The Sophistry About Fuel Subsidy

Mon, 17/10/2011 - 12:29am | SAM NDA-ISAIAH

I am repeating this piece today because the president gathered some of “his own” private-sector representatives to endorse his intention to remove fuel subsidy.

I am not only a member of the private sector, I belong to one of the most difficult, if not nigh impossible, arms.

I am a newspaper entrepreneur who started from scratch, and I write as a direct participant and an enlightened stakeholder.

I also write as a human being with a feeling for the very poor and lowly among us who have no voice. In spite of the endorsement, I stand by every word I have written here.

Extreme corruption and government incompetence are our problems and not subsidy qua subsidy.

Without consultation or even as much as informing Nigerians about his intentions on the very contentious matter, President Goodluck Jonathan has tabled a proposal before the National Assembly for the removal of fuel subsidy from next year.

I am not sure if this is a courageous move, a reckless act or simply a very cold-blooded one.

The arguments on both sides are not new. It is just that, in this particular case, it looks like a conspiracy of those in power against the ordinary people.

Jonathan’s people say the subsidy amounts to throwing away over N1trillion annually in the name of providing a kind of price support for the people.

One of the silliest arguments of government is that the subsidy actually benefits the smugglers who take the fuel to other countries.

The government actually forgets that it is one of its responsibilities to secure the country’s borders from smugglers in addition to Boko Haram, MEND, kidnappers, armed robbers, etc.

State governors are some of the most enthusiastic supporters of fuel subsidy removal.

They are already doing a mental calculation of the extra money that would accrue to their monthly allocations from Abuja, which most of them will just convert into dollars and transfer to private accounts abroad.

That much can be gleaned from Governor Rotimi Amaechi’s gung-ho statements as chairman of the Nigerian Governors’ Forum recently.

The CBN governor, Mallam Sanusi Lamido Sanusi, also argues in favour of subsidy removal.

He says it is unwise for the government to be subsidising petroleum products to keep refineries in other countries going while the ones in Nigeria would not be producing in full capacity.

In other words, the CBN governor wants Nigerians to pay or be penalised for government’s incompetence in managing and building refineries that will refine our own crude at full capacity.

Even Niger Republic recently completed building its refinery and has been threatening to join the league of fuel exporters into Nigeria.

The CBN governor also argues that subsidy has not benefitted the masses of the country in any way.

The nation is borrowing billions of naira annually to pay subsidy debts that benefit a cabal in the oil industry, he says.

Well, it is when this subsidy is removed that we will see whether subsidy benefits the masses in any way or not.

By the time the price of everything doubles or triples or even quadruples, we will know whether the fuel subsidy makes a difference in the lives of the ordinary people or not.

If the impending catastrophe is added to the ever-increasing bank interest rates, and the ever-falling value of the naira – some people have predicted it might even get as bad as N180 per dollar soon – then, we will not really have to consult the dictionary anymore to know the definition of poverty.

Maybe Jonathan’s idea of poverty alleviation is to kill all the poor people.

Every responsible country must grant one form of subsidy or the other to its people anyway.

The total amount of subsidy to agriculture and food security (that affects everyone) by the United States government is in the region of $1 billion daily.

And this has nothing to do with whether it is the Democrats or the Republicans that are in power.

Some European Union countries vote even higher subsidies for food security.

For whatever anyone would say about the tyrant, Robert Mugabe, the senile president of Zimbabwe, it is his subsidy on education that has given the country one of the highest literacy rates in the world today.

Zimbabwe has a literacy rate of 90% compared to Nigeria’s 57%.

Education in government-run schools was made free in 1980 via subsidy, of course.

Many countries also maintain subsidies on healthcare especially for the most vulnerable members of the society.

In Nigeria, it is hard to see what government really does for its people. You buy your own generators for electric power supply, which is a small price compared to what you have to pay for diesel daily.

You would also have to construct your own borehole to get potable water.

You would have to take care of your own security needs.

And you must pay through your nose to get good education for your wards; it would have to be either through expensive private schools or sending them abroad, which these days includes countries like Ghana.

