Petrol subsidy and the question of wrong choices

THE  clamour for the withdrawal of subsidy on petrol is on again and it has been coming from different directions.  International organisations, prominent Nigerians and economic analysts – local and foreign – have been persistent and vociferous in their pressure on the federal government to remove the subsidy on petrol. As experience has shown, such pressure has been the harbinger of previous fuel price hikes which have greatly compounded the misery of ordinary Nigerians.  Both the World Bank and the International Monetary Fund (IMF) want Nigeria and other countries paying subsidy on fossil fuel to stop the policy.  One major argument now is that the policy is not in favour of the poor. The aggravated economic woes and inexorable decline with which Nigeria has been grappling for the past decades cannot be divorced from the Structural Adjustment Programme (SAP) of the 1980s.  The prescription which turned out to be a poisoned chalice should serve as an object lesson to third world countries.

To some prominent Nigerians and analysts who have offered their ‘expert’ opinions on the contentious issue, subsidy on petrol is one of the wrong choices that have brought Nigeria to the sorry state in which it has is mired.   This is a position that should be subjected to rigorous interrogation in the context of the country’s status as a major oil producing country.  Nigeria is the only member of the Organisation of Petroleum Producing Countries (OPEC) that imports fuel and it is the largest importer of the product in the entire world.  It has four decrepit refineries which have a combined capacity to process 443 barrels of crude oil per day.  In spite of the colossal amounts of money that have been cumulatively spent on turn-around maintenance, the refineries hardly work.  The consequence of this is that Nigeria has, for decades, been importing petroleum products for its domestic consumption.

It is a long-established fact that the process of importation is ridden with unfathomable   corruption.  More often than not, the exact quantity of refined petroleum products brought into the country is a subject of controversy.  The quantity on which subsidy is being paid is generally believed to be much higher than the quantity being brought into the country.  Instead of confronting the problem and clearing the mess, successive governments have been increasing the prices of petroleum products. The argument that subsidy on fuel has been denying the government the resources needed to bring about the much-desired positive transformation is totally defective.  Subsidy on diesel oil and kerosene was removed many years ago.  The ‘experts’ should show Nigerians what has been achieved with the savings therefrom.  Previous fuel price hikes were preceded and largely influenced by arguments and pressures that failed to take cognisance of past experience and prevailing realities.  It therefore lies with the government to subject the issue to a critical examination so that it can clearly identify where the wrong choices truly reside.  It cannot be a moot question that Nigeria’s economy is road driven. As experienced in the past, a noticeable increase in the price of petrol will result in an increase in the cost of transportation which is a basic input in the production process.  This will lead to an across-the-board inflation and further reduce purchasing power and quality of life, particularly among the less privileged people in a country being ravaged by poverty.  Children whose parents can no longer afford daily transport fare to and from school will join the already embarrassing number of out-of-school children.

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The argument that the poor do not benefit from fuel subsidy is faulty and hollow because it is the poor that really bear the brunt of sharp increases in the prices of goods and services.   In a country where electricity remains unreliable, small-scale businesses being operated with generators will close shop and worsen the problem of unemployment with its social consequences.  The price of petrol was raised from nine kobo in 1978 to the present N145 – more than 161,000 percentage increase. The subsidy on diesel oil and kerosene has for long been removed.  If the purpose of the previous increases in the prices of these products has still not been served, it should be obvious that the problem is not with subsidy but with the management of resources and faulty identification of wrong choices.

In  a country in which close to 50 per cent of  the population lives in abject poverty, a sum of N4.68 billion was allocated as ‘’welcome package’’ to 469 individuals on their arrival at the National Assembly Complex for the sinecure of law-making.   The remunerations are outrageous while the severance package will also be in billions of naira.  The security votes of political chief executives are subject neither to auditing nor investigation.  Their entitlements after four or eight years in office are simply obscene.  The ill-thought-out system allows political office holders to engage a retinue of aides who do next to nothing.  What is being expended on the maintenance of this negligible percentage of Nigerians is widely disproportionate to what is being used to serve the rest of the population.   In addition to their remunerations at the federal level, many of these political office holders have been found to be collecting pension as former governors or deputy governors.   Within the oil industry, there are many areas of financial haemorrhage that should attract the attention of the government.  Nigeria was recently reported to be losing N995.2 billion to oil theft annually while international oil companies have not been adhering to international best practices.   The inflow of revenue into the government’s coffers will be considerably boosted if the opacity in the Nigerian National Petroleum Corporation (NNPC) can be addressed.  The issue of overlapping functions identified by different panels in the massive bureaucracy has continued to be ignored.  These anomalies and many more are the wrong choices in a country in dire economic straits, not petrol subsidy.

• Olatoye, a veteran journalist, lives in Ibadan