Petrol subsidy: Choosing between two ‘evils’

When the pump price of petrol was increased in January 2012 from N65/litre to N141/litre, which due to pressures from labour unions, was later reduced to N86.50/litre, some public commentators knew even then that the debate over petrol subsidy was yet to be over. Since the last increase of the pump price of petrol in 2012, long queues at filling stations occasioned by persistent scarcity of the product became a daily phenomenon in Nigerian towns and cities, causing hardship for Nigerians. For most part of the past four years, black-marketeering of petrol by opportunistic and highly profiteering dealers turned scarcity of the product into a norm rather than an exception in the country.
Last week, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, announced a new price regime for petrol. The minister told reporters that the decision to increase the fuel price was arrived at a meeting of various stakeholders presided over by Vice President Yemi Osinbajo at the State House, Abuja. The meeting was attended by the leadership of the two chambers of the National Assembly, the Nigeria Governors Form, and labour unions, including the NLC, TUC, NUPENG and PENGASSAN. According to Kachikwu, the meeting reviewed among others the persistent fuel scarcity and supply difficulties in the country.
While decrying the exorbitant prices of between N150 and N250/litre paid by Nigerians to buy the product, the meeting according to the minister, traced the main reason for the unending fuel crisis to the inability of importers to source foreign exchange at the official rate due to the sharp decline in the forex earnings of the federal government. This consequently led to the inability of private marketers to meet their approximately 50 percent portion of total of national supply of petrol. The minister explained that the only option left for government under this circumstance was to increase the pump price of the product.
Under the new price regime, Kachikwu announced that all oil marketers will be allowed to import petrol, otherwise called Premium Motor Spirit (PMS), on the basis of the foreign exchange procured from the parallel market. This, the minister mentioned, would increase and stabilise the supply of the product just as improved supply of the product would equally force down the pump price as experienced when government stopped paying for subsidy on diesel.
As witnessed in the past, Nigerians even now remain divided over government’s decision to increase the pump price of petrol to N145/litre which by implication entails the discontinuation by government of payment of subsidy to marketers for importing refined petroleum products. While some commentators, including this writer, consider subsidy as ‘organised theft’ orchestrated by a single digit percentage of Nigerians whose intrigues and blackmail deny many citizens (if not most) the right to quality life, others, including a section of the leadership of the Nigerian Labour Congress (NLC) as well as the Lagos-based lawyer Femi Falana, regard the action as illegal, immoral and insensitive. Each of the two polar views on fuel subsidy (paying for it and withdrawing it) looks at the consequences of the other person’s position as nothing less than evil. Assuming both positions were evil, it’s a matter of government choosing the lesser evil from the two.
If some people think the withdrawal of subsidy from petrol is an evil that government must eschew, many Nigerians on the other hand consider its payment as a worse evil. The only glaring ‘evil’ in the withdrawal of petrol subsidy is the momentary hardship which Nigerians are likely to experience as a result of the resultant rise in the cost of goods and services, including transport fares and food items. There obviously seems to be greater advantages than evil in the withdrawal of subsidy from petrol. Its apparent benefits include availability of the product.
As for the ‘evils’ of retaining subsidy on petrol, they are many. With the massive decline in the forex earned by the federal government, it would be evil and wicked of it to continue to expend more than half of its forex earnings on fuel subsidy to the detriment of other critical sectors, including health, education and roads. Payment of subsidy in huge sums from the limited forex earning has over the years denied Nigerians access to quality education, efficient primary healthcare services, good roads, clean potable water, etc. Government is said to have spent about N9 trillion on payment of fuel subsidy between 2012 and 2016.
In spite of the subsidy paid by government in colossal sums, Nigerians do not get petrol to buy at the official pump price of N86.50k/litre. The defense advanced most often by marketers is that government had not paid the subsidy owed them, and therefore, they would be at a loss if they sell the product at official price. Nigerians, thus, have always been ‘compelled’ by marketers to pay directly for the subsidy each time they bought the product above official pump price. Is it not an evil, worst for that matter, on the part of marketers who collect reimbursement of the subsidy money owed them by government after they have directly collected same from Nigerians who bought the product at filling stations? Government would be seen to be abetting corruption, which is an evil, if it allows marketers to continue to receive double payments over one item (i. e. subsidy). Besides these evils, there is hardly any advantage that accrues to Nigerians from the continuous payment of subsidy on petrol.
The pro-subsidy leadership of the NLC as well as other Nigerians that are yet to be convinced over the withdrawal of subsidy on petrol; are encouraged to engage government in dialogue; not protests or blackmail. Strikes and protests are about outliving their usefulness in the eyes of Nigerian masses. May Allah (SWT) always guide our leaders to take the best of decisions that will be in the overall national interest of Nigerians, amin.