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Gutting the Oil Subsidy---Hypocrisy of Reactionaries

--Cutting-Edge Analytics--

By: Franklin Otorofani
 Published January 8th, 2012

It might sound insensitive to the plight of millions of ordinary Nigerians groaning under the weight of inflation induced by the not-so-sudden fuel subsidy removal. But if the truth must be told, and if we are sincere to ourselves, conscious of the place of Nigeria in the global community, and desirous of real development rather than its caricatures being touted as development, this day has been long in coming and we knew it. Didn’t we? Other than the fact that nearly every government in the past had mooted the idea only to be forced to abandon it, it has taken the Jonathan administration more than six months to navigate the political minefield and consulted widely and deeply before dropping the hammer as the New Year festivities were winding down, the timing not being altogether inappropriate.

But that itself is a side issue. The real issue is the appropriateness or other wise of the subsidy removal. There is no question in my mind that it is the right thing to do. If people do not want to make the sacrifices today for a greater tomorrow that is their call and they have to live by their choices. But the government of the day has a duty to do what it thinks is right for the economy going forward. That is what it is overwhelmingly elected to do, not to cower to threats and intimidation by labor. And labor cannot and will not dictate to it on how to implement its economic policies. The labor leaders should understand the basic principle that in a democracy it is up to the government of the day to initiate and implement policies and programs that it has the mandate of the people to implement. No one voted for NLC leaders, therefore they should not and will not be permitted to arrogate to themselves the power and authority to dictate or otherwise vet government policies before they are implement. What is the locus standi of the NLC in this matter? Is this a labor issue?

The Jonathan administration would be shooting itself in the foot should it allow some unelected body of holier-than-thou, pretentious activists to dictate to it policy options. That the Jonathan administration has consulted with labor every step of the way does not and cannot mean labor has been vested with veto power over the implementation of well thought out government's policies that have taken the best brains in the land to design. And who says labor has the best interest of the ordinary Nigerians more than the government that was voted in by the people? That is presumptuous arrogance. If NLC thinks that it loves Nigerians more than the Jonathan administration, it should go and test its popularity at the next elections. Oops! It in fact did in the last and the Labor Party was roundly rejected! Where does it derive its assumed authority to speak for Nigerians then? I don't get it. This inanity and lawlessness even in the face of a court order against the proposed strike can only occur in a lawless nation like Nigeria. Jonathan should not play softball with these saboteurs masquerading as labor leaders and must come down hard on all those out to frustrate his administration from carrying out its programs design for the good of the nation.

Fuel subsidy is anachronistic burden on our economy in an age when even liberal Europe is dumping all forms of social entitlements to save its behind from going under. And somebody is telling Nigeria to hold on to, swim or sink with fuel subsidy? They've got to be kidding. We all know that the subsidy program was not working while it lasted and not fixable either, because it does not belong where it was in our economy. It was a wrong-headed policy to begin with that needed to be gutted. There is not a single leader, military or civilian that found fuel subsidy desirable policy to maintain, and all regarded it as a drain pipe that must be plugged. Why pretend then that subsidy is here to stay come rain, come shine? Why pretend that a poor, developing country like Nigeria eager to take her rightful place in the comity of nations could sustain a trillion naira subsidy yearly in the face of dearth of infrastructural facilities ranging all the way from ordinary water works to electricity and transportation? When a whopping trillion naira fuel subsidy is built into our annual budget year in year out we must understand that it is good money being thrown to the fat cats in our society that has no added value whatsoever to our lives, but simply lining the pockets of a few privileged citizens in the name of the masses.  Don’t we know this as the truth? If we say no, the truth is not in us and we must repent from our presumptuous and pretentious ways. And if we say yes, why pretend subsidy would stay for as long as Nigeria lives when oil itself is a wasting asset and will not be here forever, and when our educational and health institutions are in shambles and direly in need of massive fund infusion?

