……….As it has been revealed that the Issue of Fuel Subsidy is rest on the shoulders of Nigerian Leaders battling with Trust.
By Agoziem Tobechukwu
It is only in a state of ignorance or gross negligence that one would want to deny the fact that the subsidy regime is grossly impacting on our spending expenditure as a Nation. Money that should be meant for other economically beneficial purposes are being used to subsidize fuel. Personally from close observation, two things impacts on our yearly budgeting as a nation and that is debt servicing, subsidizing electricity and fuel. Mr Tunji Oyebanji, the Chairman of the Major Oil Marketers Association of Nigeria and Chief Executive Officer of 11 Plc., disclosed in a Reuter’s report that Nigeria has spent about 10.7 trillion naira in the past ten years subsidizing fuel.
We must understand that the removal of subsidy would definitely impact the standard of living of every Nigerian even though it is most important at this point in our economy. Transportation invariably rises, leading to the rise of every commodity, both goods and services. Inflation becomes inevitable. GDP decline follows suit.
How do we deal with this issue of subsidy? January 1, 2012 when former President Goodluck Johnathan announced on national TV of his intentions to remove fuel subsidy. That announcement provoked a public outrage that lasted for about 15 days. Clamors from all societal groups rejected the new initiative, which eventually led to a partial removal. In 2020, this government eventually realized that the Johnathan approach is the only approach. In-fact this year, the Managing Director of the NNPC, Mele Kyari, insisted that there is no allocation for fuel subsidy in the 2021 budget. As at September 2020, the Minister of States for Petroleum Resources, Mr Timipre Sylvia, announced the intention of the federal government to deregulate the prices of petroleum products. March this year, the President had to halt the total removal of subsidy till September, buying time till all necessary factors are in place before the big action is executed.
Now I believe that the halt is a positive action to take, because obviously Nigerians are not ready for the big action. But the real issue here is that even though informed Nigerians do understand the importance of Fuel subsidy removal, we still do not trust the government that there’re provisions in place to cushion the impact of the subsidy removal on our standard of living. We’ve heard of stories of gross mismanagement of funds and how the issues were swept under the carpet. This piece isn’t a criminal report so delving into that wouldn’t be necessary.
Now even if subsidy is to be removed, how are we sure that the funds secured from its removal would be used effectively for the benefit of the populace. Until now, we haven’t heard from the proposed Jobs for the 774 LGAs, promised by our honorable minister Festus Keyamo. Or the outcome of the meeting where the acting managing director of the Niger Delta Development Commission (NDDC), Daniel Pondei slumped while the House of Representatives members, probing the misuse of N81 billion interrogated him.
How are we sure that there’re measures in place to cushion the effect of the resultant petrol price hike. The issue of fuel subsidy removal in my opinion is an issue of trust. There have been attempts in the past to remove fuel subsidy, but these have not been without resistance from the populace. May 11, 2016, petrol pump prices were hiked by around 68% from 87 naira/liter to 145 naira/liter and many assumed this signaled a full deregulation but this wasn’t the case as the subsidy regime was still in place. Note that deregulating petroleum products remains a politically sensitive issue.
The real challenge is winning the trust of the people. This government must implement a transparent system for redirecting and monitoring the use of funds from the fuel subsidy program so that its citizens can review and scrutinize the expenditure. They must prioritize sustainable investments that will have a long-term development impact. Measures must be put in place to effectively communicate to Nigerians on the need for subsidy removal and provisions made to improve standard of living so as to avoid the negative impact of fuel subsidy removal.