Introduction:
Since past weeks that President GEJ conveyed to the NASS the intension of his government to begin the removal of fuel subsidy next year, there have been a lot of protagonist and antagonist views about this idea and hence further hit up the polity. If this plan sail through, it means Nigerians will pay N142.92 for a litre of petrol by January 1, 2011 (if petrol prices remain at the present level) when the subsidy on the product is withdrawn.

Current Cost of Fuel subsidy:
According to PPRA (on its website), a litre of petrol should have been selling currently at N142.92 as against the official price of N65. Nigeria is currently consuming 32 million of litres of petrol daily for N65, while the expected price for the product is N142.92, which means the government currently pays a subsidy of N77.92 per litre. In effect, the FG set aside N240bn (N20bn/Month) at the beginning of the year to be spent on fuel subsidy. It is therefore foresee that by the end of the year, 2011, the FGN would have spent N1.2tn on fuel subsidy as against the budgeted N240bn.

Why the proposed removal:
According to FG, aside from being excessively draining the government purse, it felt the subsidy has not really benefited the masses rather it has only continued to enrich some group of ‘oil thieves’ in the petroleum downstream sector. Therefore, the removal would free up about N1.2tn in savings, as part of which can be deployed into providing ‘safety net’ for the poor segment of the society to ameliorate the effects of the subsidy removal. More so, it would be invested in ‘infrastructural development’ for the downstream sector, which to a large extent, is expected to boost local production of the product as against massive importation (which is the current trend) thus attracting potential investors into the country particularly in building new refineries which in the long run bring down petroleum prices.

Argument in favour:
Accordingly to those who have argued in favour of the government plan, it is pointed that the current fuel subsidy has not really benefited the masses rather it has continued to enrich some group of individual or player in the downstream sector, who through importation of petroleum products collect fuel subsidy from FG. In addition, they also see the continuous giving of fuel subsidy to these ‘oil thieves’ as ‘inefficiency, corrupt and waste of scare national resources’. They argue that despite subsiding petroleum product with the aim of being sold at N65 yet the product is still being sold above this price (as high as N100) in some states of the federation. Therefore, fuel subsidy must go!

Argument Against:
Firstly, according to this school of thought, that this plan has gotten the support and backing of the state governors came not as a surprise to them. Since the clamour for the implementation of the N18,000 minimum wage, some state governors has not continue to express of their inability to pay this wage. However, after having fight and won this battle (perhaps in some states since strike is still ongoing in other states over non-implementation of the wage), they believe the fuel subsidy is a diplomatic way of rendering this wage useless as it will result to inflation. Even though the plan will no doubt increase the revenue base of the FG thus saving more fund which can then be use for infrastructural development (as being propose) which the current budget has not been able to adequately fund, they still believe that the state government sincerity in achieving this goal is very much doubtful. This is because, according to a poster on the President’s Face book wall, ‘the 3 tires of government have not reached the level of accountability that enables them to ask for more’’ . Therefore, to them, they believe the propose removal of fuel removal of fuel subsidy will further aggravate the suffering of Nigerians. So it’s a NO to it.

MY CANDID VIEW:

Fuel removal or not;

1. Government sincerity.
Government claim to be spending N77.92 on each litre of petrol. How true is this? Is government actually spending this much as being claim? Can the FG publish and with verifying source, the landing cost of petrol at our sea port? Secondly, do you really trust the FG and SG of their intension about the removal of this fuel subsidy? Are you sure that the state governors only want this fuel subsidy fund to be diverted into their state treasury through increment in monthly allocation which will ended up being embezzled by them and the so-called infrastructural development will never be?

2. Revitalisation of the all Refineries.
Why do we continue to export our crude oil for refining when we can as well do that here in Nigeria. Over the years, our refineries has continue to be in comatose. Our government knows what and how to being live back into our refineries but they will not because those who are into this oil exportation are their friends, associates, political god-fathers in business. The government should make our refineries work at optimum level and make supply of petroleum product available at all times. Through this, oil cost will be minimise, fuel subsidy if not eliminated will be reduced than the level it is being purported to be now.

3. Fight the ‘oil thieves’ and not removal of fuel removal.
Mr. President, removal fuel subsidy is not a better way of checkmating the corrupt practices of the so called ‘oil thieves’ but a diplomatic way in which an elderly person runs away from a wild dog. The FG should rather use all the apparatus at its disposal to check into the activities of this ‘oil thieves’ at the downstream sector. Majorly, our sea ports and NNPC should be some of the focus areas.

4. Alternative means of transportation
Mr. President, If your government is going to remove fuel subsidy, please provide alternative means of transporting to the Nigeria populace. Our rail and water ways should be open for transportation. This will provide Nigerians with alternative means of transporting themselves. If Nigerians find road transportation expensive tomorrow they can always use either the rail or water ways (forget the air transport becos that has continued to be for the rich) to transport themselves.


The Financial State Of The Nation:
I am worried NOT about the proposed plan to remove fuel subsidy but about the financial state of the nation. Over the past years, the Federal Government has continued to run a deficit budget hence being financed by (excess) borrowing. According to current report, Nigeria domestic debt amounted to $5.2 trillion (17.5% of her GDP) Source: www.fmf.gov.ng

In addition, since the implementation of the new minimum wage in some states, this has excessively increase the wage bill of state governments. Already reports have it that only 3 states are healthy (Lagos, Akwa Ibom and Rivers) , 16 bankrupt, 9 unhealthy, 6 critical and 5 distressed. Expectedly, some states have strategise on how to improve their IGR which majorly is through (multiple) taxation.

Having said this, with the present financial state of the nation, I ask myself, is Nigeria as a nation not heading towards bankruptcy?

Possible solution:

1. Diversification of the Nation’s Revenue Base
Nigeria has not excuse for continuing to be a mono-revenue derivative country. Must the nation depend heavily on oil revenue. In wonder at times if the discovery of oil is not a curse to Nigeria. Our over-dependency on oil as a major of financing the budget has not done us any good. Our agricultural sector which from time immemorial being a major sources of revenue to the nation has been neglected upon the discovery of petroleum. What about the mining sector? Recently coal in commercial quantity was reported to have been found in some states. We need to do a lot of research to discover possible availability of more of these natural resources in our land. What about tourism? Nigeria has a lot of beautiful and exotic landscape features which can be package and make money from through tourism. Our diverse cultural heritage is another avenue we can package, showcase to the world and make money from.

2. Reduce Government Spending
The 3 tiers government should reduce the cost of running their political office. Each year, outrageous fund is being used to finance most of these unnecessary offices. This is one reason why recurrent expenditure has continued to overshadow capital expenditure in government budget on a yearly basis.


God Bless Nigeria.

God bless Nigeria and God bless the poster.

These are the kind of hard questions we should be putting across to Mr President. In theory, I'm not against the removal of fuel subsidy but he should please address these issues. Enough is enough.