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Frisky Larr (MA)
Journalist/Interpreter
Author of the book “Nigeria’s Journalistic Militantism” probing into the poor role of Journalism in Nigeria! ISBN: 9781456777906.
Bochum, Germany
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Extreme caution recommended as fuel subsidy debate heats up!

 

One Nelson Ekujumi has just told the President to cut the crap on complaining that N310 billion will be spent in the next fiscal year on subsidizing kerosene. He has reminded the President that it costs only N20 billion to build a new refinery while the time required is just two years. Unfortunately, none of these is being done in Nigeria for obvious reasons stated above. Everyone knows that the fixing of existing refineries and the construction of new ones will automatically translate into subsidy removal in the interest of the masses.


Frisky Larr is author of the book “Nigeria’s Journalistic Militantism” probing into the poor role of Journalism in Nigeria! ISBN: 9781456777906.

The heated debate on the recently announced plan to remove government subsidy on the downstream sector of fuel supply for domestic consumption is pulling out all the stops. Opinions have been running passionately high since the announcement of the move with each view on the political divide being strongly defended by proponents of and subscribers to such views.

 

Whichever way the issue is finally resolved however, it is becoming certain by the day, that none of the opposing views on the two sides of the fence rejects the removal of fuel subsidy. If anything, it has become increasingly clear that convergence of opinion prevails on the hazards constituted by the lingering subsidy on the overall Nigerian economy. The draining impact that it has on resources as well as the potential gains the removal of subsidy portends on infrastructural growth does not seem to be a point of disagreement.

The basic disagreement focuses on how the subsidy should be removed. Supporters of the government’s position advance the notion that the beneficiaries of the current arrangement are a whimsical minority perpetrating fraud on the vast majority of Nigerians. Efforts are therefore required to redistribute these beneficial resources in a much more proper manner. This camp also advances the notion that the government should have no business whatsoever, building refineries, power stations or water supply plants since this can easily be left for private investors to handle. It is a typical market economy opinion advancing crude and cold capitalism subject to the dictates of market conditions. This camp subscribes to the example of several developed economies, which do not meddle in the running of infrastructural installations.

Living in Germany – a country that does not subscribe wholly to the dictates of perfect market conditions, the cold capitalist style – I am perhaps swayed by the notion of a softened welfare-oriented capitalist policy of “Social Market Economy”. Indeed, many developing economies coincidentally embrace this trend of action in advancing a general state of social welfare. Nigeria has done this too since its inception as an independent nation and I do not think it is a wrong policy direction.

Like countless developing nations and economies, Nigeria started off years ago, with a policy of self-sufficiency in fuel consumption in the domestic market. It was in the aftermath of oil discovery. To this end, raw oil was refined at home and we had a handful of oil refineries.

When the transition to the second republic was effected in 1979, Nigeria was not importing refined fuel. Nigeria was self-sufficient. Nigeria had three oil refineries and the fourth was near completion and was subsequently completed by the government of Alhaji Shehu Shagari. I do not know precisely when it all started, but the transition to a regime of fuel importation was a fallout from declining oil prices and the general state of Nigeria’s economy. The economy had taken a serious bash from corrupt politicians who diverted resources to their own pockets that could have been saved for a rainy day.

Refineries were not maintained and steady dilapidation set in. No new refineries were built and production steadily ran short of domestic demand for refined fuel. Being short of money to fix the problem at the time, I suppose it was the government of Ibrahim Badamosi Babangida, which then resolved to import refined fuel from countries to which we had hitherto exported raw petroleum. After all the debate and rabble-rousing, the understanding at the time, was that the measure was tentative. The basic aim was to buy time to sort out the problem of fixing refineries for a reversal to self-sufficiency. After all, it is not an uncommon practice in oil-producing countries to allow the citizenry reap the benefit of such a God-given manna from heaven! In fact, many see the idea of the citizenry reaping this benefit as a divine right. To underscore the tentativeness of the arrangement however, government resolved to subsidize the importation of refined fuel so that the ordinary man in the street would not feel the harsh impact of importation until complete reversal to self-sufficiency is ultimately attained. That has been the psychology of the game plan surrounding the story of fuel subsidy.

In fact, General Babaginda implemented a very woeful policy of promoting private investment in the refineries and stripped the NNPC of the duty of maintaining refineries and keeping them functional. He encouraged private investors to engage in crude oil exportation so that they will end up building more refineries. The reality however turned out differently. Exporters made their money and disappeared into thin air. This is an issue that I treated elaborately in my book “Nigeria’s Journalistic Militantism”.

