•The issue is not subsidy but local refining of crude
The call for the removal of petroleum subsidy, just got a boost, from the Emir of Kano, Muhammad Sanusi II. The former Governor of Central Bank of Nigeria (CBN) made the call while receiving a Life Time Achievement Award at the All Africa Business Leaders Award, in Lagos.
Hear him: “Does it make sense at this time for government to continue paying petroleum subsidies? It does not! When you are not earning because oil prices are down, you have to shut down those expense lines that had been known historically to be the site of rent-seeking.”
There has, however, been very stringent criticisms against the call. Senator Shehu Sani, said: “Decades of adoption of such capitalist strategies by many countries in the developing world especially Africa led those nation to economic quagmire and paralysis”.
He further admonished: “The poor must not continue to pay the price for the corruption and mismanagement perpetrated by past governments”.
In his reaction, the Nigerian Labour Congress (NLC) President, Comrade Ayuba Wabba, said: “There is no doubt that the former CBN Governor is no more connected with the people”. He referred to his call as “the language of the capitalists, the marketers and those who want to milk the country dry”.
The cacophony of the voices represents the myriad of challenges facing the government of President Muhammadu Buhari over what to the do with the petroleum subsidy conundrum. For us, mindboggling corruption, is at the root of this national embarrassment. Indeed, it sounds like fiction, that Nigeria would shamelessly export crude oil, with all the employment opportunities and by-products, that local refining would gift us, only to import refined petroleum products, at inflated costs and huge arbitrage.
The quagmire facing the present government is how to pass on to the citizens, the glaring costs of incompetence of the past governments. They chose to neglect our refineries; and created, deliberately or inadvertently, a corps of parasites, choosing subsidy to bleed their country to death.
With nearly all the old refineries almost derelict, and with regulation of the sector making it unattractive for private sector investment, the government which has limited resources to invest in new refineries, is therefore at a crossroads: can it dare the people and the likely inflation nightmare, if the subsidy is removed? Only if it can guarantee an improvement in the life of the ordinary Nigerians.
But the Buhari government must quickly take a jump. It must choose to either source for funds to build new refineries, to support the aging ones in Port Harcourt, Warri and Kaduna, and save the people from suffering and the government from embarrassment; or it would dare the consequences, and remove the subsidy, and encourage private equity participation in the development of new refineries.
In taking a decision, the government must weigh its capacity to rein in the criminal elements in the oil industry, who under the previous governments, have been in criminal collaboration with the government officials.
This government must also appreciate the enormous sacrifices already made by the people, who have been taken on a long deceitful ride, each time there had been an adjustment of the price of fuel, with a promise to use the proceeds to renew the infrastructure.
The government must indeed start by removing the corrupt component of the subsidy regime and pass the benefits to the people. For many, if they cannot trust the Government to block the leakages, how can they trust it, to use the gains from the removal well?
