Over the years Nigerians have been faced with series controversies
surrounding subsidy removal and many Nigerians have frowned against this
with great ferocity each time the government of the day makes any move
to remove it either totally or partially.
Many opposition bodies
have used this to campaign against the government of the day and that
was the case during the period of President Goodluck Jonathan and many
Nigerians were also made to believe that it was indeed a callous move by
previous governments to inflict hardship on Nigerians but just
yesterday,we got a very surprising news that the APC led government have
decided to finally remove subsidy as Petrol will now sell for a maximum
of N145 per liter..
The question on the minds of many is why was
there a strong move against this in the past? could it be to lack of
proper sensitization of the populace by the previous governments?or was
it because the lack of trust in the previous administrations or shall we
say we have suddenly realized the true picture of the situation on
ground? I guess these are questions we will continue to ask ourselves
but this write up will address the reality and advantages of subsidy
removal from a very layman’s perspective and professionals are welcomed
to shed more like and correct any form of misinformation.
THE REALITY
FUEL SUBSIDY:
Understanding
the madness called “fuel subsidy” requires a walk down memory lane.
However, let me start by saying a country like Nigeria, which is also
the largest crude oil exporter in the African continent, imports fuel
into the country.YES we know this makes no sense. Unfortunately, it
does. Nigeria has four national refineries that are barely functional
because of the country’s poor planning and maintenance culture, and even
more, our refining plants are aging while the pipelines linking these
plants have lacked adequate investments and they are terribly unreliable
to support uninterrupted domestic production and sadly enough as
determined as the government are in ensuring that these refineries are
repaired,some interest groups have taken up the habit of destroying
these facilities thus Nigeria is forced to refine its crude oil
resources outside its borders and then it imports the refined products,
mostly from European suppliers, to satisfy the energy needs of its large
population.
WHO BENEFITS MORE FROM FUEL SUBSIDY?
Now
lets assume the governments spends an average of N40 to subsidize a
litre of petrol that is bought by each Nigerian,it means for every 20
liters you buy, the government helps you to pay N800. But the truth is
that the rich benefits more because in a month they buy thousands of
liters to power their office,homes,cars and so on while an average
citizen with a tight budget might just manage to buy 50litres in one
month.
Lets
ask each other this question;Does it make sense for a government to
spend over 1 trillion naira on fuel subsidy yearly to help the rich
while lesser amount is marked for other infrastructures that would
impact more positively on the average man?
Now lets take a quick look at 7 advantages of subsidy removal:
1. IT REDUCES CORRUPTION IN THE DOWN STREAM SECTOR:
According
to the statement made by the former finance minister and coordinator of
subsidy removal, Dr. Ngozi Okonjo Iweala. “ The removal of oil subsidy
will drastically reduce corruption in the down stream sector.” Moreso,
deregulation will also help to end the waivers enjoyed by powerful
“cabals” at the expense of the Nigerian people…this needs no
explanation.
2.PROVISION OF BASIC AMENITIES
The
Nigerian governments spends over 1 trillion naira on fuel subsidy each
year and this has made it extremely difficult to provide other amenities
that would impact more directly in the lives of the citizens. However,
if half of the money spent oil subsidy is channeled to other sectors of
the economy, Nigeria would have been better for it. Consequently, the
money saved from subsidies will be used to improve infrastructure,
building good roads and bridges, fund agriculture,pay higher
salaries,improve education and health sectors.
3.REDUCTION OF GOVERNMENT DEBT
According
to the words of the former Central Bank Governor, Malam Sanusi, one of
the long term benefit of the withdrawal of the subsidy is the reduction
of government debt and at least help direct that debt to the finance of
infrastructure that should create jobs and more inclusive growth.
However, it is important to note that Nigerian government often borrow
to enable it finance this oil subsidy so as to make the petroleum pump
price affordable to a few rich Nigerians who operate or control some of
the devices which actually consume the petrol.
4. TRANSFORMATION OF THE PETROLEUM SECTOR
A
lot has been said of corruption in this nation, and the time is now to
effect the change we need. Reformation of the oil sector which is the
life wire of the nation could take the lead.
5. INCREASE IN FOREIGN RESERVE AND SAVINGS
With
subsidy removal, Nigerian, government will get to keep more of the
money raised from sales of its petroleum product and savings made on its
foreign earnings, this will uplift the countries foreign reserves and
greatly improves our ratings by international agencies.
6. ESTABLISHMENT OF MORE REFINERIES It
is noted that since 2000, government of Nigeria had issued licenses for
refineries, but none was been built for these reason. This is not
unconnected to the financial and structure imbalance created in the huge
sums, of money expended on petroleum subsidy. However, it is obvious
that with subsidy removal, Nigerian government can now use the money
saved from subsidy to build refineries which will inturn provide
enormous opportunities for employments of our jobless youths.
7. MAKES WAY FOR TRANSPARENCY AND COMPETITION IN THE OIL INDUSTRY
When
petroleum subsidy which is rife with corruption and unhealthy practices
is no longer there, transparency and healthy competition will return to
the petroleum industry.
Lets give the government a
chance and make this sacrifice with hope that we will have a new story
to tell.Yes we may see a sharp increase in the price of commodities and
transportation but in a short while, we will see the positive outcome
just as we now see in previously deregulated sectors.