In fact, one President of the Students’ Union Government of the University of Jos at the time personally led a protest movement to the military government of General Babaginda to impress upon it that the removal of fuel subsidy was “a crime against the Nigerian masses and a war against the poor”. The President of the Students’ Union government then Mr. Labaran Maku is now the Minister of Information today ‘re-branding’ the government of President Jonathan. Today, he says that the removal of fuel subsidy is long overdue.

Somewhere down the line however, Generals and their cronies who ran the regime of fuel importation discovered the lucrative nature of the business to their private pockets. It fetched them millions in shortcut income. Fixing the refineries that are performing ways below capacity, thus became a problem that would pull the carpet from beneath their feet. In fact, the rising cost of raw petroleum and the loss of value of the Nigerian Naira, renders the cost of importation higher. These importers do not only bring in refined fuel, some of them also own filling stations. Today, many of them are politicians and lobbyists. Those who are not politicians simply sponsor the political aspirations of professional politicians thus making it difficult for politicians to engage them in a fight to force the notion of fixing refineries upon them.

The policy of fixing refineries with all vehemence has therefore become an almost impossible task because it will end up offending these rich oil Oligarchs. In fact former President Olusegun Obasanjo is highly suspected to have also fallen victim to this reality. Renowned Economist Professor Aluko reportedly sounded it to him at the time of his inception as civilian President that Nigeria urgently needed the construction of new refineries to ease out the continued implementation of fuel subsidy.

In the face of all these constraints, the easiest backdoor solution left to politicians remains the removal of subsidy without solving the problem of refineries in the land. It simply drops the burden on the shoulders of the common consumer hoping that market conditions will drive investors to lay their money in the construction of refineries. But the policy had already failed under the government of Ibrahim Badamosi Babangida!

Short term reality will be the hiking of pump prices to cover up for everything that the subsidy had taken care of. In doing so, the government will maintain its peace and the Oligarchs will keep their millions in expectation of many more to come. Inflation will rise because salaries will not be raised proportionately. If the same money is diverted into the payment of the contentious minimum wage, the notion will be automatically defeated that savings from subsidy withdrawal will go into infrastructure building.

The poor consumer will then have to reach deeper down his pocket to meet the costs of boarding a bike, a taxi, a bus and a Molue or Danfo. He will reach deeper into his pocket to buy agricultural products that are transported from rural areas to the metropolises. He will reach deeper down his pocket to afford virtually every basic necessity of life since almost everything is linked with transportation and fuel for power.

Supporters of this government’s move are holding on adamantly to the notion that the government should have had no business building refineries in the very first place. An inferred logic suggesting too that the government should have no business building power stations or water dams! They draw parallels to countries that are ways and many light years ahead of Nigeria in every ramification of social and infrastructural development. But they conveniently avoid comparison with countless other countries implementing beneficial welfare programs for their citizens.

The betrayal of public trust that was built up in the run-up to the tentativeness of the introduction of fuel subsidy seems to play no role at all. The reality of the very high chances of regained subsidy money going into private pockets without the refinery problem being fixed does not seem to play any role at all. The argument is advanced that public debate should focus on what to do with saved subsidy money rather than asking for the fixing of the refinery problem. They seem to present the notion that subsidy will be removed and cash distributed to the hands of every household in return.

Indeed President Jonathan, who has pledged to run for a single term, should ordinarily, not be caring about support from the millionaire Oligarchs. That is the beauty of the single tenure arrangement that should normally, have enabled the governing instance concentrate on governance without thinking much of financial and political support for the next tenure. Unfortunately however, President Jonathan seems to be in some fix unable to ply the road with the aim of fixing the subsidy problem in the interest of the masses.

One Nelson Ekujumi has just told the President to cut the crap on complaining that N310 billion will be spent in the next fiscal year on subsidizing kerosene. He has reminded the President that it costs only N20 billion to build a new refinery while the time required is just two years. Unfortunately, none of these is being done in Nigeria for obvious reasons stated above. Everyone knows that the fixing of existing refineries and the construction of new ones will automatically translate into subsidy removal in the interest of the masses.

I just hope the President will still use the time available to him to make the right choices before he sets the country on fire.

Frisky Larr is author of the book “Nigeria’s Journalistic Militantism” probing into the poor role of Journalism in Nigeria! ISBN: 9781456777906.

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