Outrageous subsidy, time to deregulate downstream

There is a new name for petroleum subsidy in Nigeria. It is the technical expression known as ‘under-recovery on petrol import.’ And there had to be a new name for what we all call subsidy. The reason for this is not far-fetched.

Long before this government came to power, during the much-heated campaigns to win the 2015 elections, prominent persons within the now governing party, then in opposition, including President Muhammadu Buhari, promoted the view that there was nothing like petroleum subsidy and that the government talks about subsidy were only a ruse for corruption.

At the time, APC-in-opposition had henchmen and women, as well as followers who were bent on making sure the message stuck, that there was no subsidy and hence, stopping the payment was the logical thing to do. We think it is alarming that about three years after coming to power, the government is still carrying on as if it did not make any promise regarding this petroleum subsidy matter. That it has not made any serious attempt to deeply analyse the subject of subsidy and the economics surrounding it with a view to keeping its promise to stop it totally, is rather unfortunate.

In the last dispensation, beneficiaries of the subsidy largesse were many and widely spread. Some of them flaunted their arrival to an exclusive club of people with direct access to the Nigerian treasury. Now, it might be proper to ask: Who are the current beneficiaries, because with an opaque title such as ‘under-recovery on petroleum import,’ it would be difficult to really tell who has got their hands on the till nowadays.

But beyond having someone’s hands on the till, it is our view that the subject matter of subsidy is due for a down-to-earth, thorough debate about its advantages and disadvantages. We feel that the issue of subsidy has been over politicised and has thus created distractions from the real issues that it conjures up. From what the now ruling party boasted was nonexistent, when it was in opposition, we are now learning that under-recovery on petroleum imports is now costing the country up to N1.4 trillion yearly.

What this means to the layman is that Nigeria is still paying a huge amount on subsidy on petrol. We think this is a lot of money which can be better used by the government to take care of key areas of health care, education and other such social areas that have greater chances of impacting on a larger number of citizens than the few car-owning city-types that subsidy tends to serve.

It is our view that subsidy or under-recovery on petroleum imports denies ordinary citizens, many of whom will never get to drive a car so as to use subsidised fuel and even get a ride in one so as to pay lower fares, the opportunity to participate as part of a collective enjoying the gift of being citizens of an oil-rich country.

Yet again, tied to the whole talk about subsidy and whether or not to let it go, is the question of what to do with the downstream sub-sector of the petroleum industry. The government has a way of pretending to protect its people whenever this debate comes up, whereas it could just be an opportunity to safeguard and secure its electoral position in the scheme of things.

The whole idea of paying subsidy stems from the failure to really tackle the demon called regulation and control across different areas of the Nigerian economy. In regulating and controlling the downstream part of the petroleum industry, government exposes itself to a costly opportunity cost, using the money of the many to service the few, including itself and all the elites in its gangster group.

The Nigerian government needs to free up itself so as to enable it to concentrate on areas of serious need by citizens. It needs to make sure that it collects all the monies it needs from different sources, and block waste and leakages, that allows it to spend N1.4 trillion annually on subsidy that hardly touches the lives of a majority of the citizens.

Spending N3.76 billion daily to keep the subsidy regime alive, money that could be better spent on education, on the health of less fortunate citizens, is the wrong way to spend taxpayers money. Having been on this road for such a long time and leaving citizens still thirsty, we believe that government would take another good look at the need to deregulate the downstream sectors and free up money for better citizens care and welfare. Fund in circle type has not brought real development to the people. Here are our reasons.

City development for economic expansion and growth has not really been a pursuit of any government. The Federal Government, after deciding to move to Abuja, has focused its attention on developing the capital, which it has done in a never-ending manner. The significant other city developments that Nigeria has witnessed have happened only with the creation of new states, the consequence of which has followed new state capitals, left to the respective new states to develop. This pattern of city development, which has been the lot of Nigeria since independence, points to the collective failure of our leaders since independence.

Every state in Nigeria, besides its capital city, has more than two other places that ought to be fully developed like the capital city. In Lagos, Rivers, Cross River, Kano, Kaduna, Bornu, Jigawa, Delta, Edo, Kwara, and the other 26 states, we are of the view that elected governors, when they come into force, should have the mandate to work to develop alternative cities, offering similar attributes like the state capitals and serving as alternative centres of complete living, without the need for everybody to concentrate on the capital of the state.

For instance, in Akwa-Ibom, Uyo should not be the only city of attraction. Eket should be a city like Uyo. We think that governors owe the citizens a duty to use this concept of building new cities as a basis for economic expansion and development that o ers inclusiveness and the opportunity for alternative city living. It is what would help stop the rot that is political leadership, where nobody leaves a legacy, and nobody is remembered for much else after leaving office because what they actually do is the basic routine of governance.