There have been so many discussions about the potential oil Subsidy removal that I cannot really contribute a lot more to the debate. I am so excited about what will unravel in the next few weeks; this will be a litmus test of the Nigerian democracy…
“We have been subsidising corruption, inefficiency and fraud in the sector” (2009, Special advisor Adeniyi) Yaradua’s government went through a process audit, but then the findings were not revealed to the public, therefore we do not know the real amount that is being spent in the name of the fuel subsidy.
The 24 member Economic Management team should have contributed better to the recent statement released by President Goodluck Jonathan:
“This will free up about N1.2 trillion in savings, part of which can be deployed into providing safety nets for poor segments of the society to ameliorate the effects of the subsidy removal”Maybe I am wrong and the economic team have a 100 page document yet to be released regarding the provision of ‘safety nets’ for the poor segments of the society. It is essential that if something is being removed a package about how to implement a new policy in its place is provided.
Reality of Fuel Subsidy
The NNPC accounts are opaque and not provided for revision by the members of the House, so we have to take the N1.2 trillion figure as a given.
The subsidy is not beneficial directly to the ‘poor’ people in Nigeria, but most beneficial to the importation cartels.
It is possible to remove the fuel subsidy without raising the pump prices, and this is what the government should focus their energy analysing over the next 3 months. As said by Hon Davies, it has created portfolio billionaires, because the subsidy benefit does not filter down but over the years has enriched a few.
Coincides with electricity tariff hike, devaluation of the naira and the global economic recession, this subsidy removal is bad timing.
Senator Ganiyu Solomon said the right environment had not been created for the policy, you need to provide better alternatives- this ECHOES my thoughts very accurately.
I would suggest to the Presidency that before subsidy implementation, they need to:
1) Improve the conditions at the ports so that vessels importing fuel do not have to pay high demurrage fees because our jetties are ill designed/ outdated
2) Start construction on a refinery/ multiple refineries
3) Allow states to be in control of power generation within their jurisdictions
Spotlight: We can’t manage our foreign reserves, therefore on a similar note we cannot put 100percent faith in a management company to provide us with returns from the Sovereign Wealth Fund (SWF). How will the allocations work, what percentage will be given to the SWF, what percentage will be given to the ‘poor’ initiative which has not be defined or named as yet.
The Neoliberal idea of leaving things to market forces is very naive in a country which does not have a social welfare matrix. The President’s claim that this policy will aid the poor is a very flighty statement. How exactly will the fuel subsidy trickle down to the poor?
Esele the President of the Trade Union Congress (TUC) released a poignant statement which criticised the government, he also claimed to stop oil and gas installations in Warri and the Niger Delta from Monday. “The dredging has not been done, expansion of the refineries has not been done, refurbishment of refineries has not been done and other additional associated things have not been put in place yet and the government is talking of removing subsidy.“So if you are removing subsidy and making Nigerians to pay for the laxity of people in government, then it is just to punish Nigerians. If government removes subsidy without proper agreement with us, we will ground the country to a halt.’’ He highlighted furtherthat if the government reduced their numbers first, and used those revenues wisely, we would not have to resort to the subsidy removal.
Ironically if governor’s concede to the N18,000 minimum wage, another pyrrhic victory for the poor, because it will not be enough to survive in the new Nigeria swamped by the effects of super inflation!!! The president should insist that the governor’s contribute to the SWF and clamp down on the potential sites of corruption before starting a conversation about subsidy removal…