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The Federal Government’s plan to remove fuel subsidy early next year has been condemned by most Nigerians. While concerned Nigerians believe that the plan is untimely and insensitive, the government is of the view that the subsidy regime that currently runs into trillions of naira annually is unsustainable and economically disingenuous.
The government also claims that it spends between N1.8 trillion and N2.4trillion on fuel subsidy annually. This claim is yet to be independently substantiated or verified. To cushion the effect of subsidy removal, the government is considering paying a monthly stipend of N5,000 to about 40 million vulnerable Nigerians.
The gesture, according to the government, will be for a period of six months or one year only. This measure is not likely to be fully implemented and therefore will not solve the envisaged problem. Moreover, the government has not disclosed how it arrived at the poor Nigerians who will benefit from the monetary intervention. Concerned Nigerians also believe that the government’s decision to do away with subsidy regime is ill-conceived, especially at this time that most Nigerians are suffering from excruciating economic hardship arising from poor management of the economy.
They also argue that the withdrawal of fuel subsidy at this point in time will inadvertently plunge the nation into avoidable crisis. Concerned groups such as the Pentecostal Fellowship of Nigeria (PFN), Northern Elders Forum (NEF), National Association of Nigerian Students (NANS), the Nigerian Labour Congress (NLC) and the Organised Private Sector have urged the government to rescind its decision forthwith on the subsidy removal. We urge the government to listen to the.
Government’s new argument on subsidy is not radically different from its previous stand on the matter. This time round, it has expectedly found support from the World Bank, the Nigerian National Petroleum Corporation (NNPC) and other groups. Last week, the World Bank warned that any further delay by the government in removing the fuel subsidy would harm the economy irreparably. It quickly added that retaining the corrupt subsidy regime would make the federal and state governments unable to pay salaries from next year, as well as discharge other key obligations. The veracity of this claim has not been proved.
According to the World Bank, Nigeria is subsidising petrol with two per cent of the Gross Domestic Product (GDP) in 2021. This represents a massive 35 per cent of oil and gas revenue. The global bank’s position was made by its Lead Economist, Nigeria Country Office, Mr. Marco Antonio Hernandez. Also, the GMD, NNPC, Mallam Mele Kyari, had argued that a litre of fuel could sell between N320 and N340 in 2022 if subsidy was not removed. Regardless of the position of the government and that of the global bank on the matter, they are not convincing enough to warrant the full removal of the so-called fuel subsidy. We say this because any hasty plan to remove the fuel subsidy will have dire consequences. The economic situation in the country does not favour subsidy removal. Why should the government consider it appropriate to remove the only subsidy that Nigerians enjoy? Unfortunately, Nigerians had witnessed the increase in the price of a litre of fuel by 100 percent, from N85 to N165 in the past six years. The rising inflation has not helped matters.
If the primary purpose of government, as enshrined in the 1999 Nigerian Constitution, is to ensure the security and welfare of the people, then the removal of fuel subsidy should not be contemplated by those in government. A government that operated the subsidy regime for six years must not rush to remove it before it vacates office.
While the deregulation of the downstream petroleum sector is desirable, the government must ensure that there is steady supply of fuel. The money used to service fuel subsidy is enough to fix the four refineries and even build new ones. The government should address the decay in the oil sector as recommended in the recent Petroleum Industry Act (PIA). Besides, there are other avenues the government can make savings other than fuel subsidy withdrawal. It is time for the government to drastically reduce the cost of governance.
Let government think of how to solve existing national problems instead of adding more through the hardship that subsidy withdrawal will inflict on the citizens. The removal of fuel subsidy will inflict more pains on many Nigerians and push more Nigerians into poverty, misery and deprivation. At present, Nigeria is the poverty capital of the world. Even the government’s promise to lift millions of Nigerians out of poverty is yet to yield the desired result. We advise the government to tread with caution over the removal of fuel subsidy.
