On Fuel Subsidy Removal: Facts And Falsehood By Leonard Karshima Shilgba, PhD

By Leonard Karshima Shilgba, PhD

The recent revelation of the avowed intention of the Nigerian federal government to remove fuel subsidy and devalue the national currency (the naira) in 2012 should not surprise Nigerians who have observed the conduct of government in Nigeria in the past twelve years. Rather, Nigerians should be concerned about the capacity of the social power zones in Nigeria to resist the policy intent until certain minimal conditions are satisfied.

Is the organized labour capable of resisting the Nigerian government? Has the Nigerian student body lately demonstrated adequate understanding of the implications of government decisions and responded appropriately? Has the formal news media shown through unassailable intellectual dexterity that it is able to puncture disingenuous arguments of government officials and guide the Nigerian people through the web of deceit spun endlessly in the corridors of power? Has the organized civil society in Nigeria earned for itself the capital of trust of the Nigerian people for selfless advocacy on their behalf without betrayal, and the capital of honour from the Nigerian rulers for its uncompromising dispositions during mutual engagements? I can bet that majority of readers would answer in the contrary.

My purpose here is to separate facts from falsehood, and to remind Nigerians of the past—the relevant past—that we have hurriedly forgotten.

UNCONVINCING PRECEDENT:
SAVINGS FROM SOVEREIGN DEBTS: Towards the end of the Obasanjo government, Nigeria earned—yes, earned—“debt forgiveness” from the Paris and London clubs of creditors. Nigerians were told, as it was equally made a condition for the “forgiveness”, that the resulting savings from sovereign debt servicing would be invested in critical sectors such as education, health, and public infrastructural development. In November 2006 (the same year Nigeria formally exited indebtedness to those clubs) President Obasanjo flagged off the construction of a modern dual-track rail network that would cover more than 1,300 km from Lagos to Kano. The completion date for the project was in 2010! The cost of the project was about 8.3 billion US dollars. Trains running on those tracks were to move at about 160 km per hour; that means a trip from Abuja to Lagos would take less than 5 hours, while less than 9 hours would be travel time from Lagos to Kano.

Nigerian rulers and politicians, some of whom are still in government as I write, made sure the contract was cancelled after the exit of President Obasanjo. In fact, the national assembly during the days of President Yar’Adua, under the leadership of Senate President David Mark, who still occupies the position, claimed that the project was inflated by as much as 700 US dollars. Later, it was reported that the same national assembly promised to “probe” the cancellation of the project (They never did). In 2009 when the issue of removal of fuel subsidy arose, the chairman of the senate committee on petroleum (downstream sector) at the time, Senator Emmanuel Paulker said this on Yar’Adua’s plans to deregulate the downstream oil sector:

"On removal of subsidy, we believe that the government would have been compelled by the unsustainable fiscal burden involved in subsidizing petroleum products to the tune of N640 billion in a single year. We have always believed that subsidy should be removed, although not in the abrupt way in which it has been done, but through a gradual phasing-out process. And while that exercise is in progress, the government should adopt immediate measures to tackle those foregoing elements that add to cost. For example, if the refineries were functioning optimally, freight and port charges would be eliminated. Also, if pipelines that make up our distribution network were in order and new ones were built, the enormous cost incurred through haulage by trucks would fall, thereby contributing to reduction in the pump prices of petroleum products. All these will simply result in a less prohibitive and more affordable pump price when the phased deregulation exercise is concluded."

The question one should ask is what the Nigerian government has been using the annual savings from sovereign debts to do in the past 5 years? If the federal government has nothing to show for the debt cancellation or “forgiveness” five after, why should Nigerians trust that same government to use whatever savings from fuel subsidy? It is the same government because, firstly, it remains PDP-led government. Besides, David Mark has been senate president for more than 4 years. President Jonathan has been around as vice-president, acting president, or president for more than 5 years now. During this period, an important project like the railway construction I referred to above was set aside. An efficient railway system of transportation could reduce cost of moving goods such as petroleum products, which, as Senator Paulker said in 2009, would have eased the hardship on the Nigerian masses that would result from removal of fuel subsidy.

CORRUPT IMPLEMENTATION OF FUEL SUBSIDY IS THE ISSUE, NOT THE SUBSIDY:
In 2009 when the issue of fuel subsidy gained momentum, President Yar’Adua’s special adviser on media, Mr. Segun Adeniyi made the following statement:

"Deregulation doesn't necessarily mean increase in fuel price. As we all know, what government is trying to do is question the rationale behind the subsidy   in the first place. What and who are we subsidizing? As the Minister of Finance said last week, we have been subsidizing corruption, inefficiency and fraud in the sector. And these are the things we are tackling. Because even   the template of PPPRA [Petroleum Products Pricing Regulatory Agency], there are issues there that are being resolved by government and labor. We believe   that government and labor can partner on this issue because at the end of the day, we should ask ourselves questions why fuel price is not going down in our country while it is going down in other countries. This is because of the   current global recession that has led to low price of crude oil. So, there are a lot of questions we should ask about the sector that are not being asked.  And these are the issues that will be tackled in the coming days. The approach we are taking is that government will partner with labor. The President told labor leaders last week that he will partner with labor on this and every other issue. We are concerned about the welfare of the Nigerian people as labor is. So, I believe we can reach a common position on this issue. And I believe we will, because at the end of the day the essence of the whole dialogue is that we deregulate the market and ensure that we are not held to ransom by cabals."

