regulator to allow the private sector to do the business? Can we keep applying the same model to solve a knotty problem and expect different outcomes? Definitely not. To have a better result, a tough decision is not unexpected.

However, for all and sundry to support Tinubu’s fuel subsidy withdrawal policy, he must come clean to the citizens for palliatives to ease the hardship. Average household uses cooking gas. The price is currently crashing and I doubt if palliatives were responsible for the drop in prices. It would be fine if palliative are geared towards it to bring the price of a kg to N300 or thereabout. Upward salary review is another way to do it. Palliatives to agricultural and related items are important at these trying times. There is so much hunger in the land. Demand of N200,000 minimum wage by the NLC for workers as a relief is a joke taken too far. Agreed that the purchasing power of naira is weak but it has not got to that ridiculous state. Besides, does the government exist only to pay workers’ salaries? Other labour forces outside government circles are 10 times more and have the right to basic and social amenities.

Danger of turning Niger into another ‘Libya’

The launch and expected refined fuel from Dangote refinery by August this year will in no small measure add value to the Nigeria economy. In a year or two of consistent local production, the impact would have been felt. Healthy competition among these refineries and other ones that may come up thereafter will bring down the price to reach the average consumer.

Era of continuous defending of naira in the international market because of pressure will definitely come to an end and as a result this increase in forex reserve is inevitable. The core mandate of the CBN which is price stability will receive undivided and better attention for the benefit of all.

Pleading to the people by President Tinubu to make sacrifices to save the country from going under would be more welcome if he directs the Nigerian National Petroleum Company Limited to provide detailed information on how the new price is arrived at. Not just churning out retail prices. The consumers need to know if the new price is premised on importation pending the time Dangote refinery can meet, substantially, the needs of the people. If it is based on importation, what is refined cost, freight, insurance, storage, movement costs from one region to the other, allowable profit margin to the dealers and the salient of all points? What will be the exchange rate? Is it the new unified foreign exchange rate President Tinubu talked about in his inauguration speech or the old Central Bank of Nigeria rate? It would also be good if the policy-makers at different levels can let the people know what they too will forgo at this period for the better of all.

Elections shouldn’t be do-or-die affair

The four government-owned refineries had installed capacity of about 400,000 crude barrels per day but hardly produced 70,000. With installed capacity of 650,000 barrels per day, Dangote refinery had expanded the frontiers for the private sector in the industries. On average, Nigeria explores 2.2 million barrels of crude oil per day. If such a trend continues, it would get to a time that every barrel of crude oil explored would be refined in the country thereby creating opportunities for exportation of refined oil as against the current situation of crude oil exportation that takes away jobs from us.

The call for a probe by SERAP into the fuel subsidy payment between 2016 and 2019 should not be handled with kid gloves. Most importantly how $2.1bn and N3.1tn budgeted for subsidy payment vanished. The current administration should not wait for SERAP to file a lawsuit for mandamus order to compel it to probe the subsidy scam. Doing so may doubt his stance on subsidy withdrawal policy and accountability. Visiting the past is good if it will create an enabling foundation for future policy to stand on. Nigerians, home and abroad, are waiting to see the renewed hope manifesting in all areas of life for the good of all.

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