It is a well-known fact that the fuel subsidy debate is quickly becoming a major obstacle to the success of Nigeria.
It was just a few days into the 2015 Presidential election that Goodluck Jonathan, realizing he might actually lose, reduced the pump price of fuel from N97 to N87.
This action left many confused, as a decrease was not demanded by anyone. It is clear that there are only two reasons for his action.
1. To gather public sympathy towards the 2015 presidential election.
2. To create a difficult situation for the incoming administration if he loses the 2015 general election.
The first reason did not succeed, but the second did. Had fuel remained at N97 per liter, there would not be anything like the fuel subsidy discussion today. Since the Buhari government announced that subsidy, each liter of fuel has gone down below N15.
The price of crude oil has fallen to as low as $37, but the government is still paying over 100 billion monthly to marketers as a fuel subsidy. If the government continues to pay the subsidy, the fuel price will remain constant even if the price of crude oil falls to $10. One thing you also need to keep in mind is that the price of processing crude has remained constant, even as the price of crude dwindles. It is also true that the service charges foreign companies like Chevron, and other multinationals, collect from the export of crude and the cost of exploration remains constant.
Government must stop this carnage and waste called the subsidy. The market should be allowed to compete freely as this will bring down the pump price of fuel in a short while. If the subsidy is removed today, the pump price of fuel will remain below N100 and will subsequently reduce in a short time when competition takes hold of the market.
What the government should do it is make sure that our refineries are working at optimum performance. By doing this, the government will begin to make a profit from the selling of fuel instead of paying the subsidies. This will also ensure that the price of fuel will naturally fall as competition sets in. The government should also provide enabling environment for oil marketers by giving licenses to intending marketers, and providing soft loans for them. If this is done, fuel will be like "gari", fuel scarcity will be a thing of the past and the pump price of fuel will fall while government will use the funds meant for a subsidy to build roads, schools, hospitals, and the development of infrastructure.