What next after petrol subsidy removal?


The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has said the regime of fuel subsidy would become an illegality by the year 2022 when it would come
to an end. 

Specifically, Kyari said by the end of February 2022, the law provides that Nigeria should be out of the subsidy regime. He said the subsidy would have gone in 2020 but some factors have made it impossible. 

 The NNPC boss spoke at the November 2021 edition of World Bank Nigeria Development Update. Kyari further said backed by law, the price of the product may range between N320 and N340 per litre. The bad news did not come to nigerians as a surprise. Many economists and financial experts have been advising government to remove fuel subsidy for the country’s growth and development. 

Even international creditors like the International Monetary Fund (IMF) and the World Bank have strongly cautioned Nigeria to hurriedly stop the subsidy regime. They argued that fuel subsidy benefits few wealthy people at the detriment of majority of Nigerians.

However, the attempts rocked the boat as government continued to foot subsidy bills running into billions of naira. There is nothing wrong for government to provide subsidy to the Nigerians. Even in developed countries subsidy exists. 

That was why Nigerians enjoyed subsidy in electricity, fertiliser and other social services approved by government until it was not longer sustainable.   The increase in population, revenue challenges and urgent desire to meet up with infrastructural development of the country has led government to change its thinking cap. Government has since embraced the concept of new public management where its role is narrowed to provide conducive atmosphere for private sector to thrive.

In the last two decades, government has been pursuing privatisation policies aimed at handing over our moribund companies to private sector for efficiency and effectiveness.

Although, Nigerians are yet to feel the impacts of government’s privitisation policies with reference to how the defunct NEPA rendered its poor service, at least, government is no longer carrying the burden of sustaining it with public funds. Many Nigerians expected same with our underperforming refineries. Our refineries have become cesspools of corruption. Every year, government approves billions of naira as turn around maintenance without the refineries working optimally.

These refineries have been operating at a loss but government continues to sustain them. With the passage of the Petroleum Industry Bill (PIB) into law, there is no doubt thatthe petroleum industry will breath a new lease of life. The Petroleum Industry Act (PIA) will unbundle the petroleum sector and make it more attractive to investors.  Back to the government plans to remove fuel subsidy in 2022. The poser begging for question remains: are Nigerians ready to swallow the next year’s bitter pill? Majority of Nigerians have frowned on the government’s sudden decision and view the next year gift as untimely which will further make lives difficult to citizenry. 

With the hyper-inflation which increases the price of goods and services by over a hundred percent, poverty and high rate of unemployment in the land, subsidy removal would push more Nigerians into hardship. 

The Minister of Finance, Zainab Ahmed, has assured that government will roll out transportation palliatives for Nigerians. Under the arrangement, government will be paying monthly stipend of N5,000 to between 30 million and 40 milllion Nigerians. While government’s token may look good, Nigeria has a poor implementation culture. The country had witnessed how similar intervention policies were abused in the past by corrupt government officials. The fear being expressed is whether the proposed palliatives would reach the target beneficiaries or not.  The country’s possible exit from subsidy regime by next year should be accompanied by reduction in the cost of governance and other genuine reforms. The wage bill of our political office holders is outrageous, hefty and unsustainable. It has continued to drain the country’s lean resources

The fat salaries and allowances of our three arms of government – the executive, legislature and judiciary -should be reduced to reflect the current economy realities. What about our over bloated bureaucracy? The government should quickly implement the report on Steven Orosanyo public service reforms, which recommended the merging of ministries and agencies with similar functions. Furthermore,the government should float the country with affordable transportation system to cushion the likely effects of the subsidy removal. Equally important is the need for government to block leakages and corruption in the collection and management of the country’s revenues.

Ibrahim Mustapha,Pambegua, Kaduna state08169056963.

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