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Buhari And Fuel Subsidy: A Choice Not An Echo By Ifeanyi Izeze

May 19, 2015

My belief is that there has to be a thoroughly articulated and well-defined program with a definite time- frame for the new government to redress the challenges we currently face in refining our crude oil before complete hands-off from funding anything called subsidy.

For several years now, concerned Nigerians have clamoured for the outright scrapping of all forms of  subsidy on petroleum products because the scheme, which at best, has been made to serve narrow personal interests rather than the collective good of the generality of the Nigerian people especially the not-so-well disposed. However, the recent renewed fiery campaign for total scrapping of the subsidy scheme targeted at the incoming government, in spirit and tone, looks in all its ramifications a well crafted dangerous trap for Muhammadu Buhari. It seems deliberately to create a crisis situation by setting him up, right from day one in office, against the very Nigerian masses that made it possible for him to win the presidential election.


Is it not curious that the same set of Nigerians who vowed to resist, with the last drop of their blood, the outgoing administration’s January 2012 proposal to completely   withdraw all forms of subsidies on petroleum products are now at the forefront of pressuring the yet-to- be-inaugurated government to do same as his first official function in office?

How did we get to this point in the country that the line between outright mischief and genuine patriotic intent has become so thin it can be rightly said to be non-existent? Every day that passes, it gets more glaring that mischief, a major preoccupation of the human mind, has been perfected by those who see politics as their business in this country. And this attribute is glaringly manifested in the way those around ‘power’’ including those clamouring to be around it reason and talk most times.

It is okay to just talk publicly but it is more okay to talk sensibly and considerately. Let’s assume Buhari abolishes the subsidy scheme immediately after he takes over, where are we going to get the fuel to run our domestic needs- individual lives and businesses?

Should all forms of subsidy payments be stopped by the federal government? The answer is an emphatic ‘yes’ but with a caveat that it should not be done absurdly or rather disconnectedly.

Truth be told, years of mismanagement and corruption not only in our oil sector but in all facets of our economy as a nation has produced a Nigeria that does not (as of now) have the capacity to refine crude oil into petrol and other fuels for her domestic needs.

Whether anybody wants to hear this or not, our refineries are still comatose. The performance outings for the three and a half plants we have in this country are nowhere near 30 percent utilisation of installed capacities. Don’t mind all the deceit by the NNPC and its people in government. Even the ordinary boiling of crude oil to separate petrol (PMS) and/or diesel, none of the refineries- Warri, Kaduna, Port Harcourt I and II is doing that effectively to anything near 40 percent capacity as installed. Meanwhile, this is just a very tiny fraction of what the refineries were set up to do in the first instance. The creek boys are even doing a better job at cracking the crude for petrol and diesel. Is this not pathetic!

The truth is that even if the new government decides to, on its own, build new refineries or encourage private investor to do so, it will take at least 48 months from day one of engineering conception to full actualisation of a sizable refinery project that can contribute tangibly to our domestic need. There are no short cuts or quick fixes in this matter. And if Buhari opts to revamp the old plants, as Nigerians anticipate he would, it is not going to happen over night because most of the refineries as they are now may need a near-total overhaul if we are going to get anything remarkable out of them.

My belief is that there has to be a thoroughly articulated and well-defined program with a definite time- frame for the new government to redress the challenges we currently face in refining our crude oil before complete hands-off  from funding anything called subsidy. Most importantly, there has to be a religious commitment to funding such program also because it is one thing to set out on a remediation program but if it is not properly supported in terms of funding, we will not achieve the desired goals of bringing the refining plants to run full stream or even near that.

The incoming government should first ascertain how long it will take to revamp the unwell refineries and/or even add additional units at the current plant sites to boost capacity. With that, we can then set a timeframe to do away with this evil called fuel subsidy scheme.

As equally important, the government should also at the same time address the integrity issue of the PPMC pipeline system network which is currently in shambles with punctures that have made the pipelines more of a porous media than a conduit flowline. It would be far cheaper and more effective to send petroleum products to all parts of the country through the pipeline networks than the current practice of using road haulages which has turned out to be a major component of the subsidy racket in terms of implementing the “equalisation” initiative of the federal government.

If we bully Buhari into stopping the program without contingency, the government may be blackmailed into other forms of blurred payments. Mark my words! It may not be called subsidy this time but it will amount to almost similar drain on our national coffers at the long run because however we look at it, the issue of availability of fuel products for our domestic need is a very crucial one that can be manipulated by mischief makers and those currently benefitting from the rot in the system to turn on the heat on the new government.

Either they don’t know or pretend not to know, most of the campaigners for the immediate stoppage of this subsidy scheme seem to be deliberately mute on the issue of equalisation as enshrined in the Act that established The Petroleum Equalisation Fund (PEF) which also has been a major component of the subsidy racket.

We all remember a recent campaign by those pretending to defend the interests of Nigerians in some parts of the country that if the Equalisation Fund is scrapped, Nigerians in those areas would be made to pay four-five times higher prices than price regimes in areas closer to the depot facilities because of the distance it takes to transport the petroleum products from coastal depot facilities into the hinterland. To everybody, the argument actually made sense but Nigerians are unaware they were being manipulated by the haulage cartel whose only interest is themselves. Even in the coastal areas that host refineries and/or depot facilities, does fuel sell at the same price everywhere? Not all! But because we like to play politics with everything, sectional, regional and even ethnic colourations were introduced to deceive the innocent Nigerians for the selfish interests of a very few businessmen.

Those who know would agree that the issue of equalisation was one of the major contentions that have kept the Petroleum Industry Bill in the shelf at the National Assembly.

This Fund was supposed to make sure every Nigerian, no matter where you live, pay the same price for at least petrol, kerosene and diesel. And money has been channelled through it all these years to majorly offset haulage costs to different parts of the country. The haulage cartel is as corrupt and selfish as the fake fuel importers themselves.

So in as much as we agree to do away with this evil called fuel subsidy, we should put our house in order first. This is my advice to Buhari and his soon-to-be-inaugurated  government.

Ifeanyi Izeze lives in Abuja and can be reached at: [email protected]; 234-8033043009