Fuel price hike and its aftermath

LESS than two weeks from now, the APC/Buhari government should be celebrating its one-year in office. Amid several issues upon which the govern­ment’s performance can be judged are, its unmistak­able strides in the curbing of the terrorist and insur­gency war waged by Boko Haram in the North East of the country and the advance it has made in the anti-corruption crusade. The fact that all the local govern­ment areas seized by Boko Haram over which it was set to establish a Caliphal reign have been virtually retrieved and valiant attempt is being made to reset­tle the over two million internally displaced persons to their homes shows in no uncertain manner, that the government is delivering on the security sphere of its mandate. This is without deference to the issue of the Chibok girls still being harboured by the sect and over which there is much national anxiety. Sec­ondly, in spite of the charge of fantastic corruption leveled against the country by the undiplomatic Brit­ish Prime Minister, the whole world knows that the crusade against the corruption cankerworm is very much on. There is the well-made allegation of impu­nity against due process in the battle, but there is also widespread public support for the government in its Messianic drive to wrestle corruption to the grave in the country. These two battles of the government will go down as landmark successes on its one-year per­formance sheet and record.

Two critical departments, very sensitive ones at that, where there have been and will continue to be disputations, debates, discourses, passion and emo­tions are; a) the 2016 Budget over which there had been undisputable shoddiness, vacillation and much disquiet, was eventually and recently signed. Indeed, the release of its first tranche is said to be underway. And this is coming with a lot of relief, in terms of what is said to be in it for the common man as well as in the area of social infrastructure and capital project, reflation and revamping of the economy and so on. It should be a good reason for renewed hope and relief from the crip­pling economic hardship that Nigeri­ans have had to bear, with appreciable patience, with the government to fulfill its election promises of change in the country.

The second issue is the unexpected (?) announcement and immediate im­plementation of a new fuel price hike regime from N86.-N86.50 per litre to between N135-N145 per litre. Expect­edly, reactions have been mixed. Com­ing with the implied removal of subsidy and the ‘final’ step towards deregulation of the downward steam sector of the pe­troleum industry, most liberals and neo-liberals in the country have applauded the decision- the private sector class, like the manufacturers association, who see it as a welcome tonic for the promotion of foreign investment climate, forgetting that the small-scale industries have suf­fered incalculably from the hardship and pain of fuel scarcity as a major item of their business depend on gasoline, have praised the bold decision of government in this regard. This group of business en­trepreneurs, in addition to top notches in the APC, has applauded the tough and courageous decision of government to remove the ubiquitous fuel subsidy and begin the final lap of deregulation of the downstream sector of the oil industry. More recently, the Senate of the Fed­eral Republic has lent its support to the regime of increase in fuel price by the Executive arm of government.

There is the debatable argument that deregulation and removal of subsidy will relieve government of pumping foreign currency on purchasing crude, monies which should be better expend­ed on social infrastructure like electric­ity, roads, education, and so on. There will be less government in the gasoline business because private marketers will source forex and purchase fuel and sell at the ceiling price of N145 that gov­ernment has roofed. The expectation is that water will find its level in the com­petitive market and the price of oil will come down inexorably and social ten­sion will die down.

Unfortunately, this liberal economic purism does not gel on the common man and their defenders—the organized labor and the civil society. There is no confidence in the market forces econo­my, against which scale subsidy remov­al and deregulation are defined. When the Jonathan government be-laboured the subsidy regime and price hike, there was an instant mass ire on the streets of the urban centres in the country. I had then reflected in this column thus:

The battle- line is clearly drawn be­tween the people who consider them­selves as being at the receiving end and the State, along with its hegemonic agencies. Labour, civil society, the criti­cal mass, the press and others, including the private sector, have been roundly unequivocal about their stiff opposition to the proposed removal of subsidy by government—this, in spite of the cush­ioning that government promises to provide to lessen the burden of such a policy. The massive opposition build its argument on a number of platforms; that the subsidy is imaginary at worst, secretive at best and beneficial only to a clique and never to the masses who have carried the crippling yoke of outrageous pump prices of all petroleum products, since the last series of prize hikes; that the removal of subsidy does not guaran­tee improvement in the socio-economic conditions of the electorate, regardless of government’s promise to turn over sums accruing from removed subsidy to infrastructural work.

