Politics of Fuel Subsidy on petroleum products in the foreseeable future — Nigerian Pilot News
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Politics of Fuel Subsidy on petroleum products in the foreseeable future



Petroleum marketers’ laments over looming fuel scarcity in Ibadan

At the recent spring meeting of the International Monetary Fund/World Bank which held in Washington D.C, Finance Minister Zainab Ahmed was reported to have stated that the Buhari administration was planning to gradually remove subsidies on petroleum products in the foreseeable future. This was in apparent response to the demand by the IMF Managing Director, Christine Lagarde for Nigeria to consider removing such subsidies in order to as she suggested provide healthcare, infrastructure and other social services to the people.

First of all, the Minister’s statement was a contradiction in terms because President Buhari had once stated that as much as he knew as a former and current petroleum minister, there was no subsidy on petroleum products. So which subsidy is the government going to remove and how? Between the President, his Finance Minister and the IMF Managing Director where lies the kernel of this issue? Is this an indication of the tough times that Nigerians have been warned to look out for by President Buhari, the Finance Minister and the Governors Forum?

The issue of subsidies in the Nigerian economy has been a long standing one. Mrs Lagarde”s call on subsidies has been the tradition of Western economic experts and in her position as Managing Director of the IMF it is within her purview to make such.

But it is also within our sovereignty as a country to consider whether such a call is in tandem with our economic aspirations or not.

In this regard, the government should not feel squeamish on whether subsidies generally are necessary in the Nigerian economy or not. Subsidy is not a dirty word as economists would like us believe and every economy in the world has it. In many economies subsidies exist in many ways from generous tax incentives, to padded up defence contracts, to tariff and waivers, grants and soft loans. For instance in Mrs Lagarde”s home country of France, the economy from Industries to Agriculture to health services, to education, transportation is underpinned by layers and layers of subsidies. That Airbus plane you fly in with headquarters in the French city of Toulouse is subsidized otherwise it would not fly. No government of any hue in France will survive twenty four hours if it dared remove subsidy on Agriculture. Governments all over the world have come to consider subsidies as necessary to maintain industrial and commercial competitiveness and above all social equilibrium without which there will be social upheaval.

In the case of Nigeria the only subsidy of any significance which provides some form of succour to the people is the subsidy on petroleum products. Let us face it; removal of fuel subsidies means a concomitant increase in the price of petroleum products. Already subsidies on education, health services and transportation if they exist at all have been so pared down as to be insignificant to the lives of the average person. For years successive governments heeding the call of the IMF have gradually removed subsidies in vital sectors such that the average Nigerian hardly feels the positive presence of government in his life. Oil being the mainstay of our economy and the overwhelming revenue earner, subsidy on it has an all-round salutary effect on other sectors. It is what supports the transportation sector which enables the movement and exchange of goods and services for most Nigerians to make a decent living and attend to their daily needs. It spurs productivity and economies of scale in the small and medium sectors of the economy. In the absence of subsidies in other vital sectors removal of subsidies on fuel will negatively affect the Nigerian economy which will in turn lead to more poverty in the land. Needless to say this will result in more social dislocation and the attendant increase in insecurity which is already plaguing the land.

The typical argument against subsidies is that they are inefficient and promote waste. It is the actors at the upper end of the fuel subsidy regime who make humongous amount of money just for being connected enough to get fuel contracts that give subsidy a bad name. Rather than remove subsidy which benefits most Nigerians on account of the few known oligarchs in the system, the government should rather go after them and plug the observable loopholes. It is not fair to subject Nigerians to hardship for the infractions of a few in the oil industry.

So the government has a choice between going for doctrinaire economic correctness through removal of fuel subsidy and reaping the social storm such will unleash or keeping the necessary social equilibrium which the subsidies guarantee.

Power play at Police Service Commission
One would think that with the very serious security challenges facing the country, the Police will put all hands on deck to ensure the security of our lives and properties. But at the Police Service Commission, it has come to light that the Commissioners are at logger heads over procedural issues regarding the fate of over one thousand policemen in service currently.

The policemen in question were recruited in 2015 into the specialist cadre and were subsequently converted to general duty after a rigourous conversion process which resulted in the death of two of them.
But in the wisdom of retired Inspector General of Police Musliu Smith who is the chairman of the Commission, the conversion which was concluded during the tenure of former Chairman of the Commission retired IGP Mike Okiro should be reversed and the affected policemen reverted to their former status as Specialists. Without following the laid down procedure for such and without the formal knowledge of other members of the commission, Chairman Smith directed the Acting Inspector General of Police Mohammed Adamu to effect the move.

The other members of the Commission representing such diverse groups as women, media, civil societies and the geopolitical zones in the country have protested that Smith”s unilateral action contravenes the extant provisions of the police commission Act which specifies that the chairman’s duties are only administrative and not managerial. They also say the action by Smith was inimical to the efforts being made by the police to tackle the security challenges in the country, and insensitive to the financial cost incurred to do the conversion of the officers from specialists to general duty officers.

What should be of paramount concern is that Nigerians need the Police Force to be focussed on facing the security challenges all over the country. The acting IG who was appointed just recently needs to be allowed to face his job squarely and not be distracted by power-play in the Police Service Commission. Chairman Smith should complement the acting IG in this task and not seek to be overbearing on both the commission and the police.

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