We like to have first class health and education institutions; first class transportation infrastructures; first class telecommunication and information systems; and first class everything. But somehow, by some weird logic, we think that fuel subsidy would get us all these things and more. That is abracadabra economics. We must be kidding ourselves. Don’t these things require funds to develop, maintain, and expand in tandem with population growth that is fast approaching 200 million? And must we be hostage to the notion that funds saved from subsidy removal would be embezzled by government officials and therefore unaccounted for just because government official had been stealing public funds in the past?  This is one of the most disingenuous arguments put forward by those opposed to fuel subsidy removal. It is rested on the notion that because some leader or leaders had failed to perform in the past therefore all present and future leaders would equally fail to perform. If that is the case why do we bother to have leaders? Why do we troop out on election days and stay in the scorching sun all day to cast our votes for our leaders if we believe all would end up just like the previous ones that failed us. This self-defeatist argument must give way to reasoned argument borne out of mature and thoughtful analysis of the situation at hand rather than luxuriating in cheap sentiments. All of a sudden the labor leaders that secretly reached an understanding with the late president Yar’Adua to remove the subsidy and use part of the proceeds to enable NLC operate bus transportation services have gone back on their words just because the public is against subsidy removal. All of a sudden governors and lawmakers that had been briefed and bought into the proposal are turning coat just because NLC itself has turned coat.  This is the hypocrisy that has been the trademark of Nigerian public officials.

What is required is not the debate of the fuel subsidy removal because that was a foregone conclusion but the special projects that the savings would be used to fund and the palliatives that the government would put in place to cushion the immediate adverse effects on the masses. That is the issue not the ventilation of raw emotions that have no basis in economics or public policy standpoints. And the government has done a darn good job setting up the Christopher Kolade committee populated by eminent Nigerians to design appropriate programs to be funded with the subsidy and the accompanying palliatives. Already, as has been reported, the standardization of the Nigerian railway system is on the cards, and mass transit, high capacity buses (1,600) are said to have been ordered by the government and will arrive in a few weeks from now. At the end of the day a proper program keyed into by both the federal and state governments now being duly carried along will emerge to the benefit of the generality of the citizenry, not just a few fat cats in the oil industry. Anyone opposed to this is either a beneficiary of the status quo ante or enemy of progress.

The energy sector has to be properly deregulated to enable private investors to develop and grow it. Only a society that is woefully dependent on government would go on strike because of fuel subsidy removal. That prices would go up momentarily is not in doubt, but in the end competition will drive down prices when this artificial distortion has been removed. The whole idea is to free the industry up to competition and competition will always drive down prices in the end. Nigeria’s telecommunication industry has just proved that. It's a no brainer. The costs of telecommunication services have been crashed by competition and there is no reason to imagine that the same will not happen with regard to petroleum products from private refineries now given a chance to come on stream. NLC wants the government to build refineries. That is the mindset of a union that wants government in command of the economy that it would threaten every now and then with strikes, notwithstanding that government is not suited for these things and has in fact failed time and again consistently over the years.

The Jonathan administration must, therefore, be been given a pat on the back for having the courage to seize the bull by the horn and gut the subsidy once and for all; no half measures. Previous administration had attempted this but did not have the political will to pull through. The one leader that has severally and routinely been maliciously maligned as being “weak”, “indecisive”, and “tentative”, has proved his detractors wrong by taking this bold move and damned the consequences. And that is a plus rather than a minus for him. History will prove him right once the temporary hardships have given way and the benefits begin to settle in for all to see by way of the huge private investments that will pour in. This is what the private sector has been waiting for. It wants to know what would be the returns on its investments. With subsidies that determination cannot be made with any degree of certainty. Tying an industry to the apron strings of government is the surefire means of killing it and that’s why the oil industry in Nigeria is not growing. Compare it to the oil industry in other OPEC nations and the difference is clear. I have no doubt therefore that at the end of the day this bold decision will turn out to be real blessing for Nigeria’s oil industry rather than the doomsday scenarios being painted by vested interests in labor and civil society.

I would respectfully urge Mr. President, therefore, to ride out the storm with all the powers and instruments of state at his disposal. Having started the good journey, there can be no going back until we reach the destination even if heavens fall on us. But they will not. In time, Nigerians and labor will get used to it. No, it’s no longer business as usual. That is the message that must be drummed into our ears. Change is here not to move us backward but forward. By the way who is afraid of change? Labor and political opportunists? Too bad, because change is the currency of civilization and we must learn to trade with it and prosper in it. Nigeria has been left behind for too long due to our leaders not taking bold decisions like this. Not doing it today would be tantamount to mortgaging our tomorrow. President Goodluck Jonathan has voiced his desire to leave a better Nigeria than he met it and it takes guts and rock solid determination to do what's required to move the nation forward, though it might be unpopular today and frankly speaking hurtful to many at the implementation phase of the policy, which is what is happening now. But when things settle down Nigerians will be singing a different tune. That is the real deal, not the temporary hardship being exploited by saboteurs. Time will prove him right and posterity will remember him as the leader who got it right for once in our nation's unflattering history of inept, spineless, vision-less and and compromised leadership.


Franklin Otorofani is an attorney and public affairs analyst.

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