Fuel subsidy is gone and gone for good

President Bola Ahmed Tinubu during his inaugural speech at the Eagle Square on the 29th of May, 2023 mentioned two very important challenges that he would want resolved; fuel subsidy and the dual (multi) exchange rates. Immediately, the words “subsidy is gone” was mentioned by Mr. President, all the filling stations in Nigeria started shut down their filling stations and started hoarding their fuel with the obvious plan of taking advantage of the announcement to hike the price of fuel. As at today, the price of fuel hovers between N511 and N520 in Nigeria. President Tinubu did not say or do anything new. The Petroleum Industry Act, 2022 (as amended) has already legislated the removal of fuel subsidy by end of June, 2023. In essence, President only complied with the provisions of the law in accordance with the Oaths of Office he swore to.

It is noteworthy that all the major presidential candidates are in support of the removal of fuel subsidy, though they differ in the methodology of its removal. The next few months will be painful to Nigerians because prices of goods and services will certainly increase. The minimum wage has been rendered useless. While some Nigerians queried the timing of the removal, others are of the opinion that the best time to remove it was 2012 while the 2nd best time was 29th day of May, 2023. No matter the divide one may find himself, the fact remains that most Nigerians are in agreement that the subsidy in fuel had to go. Like President Tinubu said, we cannot continue to be subsidies the lifestyles of the rich and our neighbouring countries of Cameroon, Benin Republic and Niger. Nigeria cannot continue to sustain the fuel subsidy regime and its associated corruption.

However, it is very sad that Nigeria is the only oil producing country in the world that still imports fuel while all the government refineries have for more than 20 years had billions of dollars sunk into them all in the name of everlasting Turn Around Maintenance that has yielded nothing, with staff of these 4 moribund refineries still being paid salaries for producing no petroleum product. This can only happen in Nigeria as a result leadership incompetence.

Nigeria has to move on. The current administration of President Bola Tinubu has taken the bold step that previous administrations were afraid of and we must not go back to the days of the locust. The money that will be save from the removal of subsidy must be used to re-start the economy, invest in socio-welfare programs for Nigerians like having access to heavily subsidized health insurance schemes, heavily subsided public educational system, construct good roads, well equipped hospitals, expansive rail lines to all major cities and towns in Nigeria and most importantly increase the wages of public sector workers. The Federal Government must resist the temptation to use any part of the savings as allowances or benefit for political office holders. And all these palliatives must be done very fast, because there is too much poverty in the country.

It is a fact that Nigeria operates a free market system but there is no reasonable government that will allow an entrepreneur to take undue advantage of the citizens of its country by selling its products at unreasonable rates. There should be fair competition. Dangote Refinery is a welcome relief but it must not engage in monopolistic tendencies. The federal government must also encourage more private investment in the downstream sector of the oil industry and make Nigeria a major exporter of petroleum products in Africa.

It is instructive that where the federal government has failed since 1999 (Obasanjo, Yar-Adua, Jonathan and Buhari) to revamp just only four medium-sized refineries, a private individual has succeeded in constructing a refinery of 650,000 litres of PMS (including other petroleum products). This is a proof that government has no business running business and therefore, the four public refineries should be privatized for efficiency. NNPC Ltd (which still acts like a government agency) must lose the monopoly it currently has of being the only importer of fuel. The removal of fuel subsidy should mean what it states, which is the full deregulation of the downstream sector of the oil industry.