The fuel subsidy issue

DURING his inauguration speech, President Bola Ahmed Tinubu announced that the era of fuel subsidy was gone. Subsequently, the Nigeria National Petroleum Corporation Limited (NNPC L) hiked petrol prices to as high as N557 per litre from N189 few days after the new president’s announcement. The increase supposedly signals an end to the fuel subsidy regime that the NNPC said costs it N400 billion every month. The removal of subsidy promptly led to queues in filling stations across the country as distributors hoarded the commodity even with the hike in price. Many commuters were stranded in several parts of the country.

In the statement announcing the new prices of fuel across the country, the NNPCL stressed that petrol prices were being adjusted “in line with the current market realities” and that “prices will continue to fluctuate to reflect market dynamics.” Although the NNPCL’s statement implies that the fuel market has been deregulated, it remains the sole or major importer of the commodity. In a deregulated market, there cannot be a single importer of the commodity and, as such, there will be competition and price differences from one supplier to the other.

The president’s decision and the subsequent hike in the price of fuel were made without consultation with the organised labour regarding the adverse implications of the policy on inflation, wages and the welfare of workers and citizens, especially the poor. Consequently, the Nigeria Labour congress (NLC) has rejected the price hike as an “ambush”, insisting that “any subsequent dialogue is in danger.” The NLC further argued that government “cannot in one breath be talking about deregulation and at the same time fixing the prices of petroleum products. This negates the spirit of the free market unless the government has as usual usurped, captured or become market forces.” It called on workers to embark on a nationwide strike from Wednesday, June 7.

We think that the way and manner the decision was made and implemented suggests that the president and his new government do not sufficiently understand and appreciate the weight of the impact of the decision on the life and living conditions of Nigerians and the possible implications for social and political stability in the country. No serious-minded, responsible and responsive government anywhere in the world would contemplate effecting nearly 300 percent increase in the price of a social commodity without getting into active discussions with elements in the society who are to be impacted by the decision. The situation is particularly caustic because the government has effected this monumental increase in the price of fuel without putting in place countervailing measures to alleviate the suffering that is bound to follow from the policy. The subsidy has been removed without palliatives.

Under a supposedly democratic dispensation, the government ought to be conscious of the responsibility it owes to the people by carrying them along in its decisions and showing evidence of being always concerned about their welfare and living conditions. This would mean, in this instance, that the government would come up with plans to counter the certain debilitating impacts of the fuel subsidy removal on the people. The president should not casually announce such a momentous decision where citizens do not have any alternative, to the extent that NNPCL is the sole importer and supplier of petroleum products. This behaviour amounts to a blatant disregard for the feelings, welfare and suffering of the people. The president cannot take the people for granted, setting no store by their welfare and the stability of the polity.

Furthermore, the government must come clean on the issues with Nigerians. If Nigerians are to endure hardships as a result of the policy, there must be a basis and justification for that endurance. The government must answer several key questions. For instance, what becomes of the existing refineries on which billions have been expended? Why should the workers in the refineries continue to draw salaries for doing exactly nothing? Are other refineries coming on stream besides the Aliko Dangote refinery? These questions are relevant in the context in which the huge outlay on fuel subsidy is linked to the deep corruption underpinning government processes in the country. The government must inform the people of steps to counter and reduce corruption within it instead of just passing the burden of the cost of such corruption to the people.

The government has a duty under the current circumstances to engage Nigerians in a comprehensive and far-reaching deliberation to remove the fuel subsidy successfully and sustainably.

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