I want to announce that more than three years after that statement government did nothing about the “cabals.” It was reported at that time before Mr. Adeniyi’s statement that President Yar’Adua’s government had instituted a probe into the activities of the Petroleum Products Pricing Regulatory Agency (PPPRA) and all the bodies involved in the regulation of fuel prices. The probe, termed "process auditing," according to government, was aimed at finding out how the agencies arrived at the template they used for the prevailing petroleum products' prices. As I write, neither has the result of that probe been made public nor has the “correct” price template of PPPRA been made available to Nigerians.

Mr. Adeniyi or President Yar’Adua’s government made some revelations, but failed to follow up. The facts are that: There is dishonesty (or corruption) in the pricing of petroleum products by the PPPRA. A group of people (whom Mr. Adeniyi called “cabals”) is holding Nigerians to ransom. Another fact is that government wants to hide its incompetence at enforcement of the rule of law through total removal of fuel subsidy rather than mop up the amount it is wrongly spending in the name of fuel subsidy. The Nigerian people must not suffer for failure of government. Just hours ago I heard on the news that the House of Representatives had approved the purchase of 360 official cars for its members. Nigerian public officials take for themselves annually more than 1.2 trillion naira. But they are not talking of removing this “subsidy” they are enjoying. At the same time President Jonathan’s government plans to remove fuel subsidy, it also would devalue the naira. One does not need to be an economist to see that the twins—fuel subsidy removal and devaluation of the naira—would so eat away at the Nigerian worker’s earning that the organized labor would be asking for a minimum wage of N 100,000 a month.  

But who in the organized labor, student union, government, etc., cares to read and act on what writers like me put out there? But I know those that must be listened to— the bombers and neighborhood terrorists that shall go after relatives of those in government; the unemployed that would go on intractable riots all over Nigeria, and the many Boko Haramic sects that shall be hatched few months from now. And then we shall see whether the obduracy of government policy makers against sound reason is worth anything after all.

The organized labor, student unions, civil society, formal news media, and the legislators are all in the same league—the league of the Hopeful, who believe and sing often that “things are getting better,” even though they do nothing to give support to the verbal dance. Maybe this is an answer to the prayers of the prayerful. Who shall deceive this Ahab that he should go to battle and fall? “I shall go and be a lying spirit in the mouth of his prophets,” answered the little one. “Go and you shall succeed.” He is too blind to see that his government shall crash as soon as he goes ahead with this folly. I told it to the nation more than a year and half ago in my essay, “Nigeria: Interpreting Times and Events.” But how many remember? It is near, even at the door. If this provocation does not incite Nigerians a worse than it must come; and it shall be bloody.

Leonard Karshima Shilgba is an Associate Professor of Mathematics with the American University of Nigeria and President of the Nigeria Rally Movement (www.nigeriarally.org ). Leonard Shilgba is also the Coordinator of the Middle Belt Federation under the Middle Belt Coalition agenda.
TEL: +234 (0) 8055024356; EMAIL: shilgba@yahoo.com

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fuel subsidy

At times i weep anytime i remember am a Nigerian bcos if am to be in Lybia or iraq i would hv been very happy bcos things lik dis would not be happening and u see the masses sittin down and foldin their hands,imagine house of rep approving new official cars while people re outside lookin for just one square meal,they live like kings while we live like servants and now they re talkin about subsidy without considerin the masses.Nigerians is time to wake up.if they prefare bein rulers rather than leaders and make us slaves in our own country lets stand up and fight for our rights.lets make this country unbearable for them.the time is now.