And you better don’t fall badly sick here.

If you cannot afford flying abroad for good treatment, then, you could be taken to one of the government hospitals that have now become places where people go to die.

The truth about this rush to remove fuel subsidy is that, in spite of the high international price of crude oil, which should have made us very comfortable like other oil-producing countries, Nigeria has precipitously run out of money to run the machinery of government.

And the only reason for this is corruption.

The nation is being looted to death. Virtually all the money has been stolen at all levels.

The government says that removal of the subsidy would free more than N1trillion to develop the country.

No, the money that would be freed would also be stolen.

And nothing will come out of it; there will absolutely be no development that anyone would see.

Only the foreign bank accounts of government people and their fronts would be richly developed.

The governors are, of course, supporting Jonathan because they also want to partake in the loot sharing.

By now, it should be clear to all of us that the governors don’t care about this country.

Their response to the Sovereign Wealth Fund (SWF) has made this clear.

The governors want to share in the subsidy money that would accrue to the FG.

But, like it happened when Jonathan was acting president, when he opened up the coffers of the Excess Crude Account to the governors and nothing came out of it, the governors will also blow this and nothing will come out of it.

They absolutely would have no qualms or second thought about that.

If Jonathan and the governors (especially those who contested as incumbents) can publicly tell Nigerians the source of the humongous amount of money they used for their elections, then, they would have the moral right to remove fuel subsidy and ask the ordinary Nigerian who is the ultimate victim of their bad governance to share in the sacrifice.

The truth is that if the government wants more money to run the government, it should face the cankerworm of corruption.

Nigeria is being looted to extinction and nobody appears to give a hoot.

Many of us can afford the generators, boreholes, barricades and extra guards to provide the security that government is not providing, as well as dispatching our children overseas, but the ordinary Nigerian on the street doesn’t deserve what the self-imposed leaders are doing to him.

For God’s sake, Nigeria is Africa’s largest oil producer and the seventh largest exporter of the commodity in the world, and with the 10th largest reserves.

This is apart from our gas reserves.

We produce more than two million barrels daily and yet we are the only OPEC country that imports refined products and our government is not even ashamed of that.

Because of corruption, the country has not constructed new refineries or even managed the old ones to full capacity and they complain that the fuel subsidy benefits only foreign refineries that we import fuel from.

Besides, I bet that not many people know that crude oil is not the highest revenue earner for the country.

The revenues that the nation is supposed to be making from many of its revenue-yielding agencies like the NPA, NIMASA, CBN, FIRS, Customs, the Mint, Immigration Services, and many, many other agencies, if maximised, would cumulatively generate more funds than oil.

It is the revenues from such agencies that others use to develop their countries.

In Nigeria, only the FIRS and Customs declare their figures.

State governments can also make a lot of revenue if they, just for a second, take their greedy eyes off the federation account from where they get cheap money every month without having to work for it.

I have said on this page several times that virtually every state in Nigeria can exist as a rich nation if only we had serious people at the helm.

If Jonathan’s government wants more money, it doesn’t have to kill poor Nigerians to get it.

It should leave fuel subsidy alone and look elsewhere.

Fuel subsidy is too hot an issue for a government that is already perceived to be ineffective and incompetent.

The president should start by fighting corruption, building refineries, policing our borders effectively and getting all the revenues he can possibly garner from revenue-generating government agencies.

The Jonathan government would do well to concentrate and improve the real sector of the economy by providing power supply immediately or providing subsidy on the diesel that now solely powers entrepreneurship.
Yes, subsidy again.

This would stabilise the naira at a respectable value.

The government must use all its will and focus to stabilise the value of the naira at less than N100 per dollar.

It can obviously be done with a serious government. One of the jaded arguments for a weak currency is that it encourages export entrepreneurship.

That lie has been fully exposed and must now be finally laid to rest.

The only main export commodity Nigeria has today remains predominantly crude oil, unless we also want to include the prostitutes we export to service the developed world.

But if Jonathan insists on removing the fuel subsidy because his government has no better idea, then, like General Sani Abacha did, he must tell us what, specifically, the money would be used for and who would manage it.

