The politics towards total removal of the controversial subsidy is on and the ruling APC is spearheading it. EMMA ALOZIE looks at why the APC government does not want the scarcity to end
When the then President Goodluck Jonathan took the bull by the horn and removed the fuel subsidy in January 2012, all hell was let loose. Organised labour, civil society groups, entertainers and even private individuals mobilised in what is today known as ‘occupy Nigeria’ protest.
The country was locked down and global attention turned on Nigeria. In his January 7, 2012 nationwide broadcast to explain the rationale behind the total removal of the subsidy, President Jonathan warned Nigerians of the dire consequences the country faced if the subsidy regime was to be continued. According to him, “My fellow Nigerians, the truth is that we are all faced with two basic choices with regard to the management of the downstream petroleum sector: either we deregulate and survive economically, or we continue with a subsidy regime that will continue to undermine our economy and potential for growth, and face serious consequences.”
However, this seemed to have fallen on deaf ears as the last thing Nigerians wanted to hear then was any increment in pump price of petroleum products, which the total removal of subsidy would engender. The then president backed down and the people won.
Fast forward to 2015. After a keenly contested general election, where the ruling party was ousted from power by the main opposition party, the All Progressives Congress, APC. Seven months after taking over power, the reality of what the fuel subsidy means has dawned on the relatively new government. The long fuel queues occasioned by the subsidy have lasted longer than perhaps any other time in recent history and the chant in town is remove the subsidy.
While delivering a lecture in Kaduna last Friday at the 10th memorial anniversary of late Dr. Bala Usman, a politician, and former lecturer with Ahmadu Bello University, (ABU, Zaria, chieftain of the ruling APC, former governor of Lagos and one of those fingered in financing the 2012 Lagos subsidy protest, Bola Tinubu called for the immediate removal of subsidy. Curiously, Tinubu described it as demonic.
According to the former Lagos governor, “In a perfect world, I wish we could sanitize the subsidy regime and thus continue with it. However, I have reached the conclusion that there are too many demons in the system for that hell to be turned into heaven. It is better that we remove it, not for the austere purpose of saving money but to use the money more wisely that we might better save the people. Let us begin a process of a thoughtful, but decisive subsidy phase-out. While this is occurring, we should simultaneously phase in social programs benefiting the poorest, most vulnerable among us.
“Programs such as transportation subsidies, school feeding, improved basic medical care and coverage for the poor, and potable water projects are some of the things that can be done with the same funds. This way we can undertake this massive expenditure confident that the fruits will go to the hungry, not the already too well fed. End the fuel subsidy. Subsidize the people instead – Subsidize the people instead.”
This is the second phase in the politics of the persistent long queues. Insiders in this government are murmuring that the government is fully behind the unabating fuel scarcity. Even after dolling out N413bn as subsidy payment to marketers, the question is, why have the queues remained longer than ever and pump prices blowing over the rooftop? Those in the know say that the government has one aim; wear out Nigerians with this long suffering so that when the government will inevitably remove the subsidy, Nigerians would have been too weary to protest or resist. This logic seems very plausible. With unprecedented pump price variants across the country, getting as high as N200 per litre in some states, Nigerians will gladly welcome any subsidy removal that takes the price back to N97 or a little bit above that.
But that is only a part of the story. The main story is the moral strength of an APC government led by President Muhammadu Buhari to inflict more pains on Nigerians without any iota of remorse. In the build up to the elections, Candidate Buhari as he then was and his party lampooned the PDP and President Jonathan for what they described as the fraud behind subsidy payments. To them, subsidy was non existent and even if it existed, it was fraught with unimaginable fraud.
The APC presidential campaign organisation came out scathingly to describe any talk of deregulation as benefiting on a few money bags “who are loyal to the then ruling PDP.”
“The current attempt by the government to deregulate the prices of some petroleum products has been completely compromised to satisfy few money bags to the detriment of the Nigerian people and the economy.
“The price of diesel which has been deregulated since 2009 still sells at the pump price of N150 and N170 per litre, the same pump price when the international benchmark per barrel of crude was over $100. Now that the international benchmark has dropped to $47.5 (USD) per barrel as at Monday, we ask: where is the deregulation and the relief which it ought to bring to local consumers of diesel?
“For the Nigerian consumers, unfortunately the collapse of crude oil price since October 2014 has not translated into any change in diesel, kerosene and PMS prices across the country.
“We challenge the federal government to reconcile the information on the website of the Petroleum Products Pricing and Regulatory Agency, indicating the maximum open market price of diesel per litre in December 2014 as being at N111.6 and the fact that the price has come down to less than $50 (USD) as at Monday.
“We want to posit that that the maximum indicative benchmark open consumers of diesel should pay is at a margin below N100 per litre. Therefore, Nigerians are being short-changed by about N50 to N70 on every litre of diesel sold by government.