MR. PRESIDENT BEWARE OF DANGERS AHEAD

Removal of Subsidy would have been tenable if we had improved infrastructure. You can not buy fuel at 150 naira a littre and burn it in five hours of trafic jam, you spent two hours on a journey of 20 minutes because of bad roads. How about Railway? we dont have, if we have functional railway system and alternative mode of transportation, the issue of fuel subsidy would have been history. The people can not trust the government on the promises of using the saved money to ameliorate the suffering of the masses, this we have heard several times, we use to hear palliative measures to cushion effect during obasanjo era, yet nothing was cushioned, rather it became worse. I fear that the President is dancing on the brink of failure. As one of his supporter, I pray he opens his eyes soon to the dangers ahead of him if he proceeds on this road to self destruction.

what a shame

We can not continue to make the same mistakes all the time. OBJ left huge deposit of foreign exchange reserves in 2007, instead of the Government to use the money to invest in critical infrastructure, like Roads, Railway, Electricity, Affordable housing for the masses, they embarked on spending spree, making jumbo allocations to themselves, now they have completely depleted the foreign reserves, this government want to sell dummy to us about saving money, when the one already saved was not accounted for. How can you save at the expense of peoples lives? Do the first thing first before you talk about removal of subsidy. If you know you have nothing to do, you should simply pack your bags and go back to Otuoke. What a shame,

THE DECEPTION CALLED FUEL SUBSIDY

As always, transparency, impunity, deceit, fraud and corruption are on trial. Do Nigerians (including Government officials, past and present) acknowledge this as plainly stated by Dr Shilgba? Another question is.. who occupies the moral high ground to deliver judgment and who is out there to execute it??

STILL ON DERI

READING YOUR POSTS EVERYDAY, DERI, HAS EDUCATED ME A LOT. I NOW COME TO THE CONCLUSION THAT ALL OF NIGERIA'S PROBLEMS INCLUDING BOKO HARAM, SUBSIDY REMOVAL, NON FUNCTIONAL REFINERIES AND OTHER INSTITUTIONS ARE CAUSED BY THE FOLLOWING EVIL PEOPLE: BUHARI, TAFAWA BALEWA, SHAGARI, OBASANJO, THE SULTAN OF SAKWKWATO, PROF. ALUKO, IBB, ABACHA, YARADUA AND ATIKU. THE ONLY SAINT THAT CAN SOLVE OUR PROBLEM IS GOODLUCK JONATHAN. UNFORTUNATELY THE AFOREMENTIONED EVIL PEOPLE HAVE TRAVEL IN TIME TO SCUTTLE HIS PRESIDENCY BY CHANGING THE CONSTITUTION TO TAKE AWAY ALL POWERS FROM G.E.J. THE ONLY POWERS LEFT FOR HIM IS OVER ASO VILLA. THEY PUT DAVID MARK OVER HIM, MAKE THEMSELVES ABOVE THE LAW EVEN AS THEY USE MEND AND BOKO HARAM TO TERRORIZE GEJ INTO HIDING IN ASO VILLA. NOW THEY WONT EVEN ALLOW HIM TO USE EAGLE SQUARE! TO ADD SALT ON INJURY THEY GAVE HIM A WIFE THAT WILL GET OFF AN AIRCRAFT BEFORE HIM IN THE FULL GLARE OF INTERNATIONAL MEDIA!

YOU STARTED WELL DERI BUT STILL END WITH BUHARI

YOU STARTED WELL ON THE ISSUES DERI, UNFORTUNATELY YOUR MANIC OBSESSION WITH THE ELECTION LOOSER BUHARI HAS TO SHOW UP. HE CANCEL THE METRO, HOWEVER THERE IS A NEW PRESIDENT NOW WHO CAN RE-INSTATE IT- OH IAM SORRY HE CANT DO THAT! DAVID MARK CANCEL THE RAILWAYS, WELL I WILL BELIEVE YOU ON THAT BECAUSE IF OUR PRESIDENTS HAVE MORE POWER THAN DAVID MARK HE WOULD NOT DARE DO THAT. IF HE DID IT DURING YARADUA'S REGIME AS YOU ARE LIKELY TO REPLY THEN YOU CAN SEE WHO HAS MORE POWER, NIGERIA'S PRESIDENT OR SENATE PRESIDENT. IF IT CAN STILL STAY CANCELLED WHEN THERE IS A NEW PRESIDENT, NOW THAT CONFIRMS DAVID MARK IS RUNNING NIGERIA. BRING YOURSELF TO THE PRESENT. IF THERE IS ANYTHING THAT WRONG IT IS WRONG BECAUSE WE OBSERVE IT NOW! LETS DO SOMETHING NOW! BLAMING THE PAST OR THE FUTURE DOES NOT SOLVE ANYTHING IT IS WHAT WE DO NOW THAT MATTERS.

Fuel Must Go in January!!!!

Like I said in another forum, this is one the best news so far from Jonathan and Ngozi. It is either the damned subsidy ends or we go back to the dark days of fuel shortages.
We are past the stage where as a country government could have learnt to build rigs, educate our engineers, refine our fuel, count our people correctly and administer subsidies efficiently. We are a nation of 200 different peoples, forced to live together by the white man. Everyone is trying to take care of themselves and not Nigeria.
Let the private sector import and sell fuel. Very soon greed will bring several refineries to Nigeria, employing thousands of our graduates.
This oil belongs to the Niger Delta, so the sooner we wean ourselves off this injustice, the better off all Nigerians will be. Don't complain about our corrupt politicians if you send them to steal other peoples oil to provide subsidy and sell it to you below market price.
IT DOES NOT WORK!

devalue to increase the sale of cocoa or groundnut soup?

