Experts in the oil and gas sub-sector of the country’s economy have declared that the issue of subsidy on premium motor spirit, otherwise called fuel, was a bone in the federal government’s throat.
According to them, the issue has become a burden to the federal government as revenues that should have been used for critical infrastructure are spent on subsidies.
Speaking exclusively to Blueprint Weekend recently, the Managing Director/CEO, Dreamheight Global Consult Ltd., Agaba Wilson Agaba, said the rationale for subsidies had long been defeated, stressing that it had become “a bone in the throat of the government.”
He also noted that not only had fuel subsidies failed to achieve the goal for which it was implemented, it had become extremely difficult to eliminate it for a variety of reasons.
“Over the years, particularly after the inception of the current republic in 1999, certain politicians have purposefully mis-communicated the economics of subsidies to Nigerians to achieve political advantages. They tell Nigerians that the only benefit they receive from the government is fuel subsidies and that the government aims to shift funds earmarked for fuel subsidies to private pockets; therefore, the attempt to eliminate subsidies.
“Another reason fuel subsidies have proven so difficult to abolish is corruption. Corruption pervades the whole sector, and those who profit from it are incredibly powerful. They are spread across the upper segment of the government and political elites. Subsidies benefit a range of stakeholders by inflating figures for oil imports and overcharging the government for import costs. They used their political connections and power to thwart removal attempts.
“A third factor is that the general public has a misunderstanding about fuel subsidies. Nigerians have come to believe that the removal of fuel subsidies will cause them unimaginable misery. This is understandable given that many of them have lost faith in government projects, no matter how well-intended. Furthermore, the protests against the elimination of oil subsidies serve as a rallying point for many of the people’s grievances against the government. This explains why the government prefers to borrow to fund the budget rather than eliminate subsidies,” he said.
On why it’s been difficult for successive governments to deal decisively with the issue, he said various administrations had not had the political will or courage to jettison the subsidies because they failed to uplift Nigerians’ economic conditions.
“It would have been politically easier to remove fuel subsidies if the government had provided jobs, entrepreneurial opportunities, and other forms of economic empowerment.
“Owing to their failure to improve Nigerians’ economic conditions, successive administrations have lacked the political will and bravery to discontinue fuel subsidies. If the government had provided jobs, entrepreneurial opportunities, adequate transport infrastructure and a comprehensive public mass transport system, as well as other forms of economic succour, it would have been easier for the government to eliminate fuel subsidies.”
Likewise, in an exclusive chat with our correspondent, a political economist, Aliyu Ilias, said the government seemed to have forgotten the basic economic impact of not having uniform pricing across the country.
He said he was in the South-east recently and observed that the price of petrol was way beyond the normal N165 per litre.
“And recently, I came back from Oshogbo and its environs, and there is nowhere you will get petrol for N165. It is quite clear that with the increase in global oil price, Nigeria is built at $70-$80 per barrel.
“For me, the federal government should make sure they remove subsidies so that we can move forward.
“However, the major challenge is that when the present administration came, they said they would fix the refineries. If they’ve started fixing or building a new refinery, we should have one so that one can cushion the demand that we have. It’s a serious problem and it’s appalling that at this level Nigeria is still suffering.
“The fact still remains that some people are benefitting from this. We still agree that it is only NNPC that is importing, but that does not have any effect on pricing, it’s only in Abuja. If you go to the boundary of Niger, Nasarawa and Kogi, they sell beyond N165. It’s a common thing that happens everywhere. You are tempted to agree with the people that sell it because of how they get it. So, subsidy removal remains sacrosanct and it’s just the way to go.
However, in his view, a development researcher, Adefolarin Olamilekan, also speaking exclusively to this reporter, said there was a need for the federal government to put other things in place before it could talk about subsidy removal.
He noted that with the various economic indices not speaking favourably, it would not be proper for the government to stop subsidies.
“It will be irresponsible on the part of the government to discontinue or stop subsidising fuel when it has failed to do the needful; putting the four own refineries to work, encourage private investment in refinery building not just modular refinery alone, collect refinery licence from those given in the last 10 years who have refused to build and give it to serious people.
“It will be difficult to stop subsidising fuel right now, with all prevailing economic variables resulting in high cost of living and surging cost of doing business,” he said.
Also, speaking to Blueprint Weekend on the matter, the Managing Director, SD&D Management Limited, Gabriel Idakolo, said for a long time fuel was not sold at official price in many states.
He said: “Many states, especially in the South-east and North-central, are not selling petrol at the official price, but the federal government through its regulatory agencies has overlooked this for so many years. The reluctance to stop fuel subsidy still boils down to satisfying some beneficiaries of the subsidy scam and also looking good in the eyes of Nigerians.
“Nigeria sells petrol at the lowest price compared to its West African neighbours, but the government allows smuggling of the products to these neighbouring countries because of the incomplete deregulation of petroleum products prices in Nigeria. The big brother ego which makes the country supply electricity to its neighbours without being paid is at play,” he said.
