Reactions, most of them inauspicious, have continued to trail the musing by government to remove oil subsidy and replace it with transport grant since the plan was made public. But before we go into analyzing all the issues connected to oil subsidy, let us first paraphrase the claims by government about this over-flogged discourse on subsidy.
Speaking at the launch of the World Bank Nigeria Development Update in Abuja on Tuesday November 23, 2021, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the subsidy was not benefiting the poor; adding that government is determined to remove subsidies on petrol and electricity in 2022. The subsidy is currently being paid by the NNPC Limited as it is the sole importer of petrol. While it tags the monthly petrol subsidy as ‘Under-recovery of PMS/Value shortfall’, it deducts the sum upfront from the monthly remittances of oil proceeds it makes to the Federation Accounts. The Group Managing Director of NNPC, Malam Mele Kyari, later hinted at the same event that petrol price may rise to N340/liter upon the removal of the subsidy.
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The Finance Minister said the jerking up of the pump price of petrol which is due before June 2022 is in accordance with provisions of the Petroleum Industry Act (PIA). The PIA which was signed by President Muhammadu Buhari on August 16, 2021, stipulates the removal of petrol subsidy within six months of the Act’s implementation. She further explained that the federal government has planned to pay about 40 million poorest Nigerians a transportation grant of N5, 000 every month over a period of 12 months. This, she said, is to cushion the effect of the subsidy removal. A total of N2.4 trillion will, thus, be required to pay N5, 000 to 40 million Nigerians for the 12-months period of the scheme.
Let us examine some aspects of the proposal by asking some questions. Who are the 40 million poorest Nigerians? Although the Permanent Secretary in the Ministry of Humanitarian Affairs, Disaster Management and Social Development, Alhaji Bashir Alkali, said in March this year that only 30 million Nigerians have been captured in the National Social Register (NSR) from 36 states and the Federal Capital Territory (FCT), comprising seven million poor and vulnerable households; Nigerians are interested in knowing details of the criteria used in defining this category of Nigerians. With the disappearance of the middle-class in addition to the incessant fall in the value of the naira, how reliable is the statistics that only 30 million or 40 million Nigerians are the poorest?
Making further clarifications on the subsidy matter after the FEC meeting on Wednesday November 24, 2021, the Minister of Finance said “Government is providing the support to augment what the families already have.” But if one may ask, what really do many families or most Nigerians as workers, teachers, petty traders, technicians, artisans, drivers, or cleaners in Nigeria already have beside poverty, hunger, and disease? Many Nigerians are apprehensive of the current plan to remove oil subsidy because of the bad economic situation that is already hitting them hard. The hyper-inflation regime which affects all aspects of the life of Nigerians is actually worrisome.
In spite of the push by government for the implementation of this PIA policy, is it not appalling that it failed to make provisions for the proposed monthly N5, 000 transport ‘subsidy’ to 40 million poor Nigerians in the 2022 budget, which is currently being considered by the National Assembly? This hole was picked by Chairman of the Senate Committee on Finance, Senator Adeola Olamilekan Solomon, while speaking with newsmen after presenting his report on the 2022 budget to the Appropriations Committee. Does it make sense or bring honour to a government to plan to subsidize transportation for a group of its population without making budgetary provisions for it? It is understandable if no money is appropriated for oil subsidy since it is to be removed. However, it sounds dubious to promise to pay transport ‘subsidy’ without appropriating money for it.
It also sounds ridiculous and unreasonable that government plans to spend N2.4 trillion as transport palliative to 40 million Nigerians in order to save N1.8 trillion that would have been spent on petroleum subsidy. That, in the view of this writer, is like paying for a cow in order to save the cost of going to Fulani settlement (called ruga in Hausa) on a daily basis to buy milk. Although I’m not good in Mathematics involving decimal points, I’m sure even Professor Chike Obi (if he were alive) will be asking of when and how 2.4 trillion is found to be less than 1.8 trillion.
Meanwhile, President of the Nigeria Labour Congress (NLC), Ayuba Wabba, in a recent statement said Nigerian workers reject the position of the federal government on subsidy removal. He said, “Given the nationwide panic that has trailed the disclosure of the monologue within the corridors of government and foreign interests, the NLC wishes to posit that it continues to maintain its rejection of deregulation based on import driven model.” Besides government officials in Nigeria and western creditor nations that have been speaking in favour of the proposal, Nigerians seem to be united against the policy.
It is shameful that Nigeria, which is one of the largest producers of crude oil in the world, is importing refined products. It is scandalous and a national embarrassment that government or Nigerians have to pay for the cost of importing refined products of a resource that it naturally has in abundance. Subjecting Nigerians to hardships (through long fuel queues occasioned by artificial market forces in the petroleum industry) has been a major socio-economic norm for several years in Nigeria. It is sad that Nigerians are ‘thirsty’ of refined petroleum products in a country of ‘surging oceans’ from oil wells. If subsidy is paid for importing refined petroleum products, why has government failed or refused to build new refineries or even repair the broken down ones in order to refine the products locally? The answer is obvious!
The interrogations in the last few paragraphs seek to lend plausible credence to the insinuation among Nigerians that oil subsidy removal is a smokescreen for some politicians and political office holders to raise money for the 2023 general elections. But even if the proposed action by government is justified, a period of economic trial may not be the best time to implement this kind of policy. May Allah guide us to do the proper thing at the proper time, amin.