Yes for once this is a good article-I admire the courage of the writer-The western ploy as it relates to the removal of subsidies, is the same as when the intellectual told us that a gallon of petrol in Nigeria, was by far cheaper than a bottle of coke. The problem is that there is no continuity in our system. Malaysia is moving ahead of Nigeria, because she never drops a plan once she sets her mind on it. Regardless of the regime in power. Buhari came and cancelled the Metro line project in Lagos state. Here we are with David Mark, doing same to a railway scheme which wld have gone on to save thousands of lives and man hr. The neo-colonialist minds in the IMF sold the idea of devaluing the Naira to OBJ through Prof Aluko. Before OBJ handed over to Sahagari. What are we devaluing the Naira for? To enable China and Europe or America buy more of our groundnuts or cocoa? Oil is quoted in dollars not naira around the globe-it does not make sense to devalue for the fun of it.

Deaf and dumb...

Deaf and dumb and self centred leadership has been our system body polity immediately after Buhari/Idiagbon-Augurt 27,1983.May Allah intervene,amin!

Every government wants to

Every government wants to remove fuel subsidy! My question is: How many times will this fuel subsidy be removed? Is the question of fuel subsidy an euphemism for price increase? Who is really fooling who? Right from the time of IBB we continue to hear of fuel subsidy being removed. How many times will it removed? I am really at a loss. Nigeria has never had it so bad.

Comments fromt he Public

For a while now, I stopped reading comments from readers, because of the hatred and intolerance displayed in them, especially on articles that speak in less favourable terms of GEJ. Considering the bare facts contained in Prof's article, curiosity over ruled my earlier stance. What I saw from the comments gladdens my heart. All the contributors were unanimous in addressing the issue as against the old trend of casting aspersions on the writers.

I preached tolerance and understanding and the need for us to look beyond the obvious, but no one listened. I guess hard times is catching up with all of us and the luxury of sectionalism, tribalism or religion is gradually diminishing.

Why Subsidy

I wonder why fuel is 65 Naira in Nija. COuntry like Malaysia that does have crude oil it sales litre at 1.4RM (95Naira). UAE a litre is around 1AED around 45 naira. Saudi Arabia is SR0.45 that is 18 Naira.

Very insightful write up

Very insightful write up Prof.The aftermath of these draconian policies-if implemented by GEJ's good for nothing and clueless govt are better imagined.I have a feeling that it's going to trigger the much needed revolution in our land.Even people like me who hitheto abhorred the use of violence as a means to an end are already bracing up for this monumental task ahead of us!Arise o compatriots!!

Nigeria

Very intelligent write-up. Hope Mr.President can see the hand writting on the wall and re-think. The economic impact of this crazy idea will be worse than the days of SAP (Structural Adjustment Programme).

I HAVE PRAYED FOR THIS

I HAVE FERVENTLY PRAYED FOR WHAT I CALLED A PERFECT STORM OF SUBSIDY REMOVAL. I BELIEVE IT WILL BE THE LAST STRAW. IT WILL STRIP NIGERIANS OF ETHNICITY AND RELIGIOUS BIGOTRY AND UNITE THEM AGAINST THIS CORRUPT GOVERNMENT. THEY GIVE UNBELIEVABLE EXCUSES LIKE "IT WILL STOP SMUGGLING". SO THEY CANT DEFEND THE BOARDERS AGAINST PASSING TRAILERS? YOU DONT FOLLOW BUSH PATHS WITH TRAILERS. YET THEY WANT US TO BELIEVE THEY CAN DO SOMETHING A THOUSAND TIMES MORE DIFFICULT, LIKE USING THE PROCEEDS TO BUILD MORE ROADS? ACCORDING TO EXPERTS IF THE NIGERIAN OIL WELLS BELONG TO NIGERIA WE WILL GET OUR CRUDE FOR KOBOS ON THE NAIRA, AND IF REFINED IN GOVERNMENT REFINERIES, PUMPED THROUGH GOVERNMENT PIPELINES (OF RAILWAYS), DISTRIBUTED BY NNPC STATIONS, WE CAN HAVE AS LOW AS N15/LITER FOR PETROL! JUST IMAGINE A N15/LITER PETROL AND PROBABLY N8/LITER KEROSINE. COMMERCIAL ELECTRICITY WILL BE AVAILABLE AND PHCN(OR NEPA) WILL HAVE TO COMPETE OR BECOME LIKE NITEL. WE LACK LEADERS WHO THINK PROPERLY.