Let the subsidy be – The Nation

•Nigerians should not carry the burden of govt’s inability to tame corruption in the downstream sector

Why would the Federal Government – after inflicting the latest round of crippling fuel scarcity – turn round to exploit it to ramp up its jaded idea of removal of subsidy on petrol and kerosene?

It seems an inevitable part of the strange ways of the government and the Nigerian National Petroleum Corporation (NNPC) that the drumbeats for the removal of subsidy hit high octane levels in the last one week or so. After confessing to their complicity in the making of the latest round of fuel scarcity that paralysed economic activities across the country, perhaps only the insensitive duo would dare to broach the idea of removing the subsidy at this time.

But then, it is not only the Federal Government that wants the subsidy removed. If reports are anything to go by, the body of states’ finance commissioners in the 36 states has since enlisted in the remove-the-subsidy orchestra. The position of the latter would seem understandable – most of them have fallen on hard times in the last one year, courtesy of the shrinking accruals into the federation account, hence their need for additional sources of finance – earned or unearned – to bridge financing gaps in their budgets. So, where else to look if not in the direction of the subsidy, with its seduction to revenue without sweat?

The truth of the matter is that the nation is no less hung on the old debate on the fuel subsidy now as it was some 10 years ago. Clearly, to the extent that the views credited to the Minister of Petroleum Resources, Diezani Alison-Madueke at the Oil and Gas Conference in Abuja last week represents the latest thinking at the highest levels of government, nothing appears to have changed. It was the same old arguments about the hefty subsidy payout (on imported Premium Motor Spirit and Kerosene) to fuel marketers being unsustainable; the usual argument about the deregulation of the downstream sector of the petroleum industry being overdue; the current regime of petroleum pricing not just unsustainable but discourages investment and benefits the rich and not the masses in the society for which the policies were intended.

Now, they are so wearisome.

In vain did this newspaper struggle to detect any shift in the position of government – on a subject on which the government and the governed have been in diametric opposition all these years. It is as tragic as it is unfortunate.

Now, to start with, the very idea that the Federal Government has the monopoly of knowledge – or that it could do no wrong – is not only absurd but baseless. However, in this case, conceit appears not to be the only affliction suffered by the government; as far as the issue of the subsidy goes, the government has opted to be so blind in its fixation with an outmoded paradigm – to the extent that it now elevates the debate on the subsidy above everything else.

What do we know about the subsidy arithmetic or economics? Given the revelations at the various subsidy probes, it would appear that not even the government is in a position to deny that a huge chunk of the figures bandied around for the purpose of claims payment do not even qualify. Unfortunately, rather than concentrate on measures to reduce graft in the fuel supply and distribution chain, the government would seem content to punish its innocent victims – the fuel consumer.

Contrary to what the Federal Government prefers to think of Nigerians’ attitude to the subsidy issue, Nigerians are neither dumb nor stupid as to believe that the annual payout to the merchant club of marketers is sustainable either now or in the long run. In the 2014 budget for instance, N971 billion was voted for the subsidy. Perhaps more than the government would care to admit, the citizens appreciate the massive distortions foisted by the subsidy regime, the vicious spiral of negative macro-economic waves indicated in the annual outflow of the foreign exchange on the importation reckoned in billions of dollars and exchange rate pressures, and, not least, the dangers that these pose to the economy in the long run.

But they also understand these to be the direct effects of the current regime of importation.

It seems that the main issue is government’s narrow interpretation of what the policy of deregulation should be. For sure, citizens have nothing to choose in the current laisez faire, all-comers policy of unbridled importation, or its twin, the hollow, incoherent policy of abdication conveniently encased in some jaded policy mumbo-jumbo. Citizens surely know enough to recognise deliberate, guided policy to usher in multiple players in the refining sub sector when they see one.

And if we may well add, this is where the difference between the throng opposed to subsidy removal and the government comes in bold relief: the former see the subsidy as a symptom of a troubling malaise – if you like, an opportunity cost for the road not taken; for the latter it is a terminal disease that citizens must put up with – a folly of tragic proportions that must be shunned.

To allow government to have its way on the subsidy is to expose the economy to the risk of macro-economic instability of hyper inflation. Moreover, in a nation where the cost of doing business is humongous, and where no forms of social protection exist for the poor, it seems the surest path to further constriction of business and impoverishment of Nigerians.

This is where, unlike the Federal Government, we find no pleasure in framing the debate in terms of the option of either retaining the subsidy with its dire implications for the national treasury, or shifting the burden from the treasury to the motorist. To the extent that both do not come close to being palliatives in the context of the aspirations of OPEC’s sixth largest producer of crude, we consider them to be at best, false choices. At this time, the question we ought to be asking the Federal Government is how further we have to wait before the three promised Greenfield refineries come on stream. What about the billions poured into the Turn Around Maintenance (TAM) of the four refineries – including those from SURE-P; shouldn’t the funds have put them to work?

In the meantime, the government should let the subsidy be.

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