When Abacha increased fuel price from N3.25 to N11 per litre, he promised to use part of the proceeds to create the PTF in order to “cushion the harsh effects” of the increase.

The PTF got 33.333% of the N7.75 difference which came to N2.58 only.

The balance was shared between the federation account (which also got about the same amount as the PTF, the NNPC, the FCT) and the armed forces/police.

The rest is now history, and, unless you want to lie to yourself, the effect of PTF has been the only semblance of meaningful government in the ordinary people’s lives in the last 15 years.

If, as it now seems, Jonathan will increase the price from the current N65 to probably over N150 per litre, what exactly would he do with that large difference?

We expect the difference to be even much bigger than what the PTF received because of the sheer amount that would accrue.

We would want to be sure that most of the money does not go into his seven-year single-term fantasy.

Nobody is asking Jonathan to be an army general or a lion, or even a pharaoh.

Nobody is even asking him to be an Abacha, but in spite of his generally not-so-sterling legacies, Abacha used the proceeds of the partial removal of oil subsidy well, and maintained the value of the naira at approximately N80 per dollar, in spite of the fact that crude sold at an average of less than $20 throughout his tenure.

Abacha has provided a standard for all those who want to toy with the fuel subsidy. We shall expect nothing less!





EARSHOT

Obasanjo And Jonathan’s Police



More often than not, the Nigerian police behave like paid bouncers.

And this can be very bad depending on who’s the IG. Last week, The Nation carried a story about former president Olusegun Obasanjo writing a letter to President Goodluck Jonathan asking him to change the heads of some government agencies over non-performance.

The curious, if not funny, thing about the letter is that all of the agencies are funding agencies.

The former president wants the heads of the PTDF and a couple others changed and replaced with his own nominees. Obasanjo has always been interested in the PTDF right from when he was president.

It’s one of the places he stole good money and he now wants to take possession of it again.

During Yar’Adua’s presidency, he lost total control as the former president appointed the heads himself. Obasanjo also listed TETFUND (formerly called ETF), UBEC, Petroleum Equalisation Fund and Industrial Training Fund.

The story written by The Nation was a very good scoop, the type that earns awards for both reporters and editors.

When asked about the story, Obasanjo denied ever writing such a letter.

The PDP Board of Trustees chairman was lying, as usual.

People who know Obasanjo very well have always known him to be a compulsive liar.

Remember he still says he never attempted to do a third term. Lying is a sport for him.

But since the editors of The Nation knew that they had to protect their names, they then released a scanned copy of the letter Obasanjo wrote to the president in his handwriting.

It was at that point that Obasanjo thought he should rent the Nigerian police, who are always available for such acts of thuggery.

Like most felons, Obasanjo hates to be caught.

And it is worse if he is caught pants down. That was exactly what happened with this letter to the president.

Obasanjo, Jonathan and Ringim (the IG) forget that we are in the freedom of information era.

They also forget that it is both outdated and crude to send policemen to newspaper houses.

When was the last time any of them heard policemen being sent to newspaper houses in Ghana or Mali?

And we claim to be more enlightened than these countries.

I have three pieces of advice here. My counsel to Ringim is that he should place the photograph of Tafa Balogun on his wall to always remind him of how that IG ended.

After Obasanjo had thoroughly used him, including to rig the 2003 elections, he dumped him with a handcuff and a prison term. Those who learn from history,

The advice to Obasanjo is that he should please retire and leave us alone to clean up the mess he left behind.

The former president is responsible for the quagmire in which we have found ourselves in Nigeria today.

In any other country, he would be treated like a villain, the same way Americans treated Richard Nixon before his death.

Obasanjo is currently the busiest former president in the world, causing mischief everywhere.

And to President Jonathan: he should not allow anyone to decide his legacies for him.

Already, the arrest of Nasiru el-Rufai over the views he held and last week’s raiding of The Nation and arrest of its editors will remain an indelible blot on his legacies, whatever they end up to be.

http://leadership.ng/nga/columns/6766/2011/10/17/sophistry_about_fuel_subsidy.html