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Fuel Subsidy: The justice of the matter.

By: Bapakaye I. Dibi  
 Published January 5th, 2012

The hottest debate in town today is on fuel subsidy, its removal and petrol price hike. Arising from these issues are questions like: How did we as a people come by fuel subsidy? Why fuel subsidy? What has made its removal necessary? How is petrol priced in other countries? Some effort will be made here to bring together bits and pieces of information trailing the foregoing issues and to make some sense out of them. There is no intention to join issues with technocrats. No room here for statistics. There are many on the internet. Here is the ordinary man’s tale of fuel subsidy told with good cheer.

Going by the arithmetic we have seen on TV, in the Newspapers and on the internet since the debate on fuel subsidy, for every litre of petrol a Nigerian citizen paid N65 for in 2011, to run his car or fuel his power generator, the Nigerian Government also paid about N65. On your behalf, beloved Nigerian citizen, government paid for one-half of the true cost of all the petrol you burnt until the end of 2011. “True cost. . ." .

I can hear you say, “Who beg them?” Nobody did. What happened is that some people were asked to run our 4 petrol refineries profitably and among other things, refine for home consumption, some of the crude oil from our soil, so abundant Nigeria was once rated 4th exporter worldwide. If this had been done well we would have petrol very low-priced in this country. The people entrusted with running our refineries failed on the job. Some say they did not fail because of genuine human error of judgment in doing business; but that they served their personal greed. They pocketed monies put up by government for maintaining the refineries in what they call, “TAM” - Turn Around Maintenance. All 4 refineries broke down nearly completely at a point in time. Frustrated, government allowed them to remain so for quite some time and groped about for what to do.

I can hear you ask, “Those who pocketed the monies for upkeep of the refineries and brought us to this pass, are they in jail?” We have not risen to that level of civilization. Ordinarily what we do, as you know, is to sack you after you have stolen a few millions and create room for another Honorable man who takes your place and does the same thing that earned you a sack. I understand to jail those who pocketed the refinery monies would bring out the names of Honorable and Distinguished Gentlemen. The safe course was to suffer Nigerians to be without a viable refinery.

The solution to the problem of our inability to maintain our refinery, the government thought, was to licence some people to import petrol. The importers would not sell at N65 per litre. And so Goverment agreed to subsidize as above described, pay one-half of the true cost of the petrol you need. That is how we came by fuel subsidy.

While the honeymoon lasted between the government and importers of fuel there was peace. As you know, honeymoon is a situation of give and take. No one cared to raise the questions asked herein above. The minions of Fortune soon became as wise as their counterparts in the refineries. They imported 10 litres and claimed subsidy for 15 litres. In 2011 alone the annual subsidy figures doubled, tripled or quadrupled – I do not know exactly – the previous years’ figures. Then the names of the fuel subsidy fraudsters became known. Even members of parliament who violently expired their foul breath on Sanusi of CBN for telling the people of government’s reckless spending, dared not reveal the names immediately. They went on a retreat to assess the possible damage of revealing the names of the Honorables. They returned with the names of the companies instead.

Meanwhile the government said enough is enough with fuel subsidy. They did not go on a retreat to assess the impact of fuel subsidy removal or maybe they did but chose to ignore the effect. Everyone in government rides an official car fueled by the People of Nigeria, every President, every distinguished gentleman of the Senate and House of Representative or of Assembly , every governor, every minister, every commissioner. And thanks to our Senate, Nigerians have a new phrase in our lexicon, “Jumbo Pay”. So what is the business of this class of people with fuel subsidy removal?

Who cares about the effect on transportation, house rent, food from the hinterland, school fees and school shoes? If we wrote it into our constitution that no person who draws salaries and allowances from public funds shall all together take more than 50 times the minimum wage, there will be more subsidies.

The immediate and visible effect of petrol subsidy removal is that the price of Motor Spirit has catapulted from N65 to about N140, officially. What is the situation in other countries? We have it on good authority and from a recent survey that petrol sells for the equivalent of N30.55k in Kuwait, N17.52k in Saudi Arabia, N58.40k in Iran, N54.00 in United Arab Emirates, and N39.42k in Bahrain. These are places where people manage to do what should be done with monies set aside for maintaining their refineries.

In fairness to the present government they inherited the fuel subsidy situation. The government’s intention in removing it is a good one. Someone said in the debate that we should remove corruption and not fuel subsidy. Corruption in this context is defined as absence of fair play, not just the presence of immorality or injustice. Thus to remove corruption we must bring our Distinguished Senators’ salaries and allowances to 50 times the minimum wage and bring this policy progressively down to the minimum wage earner.

Fuel subsidy removal should be the last bus stop in our effort at eliminating all waste in governance and social services. If we did this, investors will find investing in refineries viable. Many of them will do this and set up competition among themselves, much like the GSM Phone people, and market forces will keep prices within your pocket and mine. This is the government’s good intention. But they went about it the wrong way. Of course at their numerous meetings the movers and shakers of government refused to suggest that their pay be reduced to 50 times the minimum wage. They pounced on fuel subsidy. That act is the unkindest cut of all on the resources of the poor man.

Thus fuel subsidy removal is in fact a brave act but the average Nigerian does not look upon the President in that light. The President would have been considered brave if he first made the highest salary-and-allowance drawn from the public fund by any one person to be about 50 times the minimum wage. If you want to change the world, start with yourself, I have heard said.

Long live Nigeria.

Bapakaye I. Dibi

Port Harcourt, Nigeria. 0803 7072 077

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