“The implication of this is that with average consumption of about 12 to 15 million litres, Nigerians are currently extorted of amounts between N600 Million to N1 Billion daily due to corruption-induced poor regulatory oversight of the Ministry of Petroleum Resources. No wonder some few industry players are smiling to the banks and buying private jets while small scale industrialists who buy diesel on daily basis for power generation and transportation find it difficult to break-even with their businesses.
“Similarly on Kerosene, information available on the website of the PPPRA puts the Open Market Price at N114.71 per litre although the market price is anything above N150 per litre when the global price for a barrel of crude oil was $65 (USD). Now that international price of crude is at $47.5 (USD) per barrel, why are Nigerians still buying kerosene per litre at the same price? Why are Nigerians not benefitting from the global shortfall in the prices of crude by having a cut in the pump prices of petroleum products?
“We are aware that there are examples in other African countries where governments have cut the pump prices of petroleum products to reflect the changes in the global oil market. Countries like South Africa, Zambia, Tanzania and Kenya have announced cuts in pump prices of petroleum products, why can’t the Nigerian government do same?
“Given the failure of government to do the right thing by announcing a cut in the pump prices of these products, we are compelled to draw the conclusion that the federal government is short-changing Nigerians ostensibly to fund the campaign of the PDP presidential candidate.
“The APC Presidential Campaign challenges the federal government to make explanations on why Nigerians cannot benefit pricing reliefs on petroleum products as occasioned by the fall in the global price of crude oil. Anything should of this is a fraud and Nigerians should take note.
“As for PMS (petrol) the only product the government agrees as regulated at N97 per litre, the irony is that it does not even cost much as in the United States, a country that was importing oil from Nigeria until recently.
“Moreover, even the current budget is still heavy on subsidy with an allocation of N458.68 billion, a scheme that has become a conduit pipe over the years for which the children of ruling party leaders have been beneficiaries,” said President Buhari’s campaign organisation in January.
The APC and Buhari promised to cleans the Aegean stable and equally vowed to stand with the Nigerian masses. Tam David West, a professor of virology and ardent supporter of Buhari and APC dismissed fuel subsidy and promised that Buhari would reduce the pump of price of fuel given the fallen crude oil price at the international market. According to Professor West, “I want to assure you that by the time he takes over, petrol will be dispensed at N40 per litre. This is possible and he has the credibility to make it work. The major assignment of the president-elect when he’s eventually inaugurated is to restore confidence to the industry. As military head of state, he dealt with the Federal Executive Council with the tenets of democracy. Buhari will build new refineries to make petroleum products available for the masses. No responsible government will allow the masses to suffer. He will strengthen the refineries within a year. It is possible as we won’t spend any amount in setting up a green field refinery. We already have a blueprint as we shall use what we have to get what we want.”
That was even when the crude oil price was around $60. Now that it is below $40, the same party and president that benefitted immensely from this sort of propaganda are about upping the fuel price. Professor West was not the only APC and Buhari sympathiser who played politics with fuel price. Former Governor Babatunde Fashola of Lagos State and now a super minister in charge of power, works and housing stampeded the PDP and Jonathan into reducing fuel price owing to what he called dwindling crude oil price.
According to Fashola, “Now we should be enjoying cheap fuel if the price of oil has dropped globally. Even as we import the product, a major component has reduced in price and while this has reduced, the pump price of fuel in the country still remains the same.
“Then something is wrong. If the price increases in the country when the price of oil goes up globally, then it should also reduce when the price of oil drops. I understand that I am not an economist; they (Federal Government) are the economists. But I have some logic and common sense to ask critical questions. For instance, if one buy flour at N10 per kilogram, and the bread was sold at N1 per loaf. If the price of flour drops, the price of the bread should also change.”
This is how far APC went in distorting the economics of the fuel subsidy. Seven months down the line, the campaign tone has changed, given way to the tone of reality. Dr Ibe Kachikwu who doubles as the junior minister of petroleum and the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC confirmed that the decision of the government to do away with subsidy recently while speaking to the National Assembly joint committee on the Medium Term Expenditure Framework, MTEF. He said that the subsidy bill was “on the high side.”
“The total subsidy figure for 2015 when taken along with the NNPC will be in excess of N1 trillion. We can get this specifics but the point is largely that it does not involve NNPC because the agency takes its off-cuff.
“We will work towards taking those figures off our budget in 2016. They are critical issues. The current pricing work we are doing had shown that there shouldn’t really be subsidy. The government doesn’t need to subsidise.
“There is energy around the removal of subsidy. Most Nigerians we talk to today would say that’s where to go. I have since left the dictionary of subsidy by going to price modulation which is a bit more technical.
“Price of refined products today is N87. It was N97 before it was reduced and we really have to go back to that because we don’t really have the finance to remove it.
“There are lots of safety barometer between the N87 and N97per litre regime between which government does not have to fund subsidy. Yet the prices would be fairly close to what it used to be today. That is the first mechanism we are going to work,” Dr Kachukwu said.
This is the reality on ground and this is why the APC led government has paid scant attention to the debilitating fuel scarcity in order to make removal of subsidy easier when the time comes.