The petrol subsidy narrative

The federal government eventually offered clumsy excuses for its decision to end the necessary evil known as petrol subsidy. Government’s defence stood logic on its head as it celebrated courage in the face of arrant cluelessness, pusillanimity and ineptitude. Government met consumers’ anger with executive wrath. It described consumers’ anger as “unnecessary and mischievous” when it had five years to uproot the mega-thieves crippling Nigeria’s four refineries with mysterious turnaround maintenance (TAM) or sell the plants to private investors, but did neither. 

Nigeria’s unholy dependence on refined petroleum products imports is at the root of petrol subsidy. Ironically, government flaunted imaginary “courage to remove petrol subsidy” and derided past administrations for lacking that courage. Like the establishment of petrol subsidy itself, the removal is a necessary evil not done out of courage. The decision was imposed on government by two irresistible forces.

The first Impostor is the International Monetary Fund (IMF). IMF had ordered government to withdraw petrol and electricity subsidies as a condition for the $3.4 billion loan advanced to Nigeria in March 2020.

Government was dithering over the thorny directives from the IMF when the last impostor struck. Government revenue plummeted in May, 2020 to a scant N276.99 billion. Ironically, government spent N838.99 billion during the month, thus chalking up a deficit of N561.71 billion. It compelled government to remove petrol subsidy to reduce its intimidating deficit. That obviously is not an act of courage. It is the high-noon mentality of an impoverished debtor with his back to the sea, confronted by cruel creditors who want their money at all cost.

I expected the federal government to flaunt the measures it has put in place to end Nigeria’s shameful dependence on refined petroleum imports as an act of courage.

Unfortunately, no one in the federal government can point to a concrete step taken in the last five years to make Nigeria self-sufficient in refined petroleum products. Government has clung tenaciously to its archaic statist posture on ownership of Nigeria’s cash-guzzling refineries which lost more than N200 billion in the last one year and maintained a curious deafening silence on their production lines.

Petrol subsidy is the consequence of failed leadership that foisted imported inflation on the populace by running down the country’s refineries through mysterious TAM. The evils of petrol subsidy far out-weigh its advantages.

It is true that petrol subsidy allowed toiling Nigerians to reduce the cost of fueling the estimated 64 million micro-power generators that generate close to 60 per cent of the electricity that runs Nigeria’s jinxed economy. The epileptic power supply itself is another consequence of failed leadership.

However, petrol subsidy was never enjoyed in many parts of Nigeria despite the petroleum equalisation fund operated by the federal government to ensure uniform pump price of petrol all over the country. Many states outside the south-west and Abuja hardly enjoyed it.

The main beneficiaries of petrol subsidy were the mega thieves in the petroleum products marketing companies, Petroleum Products Pricing Regulatory Agency (PPPRA) and the Nigerian National Petroleum Corporation (NNPC).

In 2011, government allocated less than N300 billion but spent N2.1 trillion on subsidy mostly for consignments of petrol that never reached the shores of Nigeria. No one sought approval of the National Assembly for the extra expenditure.

In civilized climes, the president would have been impeached, prosecuted and sent to jail for spending money not appropriated by the National Assembly. But in Nigeria there is something called mutual impunity. It allows government officials to loot the treasury with impunity while government looks the other way as the populace evade tax, drive against traffic and commit other crimes in revenge.

Nigeria’s inconsequential majority benefitted from a very tiny fraction of the N10.4 trillion largely stolen in the last 14 years in the name of petrol subsidy. Ironically even if there was no petrol subsidy, Nigeria would still not have refineries and no one would account for the N10.4 trillion largely syphoned into private pockets in the name of petrol subsidy.

When the subsidy fraud became so nauseating, the federal government eased out the dubious marketers and made the NNPC the sole importer of petrol.

Within weeks of being handed petrol imports monopoly, NNPC fashioned out its own way of defrauding the federal government. The petrol subsidy withdrawal of May 2017 which almost doubled the pump price of petrol from N87 to N145 per litre exerted enormous pressure on motorists’ pockets and drastically reduced petrol consumption.

NNPC celebrated the reduction in petrol consumption in December 2017 when it announced publicly that consumption has dropped to 28 million litres per day. Two months later in February 2018, the same organization announced that consumption has risen to 60 million litres per day. It blamed the mysterious surge in consumption on the age-long tradition of smuggling petrol to Nigeria’s tiny neighbours to the west.

When Femi Falana, a senior advocate of Nigeria (SAN) demanded import documents confirming the sudden rise in petrol consumption at a time when the economy was climbing laboriously out of recession, NNPC lawyers retorted that the documents were trade secrets not meant for public consumption. Nigerians lost.

Experience has shown that no one can be trusted with management of petrol subsidy. It is a thorn in everyone’s flesh. It should be thrown away.

The most nauseating aspect of the evil called petrol subsidy is what has been washed down the drain in its name. The figures from NNPC shows that Nigeria has spent N10.4 trillion on petrol subsidy since 2006. That is more than one year’s budget.

In 2010 the sum of N667 billion was spent on petrol subsidy. That amount could build a 300, 000bpd refinery.

The most agonizing year for petrol subsidy was 2011. That year alone, it consumed N2.1 trillion.

Federal government budget for 2011 was N4.226 trillion. Nigeria spent about 50 per cent of its budget on phony petrol subsidy.

Nigeria has wasted enough on petrol subsidy. It has to stop. The best way to phase out petrol subsidy is by ending Nigeria’s shameful dependence on refined petroleum products imports.

Nigeria does not know how to generate, transmit and distribute electricity. It does not know how to refine crude oil. That is why it is the world’s headquarters of poverty. All that would change the day Nigeria becomes self-sufficient in power and refined petroleum products supplies.

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