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Threats of fuel subsidy withdrawal

According to her, government’s unease was informed by factors such as skewed benefits that only favour the rich and impoverish the poor, stagnation of the…

According to her, government’s unease was informed by factors such as skewed benefits that only favour the rich and impoverish the poor, stagnation of the oil and gas sector sector of the Nigerian economy, and the tacit encouragement she said it offers to smugglers of petroleum products across the nation’s borders. She also mentioned that subsidy was not sustainable.
In an apparent justification for the current thinking in government circles, Mrs Alison-Madueke observed that the subsidy, which is estimated to cost as much as 25 per cent of the country’s annual budget to service, would be an enormous challenge to maintain vis-à-vis efforts to improve the industry. It was in the light of this that the government began deregulating the downstream of the industry and by implication withdrawing the subsidy, up to a point. President Goodluck Jonathan jolted many recently when he mooted the idea of total removal of the subsidy.
The minister’s argument is persuasive, but it does not vitiate the insensitivity that the policy shift betrays, especially when viewed against the backdrop of the contemporary socio-economic circumstances that confront the poor in the country.  In every country, the welfare of the people is often supported by the government in one form or the other. In this country, subsidy on petroleum products constitutes the cushion to soften the hardships that daily life means to most Nigerians.
 Contrary to the uncommon concern for the poor implicit in the minister’s statement, public perception easily identifies the subsidy on petroleum products as perhaps the only economic benefit that trickles down to all Nigerians. If such facility is also identified by the government as being hijacked and abused by unscrupulous officials and middlemen, the dispensation qualifies as a wakeup call to plug the loopholes, instead of being adopted as a basis for stopping the subsidy to the discomfort of already hard-pressed Nigerian masses.
Beyond the ills of the nation’s petroleum sector that the minister cited in respect of the subsidy are other maladies that the government has for long been expected to respond to. Due to the enduring reluctance of government to fix the nation’s refineries, importation of petroleum products has been escalating geometrically from year to year, with telling impact on the nation’s finances.  Even the grouse of the government over the cabals who are milking the nation dry through the subsidy regime is questionable, because these are well-known individuals and firms. It therefore makes better logic to penalize the known cabals than transfer the result of the government’s ineptitude to the innocent masses to bear.
Besides, if the incidence of fraudulent practices informed the minister’s position, the fact is that such a tendency is not confined to the subsidy regime. Even if subsidy were removed, fraudulent practices will still prevail unless the government takes the necessary steps to curtail them and punish the perpetrators. The sector is already steeped in a cocktail of malfeasances and unwholesome practices, including sabotage, pipeline vandalism, and illegal bunkering, among many others.
Most people would agree that subsidies should be scaled back or removed completely to invest the money saved to productive sectors. But the problem is the management of the gains; and this government has not demonstrated that it can manage resources well.
Of particular concern also is the undue delay in passing the Petroleum Industry Bill now before the National Assembly.   
Of course, the minister’s expressed concern is appreciated, but it would serve higher national interest for her to address more pertinent issues including the challenge of passing the PIB, than tinkering with the combustible idea of premature withdrawal of subsidy on petroleum products.

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