Unbearable albatross – The Nation

  • For how long will the Federal Govt continue to live in denial over subsidy?

For how long will the Federal Government continue to put up with the fuel subsidy albatross? Again, we are forced to ask in the light of the most recent report from the Nigerian National Petroleum Corporation (NNPC) showing that the corporation spent a whopping N650.2bn to maintain the price of petrol at N145/litre for the 12-month period spanning April 2018 to March 2019. Going by the National Bureau of Statistics’ (NBS) figures already showing a surge in the volume of petrol imported by 15.2 per cent in the second quarter of the current year, there’s no telling at this time where things might yet end.

Clearly, if we had expected much from the administration of President Muhammadu Buhari which rode into office with a pledge to make a difference, the result has been most disappointing, as previous governments’. Interestingly, the administration started on the note of denial only to be forced to hike the price of petrol from N87 to N145 (66.67%) few days into its first anniversary when the reality of the subsidy dawned. Unfortunately, if Nigerians expected robust, clear-headed and far-sighted policies as reward for the unprecedented understanding which they showed at the time, what they had instead was a relapse to the same old dithering and inaction as we had with the administrations before it.

Aside the situation in which the minister would be at odds with his principal on the issue of refineries, Nigerians had to endure the shifty debate on whether to call the differential between the cost price and the price at the pump more appropriately ‘subsidy’ for the purpose of legislative appropriation or ‘under-recovery’ – under which the NNPC conveniently passes off the quantum expenditure as ‘operating costs’.

One of the wages of that legendary dithering is the current situation in which the country’s four ailing refineries could neither be sold to interested investors as many have canvassed nor revamped to mitigate the problem occasioned by the mindless fuel importation, even when the government insists on holding on to it. The other is the unacceptably huge bill being borne under the regime of importation.

At this time, Nigerians can do without the perennial lectures on how the pump price of petrol will necessarily move in tandem with the price of crude in the international market. Or the equally nauseating argument about the vast price differentials between the local pump price of fuel and those of our neighbours, and how this contributes to smuggling and the nation’s inability to determine how much fuel it consumes. These are, if we daresay, rather superficial arguments that have flown forth and back in the last two decades. This is even more so as these gloss over the fundamental question of why a leading oil producer like Nigeria would tread the current ruinous path in which some 40 per cent of its earnings from oil will go into importing refined petroleum products.

To this newspaper, the only thing worse is that an administration that professes change is yet to demonstrate in practical terms that it understands the nature of the emergency posed by the fuel import challenge, let alone moving to confront it.

As it is, the easy way out is to do away with the subsidy or the so-called under recovery as suggested by the chair of Nigerian Governors Forum in the body’s meeting with the new Group Managing Director of the NNPC, Mele Kyari, in July. Without any question, the subsidy is an unacceptable drain on the nation’s resources, particularly when considered against the fact that the 2018 capital budgets for the power, works and housing is N555.88 billion, transportation – N263.10 billion, education N61.73 billion, and health N71.11 billion; in fact, there is a sense in which the N650.2bn to subsidise petrol alone could be deemed a gross misapplication of funds.

A way to go is for the government to initiate a programme of phased removal to mitigate potential shocks to the economy. That way, new entrants coming into the refining business wouldn’t have to squabble over pricing issues as they would have had to do under a regulated regime.

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