By Sani Danaudi Mohammed
Fuel subsidy removal in Nigeria is an economic necessity, as the subsidy funds could lead to major development gains.With the proper structure,such as building good infrastructure and a conducive environment for investors. Removing subsidies can be the blessing the economy needs right now especially with the increasing short falls in Government revenues.
The immediate past Minister of Petroleum Resources (State),on March 27, Mr. Timipre Sylva publicly lamented the controversies surrounding the amount of petrol that the nation consumes daily.The subsidy regime encouraged criminal activities like smuggling, which in turn impact negatively on the nation’s oil resources by labeling the entire system as a criminal Enterprise.
According to the World Bank,Keeping Subsidies on Petroleum products could significantly affect public finance and pose debt sustainability concerns to Nigeria. Nigeria’s economy depends on petroleum, accounting for 90 percent of its exports and one-third of its GDP. However, the petroleum industry recently recorded zero revenue.
President Bola Ahmed Tinubu to the bull by the horns to announced Subsidy Removal on his inaugural address to the nation which is currently receiving commendation in and around the world.This decision has no doubt thrown an average Nigerians into untold hardship with some expressing mix reactions. As they prefer for tougher times ahead,many are adding their voice on the need to have synergies that will caution the effects of the Subsidy Removal.The Federal Government must strengthen the system to have the lower income earners who does not have a Bank account but has to pay double for transport fair and are battling with the increasing high cost of food in the market.
As Nigerians awaits the distribution of palliatives as one of the steps taken to mitigate the sufferings of the masses,Many are looking forward to the implementation of this policy as its seek to benefit the poor instead of the rich.The Economists both Nationally and intentionally have suffered key in behind Mr President decision to end this monumental Fraud.In doing this,the government must consider the less fortunate who go to the same market with the middle income earners.In Nigeria and indeed the world in general, Government is about Welfarism and their citizens are the primary beneficiaries.
This means that, increasing workers salaries alone without having absolute control of the market Forces will only trigger more inflation with more money in circulation chasing fewer goods.I do not subscribed to the idea of wanton increase of wages to workers long as the ordinary man in the street who represents the higher percentage is subjected to more penury.The former American President J. F Kennedy once said that,if you do not provide for the poor,then you can not protect the rich.Therefore in implementing this welcome policy of saying goodbye to subsidy,these most abandoned class of Nigerians in the Society must be taken into account otherwise,it is just a twist to further enrich the rich.As long the Government want to achieve its primary responsibility,it must make up it mind to create wealth to Nigerians by protecting their welfare.
The 14th Emir of Kano and Former Governor of the Central Bank,HRH Sunusi Lamido Sunusi,The African Richest man and Nigerian business Mogul Alhaji Aliko Dangote and Bill Gates all visited the President and applauded his doggedness.Today, the MD of the World Bank has joined other team of Economists both in Nigeria and around the world in commending President Tinubu’s bold decision to bring to end of this subsidy.Despite the hardships and pains that accompanied this policy,no doubt the gains will be reap ,first with the steps been roll out through the Office of the Vice President Senator Kashim Shettima and in the long run rescue the dwindling Nigerian Economy by making it to be more financial independent.
This pictorial evidence regarding fuel subsidy that continue to consumed huge amount of the nation annual budget in the last few decades would have changed the lives of millions of Nigerians.Subsidy Regime can only make sense to the ears of the real enemy of Nigerian Prosperity.Many who are still questioning the rational behind the FG outright decision to let this evil go do not understand the politics behind fuel subsidy and its dangers to the development and growth of Nigeria.
The intention of the government to subsidized PMS was simply to make the product affordable for Nigerians and make life easier to the vulnerables.The average price of petrol in the world can be as high as N550,however,the FG will subsidize the product and fix price at N185 bringing total amount of subsidy per litre to N365 before May 29th,2023.The average consumption of litres of petrol in Nigeria per day is estimated to be 60 million litres.
However,Marketers of the product loads as much as 100 million litres and above per day which means the Federal Government subsidized over 40% to the rich and privilege few.One thing that cannot be contested is that,even with Subsidy,Nigerians spent the whole day and night in queues yet managed to buy the same subsidized products as high as above the current price of N550 per litre.
