It has afflicted Nigeria’s economic fabric for so long a time. Yet, the country has been unable to come to terms with its hang-ups. It has been one stigma, which we have remained ill at ease with.
So why has an economic policy aimed at ameliorating the hardships of the people’s daily fare turned out to be a source of distemper? That is the unfortunate dimension the fuel subsidy brouhaha has taken. We seem to be at the crossroads over the palliative called oil subsidy.
To underline the problematic dimension the issue has come to assume, those who hold the lever of our economy have finally demonstrated their reluctance to confront the conundrum. Rather than take a clear-cut stand on the issue, they have chosen to postpone an issue that must be tackled head-on. Their latest offering is that the decision on whether fuel subsidy will go or remain will be taken in June. The National Economic Council (NEC) under whose purview the matters falls, says the June date is when the provision for fuel subsidy in the 2022 budget will elapse. A new regime is expected to begin thereafter, whatever it might be.
The argument this time, as always, for ending the subsidy regime is that most countries of the world, which are oil-producing like Nigeria, sell petroleum products much higher than what obtains in Nigeria. Those who are steeped in this comparison binge never get tired of citing the situations in countries like the United States and Saudi Arabia. They are also quick to tell us about the oil situation in some neighbouring West African countries. The gist of it all has always been that petroleum products are cheap in Nigeria because they are being subsidized by government. At moment, government says that it spends as much as N2 trillion annually on subsidy.
Those who want this regime of subsidy to end tell us that the money being spent on it could be channelled to other productive and more rewarding areas like healthcare and education. They also argue that only about one-third of the 36 states of the federation consume two thirds of the subsidy on petroleum products. The conclusion they reach is that what is being subsidized is the living standard of the rich who own vehicles as against a subsidy regime that will benefit all. We can, therefore, safely assume that it is arguments such as these that have compelled NEC to opt for removal of subsidy on petroleum products. The authorities concerned say they are waiting for June to let the cat out of the bag. This is the juncture where oil subsidy blues is brewing at the moment.
Long before now, issues about appropriate pricing of petroleum products have been a subject matter for repeated, even unending, red herring. Figures on this issue fly about with effortless ease. What has been fashionable here is for the authorities concerned to reel out high-sounding figures and impose them on oil subsidy. Regardless of the bogus figures, there has never been any acceptable position on the matter. Instead, the figures have continued to vary from one interest group to another. In fact, one of the ugliest outcomes of the subsidy debate is that a certain cartel, which has been benefiting from the subsidy order, exists. It is this cartel, according to the promoters of oil subsidy removal, that has made it impossible for successive governments to take a decisive action on the subsidy issue. The much that has been achieved so far is the removal of subsidy on diesel and kerosene. The prices of these two products have since been deregulated, leading to a spiral in their prices. So far, what government has been unable to do is to extend the same treatment to the almighty premium motor spirit, otherwise known as fuel.
Then we ask: how will a deregulated fuel market affect Nigeria and Nigerians? That is the crux of the matter. Before NEC cracks the hard nut, let us take another look at some of the arguments that have been canvassed against the subsidy regime. The cheapest of them all is that which tells us that fuel is much cheaper in Nigeria than it is in countries like the United States and Saudi Arabia.
Comparisons, as we know, are odious. This is because no two situations are exactly the same. But the extrapolation arising from the oil pricing in the aforementioned countries makes comparisons much more odious. I do not see the sense in lumping Nigeria and the United States together merely on the basis of fuel subsidy. What about other economic and social indices? Why are we not talking about social benefits? What happened to welfare packages? What about infrastructural development? When we refer to the United States or some other countries we make nebulous references to, do we ignore the fact that Nigeria is light years away from the situation in these countries? We should recognize the fact that, if there were social safety nets that Nigerians can rely upon, perhaps the expected hardship that could come with fuel subsidy removal might not be there after all.
The problem here is that Nigerians live in a country where government does little or nothing. The individual is responsible for the provision of facilities and amenities that are taken for granted in developed and even developing countries of the world. We will, therefore, be doing a disservice to the issue before us if we do not take all the relevant indicators into consideration.
How about the argument that subsidy regime benefits only a few? This argument does not appear to be well reasoned. It is reductionist to claim that only vehicle owners benefit from the subsidy regime. We can hardly dispute the fact that everybody does. Are we glossing over the fact that those who do not own vehicles also move about? Who pays for them when transportation fares skyrocket owing to increase in the pump price of fuel? Do we not realize that higher fuel prices will have a domino effect on the prices of other goods and services? As a matter of fact, the already bad inflationary situation in the country will get worse in a situation of a deregulated fuel regime. If this should happen, the purchasing power of Nigerians will reduce as they will be unable to afford most of the basic items that they need. Economists will readily agree with us that this fact is elementary.
Those who are canvassing a deregulated fuel price seem to have made up their minds long before now, regardless of the sense or nonsense of their point of view. If it were not so, we would have conveniently ignored the claim that the funds being channelled into subsidy would serve us better in the areas of education and healthcare delivery. This manner of argument seems to suggest that our educational and healthcare facilities are in tatters because we do not have the funds to tackle them. But we know that this is not the case. If we have failed to deliver on education and healthcare, it is because we do not have the will to do the right thing. Funding is hardly the issue.
If we must make sense out of the push for the removal of fuel subsidy, we must shun all the arguments that border on sophistry. We can put the spade to whatever use that appeals to us without calling it a garden spoon. Justification for fuel subsidy removal should make sense to all concerned. Bogus statistics from other lands will not serve our purpose.