This is the second time in about a month that I will be drawing attention to the government’s plan to remove what it calls fuel subsidy or to deregulate the downstream sector of the oil industry. Like everything else about governance in Nigeria, the government has given the impression that there is no other way to do things except the government way. It gives the impression that its policymakers are not only the best but are infallible. In particular, President Goodluck Jonathan has given the impression that his economic czarina, the often cocksure Dr Ngozi Okonjo-Iweala, has all the economic wisdom to retool and possibly remould the Nigerian economy.

Rather worrisomely, Okonjo-Iweala has herself acted as if there can be no other panacea to Nigeria’s faltering economy. More, she is even a little carried away by her unassailable position in the president’s economic team, and has spoken with a dismissiveness and fervour often associated with totalitarian regimes. She seems inured to the political dangers an elected president must face if the political system were such that elections accurately and devastatingly conveyed our disapproval of government policies and actions.

But if the czarina is oblivious of the responsibility a president must show in using his massive powers, what of the president himself? Sadly, Jonathan has spoken and acted as if he was not elected, or that his bravery in office is directly proportional to the quantum of his disregard for our feelings and opposition to his policies. On both the fuel subsidy matter and the Sovereign Wealth Fund (SWF) issue, the president and his czarina have said the two are inescapable. There is no going back, they say.

However, the problems with subsidy removal are legion. Up till now there is still no statistical or econometrics model to show there is subsidy, quite apart from the question of whether it should be removed even if it existed. The president wants us to take his word for it that there is subsidy. We took his word during the elections and voted him into power, and see where it has got us. Since he and his economic team have no other plan to retool the economy, they are stuck on that dangerous illusion that once subsidy is removed or the downstream sector is deregulated, the economy would begin to recover. In their economics, however, while the subsidy removal is instantaneous, the safety nets or palliatives are projected for the medium run. Brilliant.

More appallingly, the Senate, in considering the president’s Medium Term Fiscal Frameworks, has begun to debate the subsidy issue. Newspapers report the debates as vigorous. Yet, the same Senate is still engaged in a productive probe of the subsidy issue, which is yet to be concluded. In fact, in the interim, the upper chamber has so far discovered that some of the companies involved in the fuel importation bazaar had no equipment to match what they claimed to have imported. Some of those companies, according to the Senate, were construction companies, not players in the oil sector. The Senate was beginning to find out how the number of players in the subsidy bazaar shot up astronomically from less than a dozen to over 100 in a few years, and how the quantity of fuel supposedly imported rose astronomically without a commensurate rise in consumption. It is, therefore, surprising that the Senate could not wait for its joint ad-hoc panel to finish its work before debating the issue of subsidy.

I am not fixated on whether subsidy is removed or retained. I am, however, interested in the following:
(1) It is not enough for the government to alarm us with calculations showing that over N3.5 trillion has been spent on subsidy since 2006, it must prove to us that we consumed a commensurate amount of fuel, and that its arithmetic is unimpeachable.

(2) The government has amateurishly given us what the benefit of subsidy removal would be. It should follow up by showing us truthfully and realistically what it believes would be the cost, and how that cost, which includes wages problem and prices movements, would be mitigated.       

I think the Jonathan government is the most insular Nigeria has ever had. The president does not seem to know so much about the economy, and he has saddled himself with an economic team headed by someone who believes she knows too much. They say that without their panacea the economy would collapse. Arrant nonsense. We hear such sentiments whenever fascists rise to power. This is supposed to be a democracy. If Jonathan and his team cannot operate a democracy and convince us about the issues we face, or persuade us about their solutions, they should step aside or be impeached. They were not elected to dictate to us, as they are doing unlawfully on the Sovereign Wealth Fund, or inflame us with horrors and blackmail us to the bargain, as they are doing on subsidy even while they accuse critics of trying to bring the government down.

We respect and honour the presidency, but we will neither be ruled by tin-pot messiahs nor surrender our sovereignty to those who choose not to know what democracy and leadership mean.

http://www.thenationonlineng.net/2011/index.php/columnist/sunday/idowu-akinlotan/29345-the-strange-economics-of-subsidy-removal.html

By Idowu Akinlotan

Again, as I have been saying, Mr Jonathan has to be very careful. It's obvious that the removal of the subsidy was not well-thought out. Roll-up your sleeves to tackle the problems before you remove the subsidy.

Governance is not for the weak or the lily-livered.

I'm worried after discovering there was no subsidy in the first place. You only remove subsidy when there is subsidy.