This means that,Nigerian Government is expected to pay as much as 400bn monthly as subsidy to the Marketers of the product to keep prices at N185 .Kindly take note that this amount can either decrease or increase following prices of petrol at the international market.Nigeria expends on fuel subsidy alone in a year obviously some billions of dollars which is no longer feasible nor sustainable.In an economy that is expected to create jobs, Service debts,build schools and hospitals, infrastructures and is to constantly pay workers salaries which runs in billions of naira can no longer bear this cost.By implication, Nigeria will be better without this subsidy long as the funds meant for subsidy will be re-channel to the nation critical sectors that will in the short and long run improve the live of the downtrodden.
In the wake of the global financial crisis and increasing sovereign debt risk,financing for development is drying up and Nigeria must now look inward to finance their growth and development needs.Crisis times require bold reforms and President Tinubu has spoken in action of his ability to take on one of the most difficult decisions that would work for us and the next generation.Statistics has shown, not less than 18 poor Nigerians subsidized for rich Nigerian who rolls his Prado jeep which consumed fuel that is equivalent to eighteen Seater bus.One of the great manifestation of this subsidy fraud is that,the poor keeps subsidizing for the few rich.Now that it is gone,take note of the exotic and flamboyant jeeps and wranglers have reduced drastically in our roads.
The cost of the fuel subsidy has continued to grow exponentially with 13trn spent in just 16 years.It is indeed a sad reality that the young kids and the generation unborn would not be happy to read from our national archives how billions have been syphoned through the subsidy regime.We must sacrifices by gearing up for the tougher times to pave the way for an emerging new Nigeria.
This is partly due to the rising cost of fuel which meant that the government had to spend even more to keep domestic prices low.Also, due to Nigeria’s increasing population which resulted in increased fuel consumption, together these pressures made the cost of the fuel subsidy.Nigerians are rolling to curb with the increasing high cost of items in the market but are optimistic that the Federal Government will in turn put smiles to their faces through sound economic Measures beyond the traditional paper headlines.
Subsidy regime is viewed by most Nigerians especially by those who speak the language of Economics for obvious reasons and one of such is,Marketers have connived with some fraudulent elements within the system to spoiled the good intentions of the Government.They import above the daily consumption of 60 million litres and still force the federal government to pay subsidy on the excesses, which are usually part of what they smuggle to neighbouring countries.Have you seen Nigerians taken the streets to Protest? We have seen our neighboring countries protesting against our subsidy removal and this should be an amazing irony of the raising concerns on Why Subsidy regime must be discarded.
This entire scenario makes a mess of the good intention of the Nigerian government to make the Petroleum products more cheaper for Nigerians.This scarcity and high cost of the petrol despite subsidy leads to arbitrary increase in the cost of living.Transportation for instance, goes up crazily even when trillions are been wasted on subsidy.This has been happening even when petroleum products were subsidized and the prices of items in Nigeria continue to raise unabated.We are happy that the FG has set aside the sum of 702bn to caution the effects of subsidy removal on Nigerians across the boards.
We are by this development,urging the federal Government to channel those huge amount of money paid into the pockets of Marketers to other meaningful ventures such as the infrastructural development,Agriculture,Social Security,technology, health,Education and power.While the marketers make more money on one hand,they force and instigate Nigerians through the Labour Unions against the Federal Government with the hardship created on the other hand.The labour Unions for years have help matters and have failed to address the challenges confronting the Nigerian workers like housing deficits, increase bills such as electricity,transportation,Health, training and retraining, Education and welfare.
The innocents who do not understand the politics behind subsidy go on Strike,protest,attack the government and force her to continue the subsidy regime to keep the marketers happy.This time around, Nigerians have understood this Subsidy regime,they have brazed up towards the tougher times and patiently waiting to laugh last at the aftermath of this sound and best economy policy implemented in most recent times in Nigeria history. One fundamental that the Tinubu’s administration must address is the Security and welfare of all Nigerians.This goes beyond just increasing Political Office holders and workers salaries.
Danaudi, National President of Arewa Youths Advocate for Peace and Unity Initiative Writes from Bauchi via danaudicomrade@gmail.com.
