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Tinubu: The science of blending oil and fire

“The fuel subsidy is gone,” began a fresh economic experiment after eight years of President Muhammadu Buhari. He listened as his successor made this audacious…

“The fuel subsidy is gone,” began a fresh economic experiment after eight years of President Muhammadu Buhari. He listened as his successor made this audacious declaration at Eagle Square during the handover. President Bola Ahmed Tinubu’s speech sent the panicking nation rushing to converge on filling stations, and oil industry experts rushed from one TV station to another to explain the situation. The new president wasn’t bluffing.

The fuel subsidy has always been an invitation for the fire of the nation’s anger and Tinubu’s predecessors had tiptoed around it without summoning the courage to unplug what has become the nation’s feeding bottle. Fine economists like Sanusi Lamido Sanusi and Ngozi Okonjo-Iweala have taken their time, moving from one townhall to another to explain the danger of maintaining it but their efforts only earned them scorn and derision. This is why Tinubu’s attempt to venture down the path his predecessors feared to tread, without the country erupting in flames, seems like an unbelievable magic show.

“We commend the decision of the outgoing administration in phasing out the petrol subsidy regime, which has increasingly favoured the rich more than the poor,” said President Tinubu, and that “Subsidy can no longer justify its ever-increasing costs in the wake of dwindling resources.” However, it was Mr. Mele Kyari, the Group CEO of Nigerian National Petroleum Company Limited (NNPCL), who introduced the nation to the technicalities of the subsidy regime, which had seemed like a conman’s calculation to the public.

In an extensive interview on Arise News, the NNPCL boss shared that the Buhari government had only budgeted for subsidy until June and that there were backlogs of payments owed. Mr. Kyari acknowledged the subsidy regime as an economic argument and explained that the country had been subsidising the West African oil market, which has been the preferred destination of Nigeria’s oil marketing cartel. He expressed concern about the arbitrage environment created by the oil market and stated, “Before this decision we took, fuel was selling for N195 per liter in Abuja, but just across the border, there is nowhere you have prices that are less than N500 per litre.”

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However, the greatest test of Tinubu’s presidency in his first week in office isn’t his courage to remove fuel subsidy; it’s the tact with which he has succeeded in getting the organised labour, which threatened to embark on a strike over the fuel subsidy removal, to suspend their strike. The story was different in 2012 when the nation mobilised against President Goodluck Jonathan, who announced his proposal to end the subsidy regime in a New Year broadcast, instigating instant nationwide protests.

But so much has happened since that infamous resistance to Jonathan’s aim, which drew even the political opposition of the era to antagonise him. Most of them have come to endorse the decision, and even former President Buhari was once in the news for disbelieving the existence of fuel subsidy before he took power and realised he was wrong.

Like Jonathan, Buhari too, having eventually understood the complexity of the fuel subsidy when he took charge, had flirted with the idea of removal. However, the populist paradise he had sold the people to get elected interfered with the intent. First, he declared that his government had finalised the process of the removal to justify his fuel price hike. His Minister of Finance, Ms. Kemi Adeosun, addressed the press in 2018, saying, “Technically, there is no subsidy but there is under-recovery.” She claimed that oil importers were “Importing at a higher price than they are selling, which means they are losing money, and effectively, that loss is being borne by everybody and effectively it reflects in the Federation Account.”

The convoluted explanation provided by Kemi was, in essence, the very subsidy that the Buhari government had declared abolished, highlighting the scandalous nature of this policy. Over the course of two years, despite deceiving the Nigerian populace, the same government spent a staggering $7 billion on these “non-existent” subsidies. It becomes apparent why our public officials resorted to employing complex rhetoric when the time came to eliminate the fuel subsidy they had once pledged to discontinue. Beyond the lack of trust between the impoverished citizens and the extravagant governments, the electoral repercussions of such a drastic measure shattered any remaining hope of its removal.

During the last quarter of 2021, as discussions surrounding the removal of fuel subsidies regained momentum, it was Mr. Kyari who addressed the anxious nation. The country had experienced fuel scarcity due to oil marketers withholding their products, leading to widespread rumours of an impending fuel price increase, with N340 per litre being the most frequently mentioned figure. Mr. Kyari confirmed the proposed price range, indicating that it could fluctuate between N320 and N340 per litre. He underscored the noble nature of the proposal, highlighting the government’s heightened social responsibility to safeguard the welfare of ordinary citizens and facilitate a seamless and gradual transition.

Successive governments have rushed to subsidise the nation’s outrage over the question of fuel subsidy, afraid of the backlash and the unpopularity that would come with unplugging the feeding bottle to which the country has dangerously become accustomed. Tinubu seems to have already defused the anger of the nation, and what should never be overlooked is the economic reason why Nigerians have been buying fuel below the international price. His hints about reviewing the nation’s minimum wage are the key to taming the nation in the long run.

Apart from his courage to act on his words, Tinubu hasn’t faced fierce opposition from his opponents because they, too, had promised the same during the campaign. Any attempt to attack the president now would expose their moral hypocrisies, as the documented receipts of their own proposals would underline. Even murmurs that the subsidy removal is ill-timed, the language of past cowardice, have made no difference because, after all, Tinubu has pointed out he did not formalise the removal. The decision was made before he was elected, and he was strategic in admitting this in his inaugural speech—a masterful maneuver in blending oil and fire without igniting a spark.


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