Labour and the critical mass of so­ciety are persuaded that from experi­ence, nothing good can come to them as benefit from deregulation, via subsidy withdrawal. They buffet their argument with the fact that colossal sums have been allocated in the past to power and roads, yet the nation wakes and sleeps in darkness. Our roads are pools of water in ditches called pot-holes. Our streets have hardly been darker, billions of dol­lars after. Huge sums accrue from crude oil and our federation accounts bloat and deflate from government to government. The rest is shared, primitively, between the central and state governments. The people remain in perpetual abjection and squalor, while those who lay claims to ruler-ship wallow in absurd opulence. No one outside of government is per­suaded that the removal of subsidy will improve the economy.

Today, the government of the day, even when it says that subsidy was not at the heart of its current petroleum price hike, has for practical purposes, set in motion the process of deregulation and the removal of fuel subsidy. Its avowed principle is to bring far less government into the marketing segment of the oil industry and give way to market forces (a clear liberalization principle) in the operations of the gasoline trade. Its in­tention, as expressed, is to free itself from sourcing foreign exchange for the procurement of the products and save its foreign revenue earning for social infra­structure, and allow the private sector, through competitive market to largely run the oil market and, hopefully, the prices will come down and we will all be happy.

In this perception, the present pump price benchmark of N145 per litre is a temporary hardship inflicted on the electorate, espe­cially when the palliative measures put in place within the budget bring succour to the people when fully implemented.

The voice of caution in the street, not to talk of the protestation of organized labour and the civil society, a critical section of which has, by Wednesday, embarked on strike action against the injunction of the Industrial Court and the threat of no-work-no-pay (work-to-rule) sanction), is that the wages of subsidy is chaos and an intermi­nable season of discontent. Government thinks otherwise. The State is on a lobby­ing spree, seeking soft-landing measures for the people after subsidy has become a policy. Government seeks favourable sup­port and endorsement from the nation’s leaders of opinion and weighty voices. It is not clear where all these will lead to or where it will end. Whichever way, it is clear that government will have to work, assiduously hard, to restore its easily won popularity and public confidence among the citizens. The suddenness and hardly negotiated imposition of hike of the price of gasoline has brought some credibility deficit to government in the eye of a large segment of the populace and this needs urgent amelioration and restitution. The essential aristocracy of labour, civil soci­ety, the critical mass, a huge chunk of the media, and others, are unequivocal about their stiff opposition to the huge increase in pump price of gasoline, if less so on the removal of subsidy by government—this, in spite of the cushioning that government promises to provide, through the 2016 Budget, to lessen the burden of such a policy. The main opposition (not merely from political parties) build their argu­ment on a number of platforms; that the subsidy is imaginary at worst, secretive at best, beneficial only to a clique and never to the masses who have carried the crip­pling yoke of outrageous pump prices of all petroleum products, since the last series of prize hikes; that the removal of subsidy does not guarantee improvement in the socio-economic conditions of the elector­ate, regardless of government’s promise to turn over sums accruing from removed subsidy and save foreign revenue to infra­structural work.

Labour and the critical mass of society are persuaded that from experience, noth­ing good can come to them as benefit from deregulation, via subsidy withdrawal. They buffet their argument with the fact that co­lossal sums have been allocated in the past to power and roads, yet the nation wakes and sleeps in darkness. Our roads are pools of water in ditches called potholes. Our streets have hardly been darker, billions of dollars after. Huge sums accrue from crude oil and our federation accounts bloat and deflate from government to government. The rest is shared, primitively, between the central and state governments. The people remain in perpetual abjection and squalor, while those who lay claims to ruler-ship wallow in absurd opulence. Not many out­side of government are persuaded that the removal of subsidy will improve the econ­omy. Instead, people believe that subsidy, if it indeed exists, is a token welfare return to the people and perhaps a visible way government can make them benefit from the oil which is a natural endowment from the bowel of the earth-their earth. The high price of gasoline will increase the poverty and deprivation, which have been the un­warranted lot of the masses thus far.

Yet, we have a new government, which promises to do things differently and more accountably. This is expected to begin with the faithful implementation of the 2016 budget, even as it comes rather late in the day, five months into the year. There is also a need to tread softly with labour through genuine negotiation without undue arm-twisting and untoward cowing tactics and strategies.