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The Opportunity Cost Of Fuel Subsidy Is Stunted National Growth: - Politics - Nairaland

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The Opportunity Cost Of Fuel Subsidy Is Stunted National Growth: by Horlawale1(m): 4:11pm On May 15, 2016
Even though most people oppose GEJ back then in 2012 due to ignorance and sentiment however I think this is the time for us to get it right once and for all.


In 2013 Alhaji Aliko Dangote, the Chairman of the Dangote Group approached the CBN to indicate their interest to invest in refining crude, such that petrol-chemicals, fertiliser and fuel shall be produced locally in Nigeria.

The three projects, which are valued at $14 billion (N2.8 trillion), are on course and will commence commercial operation early in 2018.

The refinery located within the Lekki Free Trade Zone in Lagos is projected to refine 650,000 barrels of crude oil per day.

The Dangote Group is set to unveil the world’s largest refinery which will make Nigeria self-sufficient in petroleum products refining and also become a major exporter of oil.

This project will mark a turning point in Nigeria’s search for local refining of crude oil.

The fertiliser production aspect of the refinery would be completed by 2017.

The time frame for the completion of the Dangote refinery from start to finish is estimated to be five (5) years. And the cost of building the refinery is $14 billion or N2.8 trillion.

The irony is that in 2013 when President Goodluck Jonathan performed the ground breaking ceremony for construction work to begin at the $14 billion ( N2.8 trillion) Dangote refinery, the Federal government spent N2.7 trillion on fuel subsidy alone.

This was the highest fuel subsidy bill in the history of Nigeria, as it rose astronomically from about N356 billion in 2010 to about N2.7 trillion in 2013 under President Goodluck Jonathan.

The administration’s attempt to cut fuel subsidy in January 2012 resulted in a nationwide crisis that crippled the country's economy for one week.

Moving on, the Goodluck Jonathan administration incurred over N2.5 trillion in 2014 and 2015 as fuel subsidy bill.

If we assumed that the country incurred a subsidy bill of about N300 billion annually from 1999 to 2010, this will amount to a cumulative of about N3.3 trillion in eleven years of civilian rule.

From the above analysis, it can be inferred that Goodluck Jonathan administration alone spent in 5 years, twice the amount of money that Obasanjo and Yar Adua jointly incurred as bill for fuel subsidy, in 11 years.

Now here is the thing:

Dangote is building a refinery complex that will refine crude oil, petrol-chemicals and fertiliser with N2.7 trillion for local consumption and export, under five years. Whereas the federal government in 16 years spent about N10 trillion to subsidise consumption via fuel subsidy. This is excluding the multi billions that was spent on turn-around maintenance of the Port Harcourt, Warri and Kaduna refineries which till date are still operating at about 30% efficiency and installed capacity.

Does this make sense?

If it doesn't make sense, then let's embark on the long journey of #change to the naspiritual Nirvana, where perfect happiness is guaranteed with no suffering, in a land with milk and honey that overflows........



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