Monday 4 January 2016

The Politics And Economics Of Fuel Subsidy

Oil Cabal
by: Basil Enwegbara

That fuel subsidy is not the problem and inevitably necessary is never in doubt. What made fuel subsidy seem unwanted as it is being advocated by the same cabal and politicians whose partnership sabotage and milk the country is their readiness to use its absence to unleash economic hardship on the weakest members of the society. And that damaging blow will come as soon as the cabal arms itself with such a dangerous monopolistic weapon as price fixing.

One of the benefits this will guarantee this thieving cabal is the very fact that it will give the Nigerian government and people a new set of problems to be preoccupied with to the extent that no one should be talking about the trillions of naira that they stole from us in the name of fuel subsidy. In other words, what in reality they are trying to remove from our attention is the very fact that the failure of fuel subsidy policy happens because of the immense corruption smuggled into the fuel subsidy regime.

That is why rather than advocating how to do away with this immense corruption inherent in the implementation of this policy, they are about successfully having their way, thanks to the success of employing powerful instruments of the state – from having our prepaid lawmakers who are today in unison singing the song of fuel subsidy removal along with some journalists and mass media owners. Our so-called public analysts and civil society organisations were the first to be won over. The only people who are still standing in their way because they are difficult to be bribed are the leaders of our various labour unions.

All as a result, and the fact that they have always successfully held the country to ransom, including the ongoing one, the President is in a serious dilemma on how to patriotically resolve this problem. While the present economic reality is forcing him to think about its removal, he is at odds with how to ensure that the masses of this country are not going to be further short-changed as a result of this hasty removal of fuel subsidy.

Of course, what is not being discussed is that no matter what, there will always be subsidy in one way or another, especially if government intends to ensure that we have a uniform pump price of fuel across the nation no matter how distantly remote some gas stations will be from either the refineries or the depots. That is because otherwise pump price differences could be so high from one part of the nation to another to as high as 1000 per cent, if at all there is fuel in these gas stations.

We should stop sweeping this truth under the carpet because no matter what, it can never go away. Truths we all know will always reappear no matter our efforts to hide them. One of the truths we are not talking about is how corruption has persisted all these years in fuel subsidy because our politicians and the cabal have connived with impunity to plunder our commonwealth.

They know that without fighting this monster called corruption, we should be deceiving ourselves in believing that the solution lies in allowing the market forces to prevail.

With fuel subsidy payment always providing them the easiest way of looting our commonwealth and getting away with their loot, it is no wonder why what we have today is a country whose economy is bleeding in coma with social deprivation causing unprecedented socio-ethno-religious uprisings and insurgencies.

That the same faulty and corruptly designed fuel subsidy template remains in use year-in-year-out only demonstrates how this politically powerful cabal and their politician partners have been and possibly will remain.

Since the Buhari administration is now fully determined to fight corruption at all levels, is there any better place to start this battle than to immediately review this corruptly designed template, which being in use since Obasanjo administration has been used in defrauding the people of this country trillions of naira?

If it’s not corruption that kept unrevised, what else would have been the reason why notwithstanding that oil price has continuously plunged from its $115 a barrel in August 2014 to its below $40 a barrel of oil presently, the fuel pump price in Nigeria remains virtually unchanged while at the same period more than N1.5tn was handed to the cabal in the false name of fuel subsidy? If not corruption, how come no previous government implemented fuel price modulation, which the Buhari administration is in the process of implementing?

The only way this administration should clean up the economic mess caused by fuel subsidy corruption is for it to set up a powerful presidential commission of inquiry with the goal of fully investigating what really went wrong and how come fuel subsidy in Nigeria became synonymous with such mind-boggling corruption to the extent that trillions of naira was handed to a band of thieves while our refineries were at the same time rendered moribund as a result of constant sabotage by the cabal with the help of some Nigerian National Petroleum Corporation staff.

The credibility and success of this presidential commission of inquiry should come with it comprising all major stakeholders whose ultimate goal should be besides ascertaining the true amount of fuel consumed daily each year in the country, should also go as far as determining and making public the actual landing cost of a litre of fuel along with other associated costs all these years.

Besides coming up with what should be the most authentic and corruption-free new template, the commission should advise the president on what needs to be done in our common good. Whatever should be done should be done once and for all in an effort to bring a lasting sanity and transparency into the country’s highly opaque downstream oil sector.

With Nigerians fully informed about what has gone wrong all these years in the downstream oil sector, and possibly who are behind it, the next step should be if at all there’s subsidy, can the present economic reality sustain it or in the overall interest of our commonwealth.

If we agree that there is now the need to partially remove fuel subsidy, we should all let the government know that the only lasting solution remains that the President mandates his Minister of State for Petroleum Resources, Ibe Kachikwu, to do all it takes not only to make all our refineries working optimally by next year but also to start building new set of refineries in addition to constructing not less than 1,000 new NNPC mega gas stations across the nation by 2016, including gas stations in every remote corner of this country.

This should be the best option we have to have should we sincerely want to once and for all do away with being at the mercy of these economic saboteurs called importers and marketers, who having milked the country trillions of naira are determined to go as far as using fuel subsidy removal to permanently lock us up as their economic slaves.

Surprisingly, such thorough investigations into the fuel subsidy scam should make Nigerians weep, especially discovering how much they have been short-changed by the country’s politicians and the cabal who they allowed to inflate fuel subsidy payments in their trillions of naira.

Also, Nigerians would be equally shocked about how in reality they have been paying more than the actual market price while at the same time those in government, corruptly handed trillions of naira to the cabal in what was mostly 50/50 shared.

And as if not enough, they will come to be shocked on hearing that rather than having consumed Premium Motor Spirit what they have been forced to consume all these years was low quality petrol, which besides having low mileage per litre and high sulphur in content, polluted their environment.

Shocked also will be their discovering that as a result of the fuel’s low octane number, their cars have been subjected to some frequent engine knocks and frequently uncalled for costly maintenance.

If South America and countries like Brazil could ever defeat corruption, I am optimistic that it’s only a matter of time we too will defeat corruption so that Nigeria will finally be on its way to economic greatness.

- Basil Enwegbara, a development economist based in Abuja

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