Last month, the government of the Federal Republic of Nigeria announced the removal of fuel subsidy, and an increase in the official fuel pump price from N86.5 to N145 per litre. Understandably, this was met with outcry from the masses, many of whom are currently experiencing untold hardship, owing to the deteriorating economy.

Unfortunately, this sort of hardship distorts people's vision from long term to short term. It seems the government is insensitive to the overall welfare of poor masses that voted them to power, because the removal of fuel subsidy would lead to more job losses, general increase in price of goods, weaker exchange rate, social tension, and a weaker economy. That said, the deregulation has its upsides including elimination of the corruption-ridden fuel subsidy, and encouragement of the establishment of local refineries by private investors going forward.

The principle of subsidy is easy; the government pays petroleum importers a certain amount per litre of fuel to reduce the fuel price for its citizens. For instance, if the landing cost of fuel calculated by the Petroleum Price Regulatory Agency (PPRA) is N145 per litre, the government subsidizes the cost per litre of fuel by setting the official pump price at N86.5 and paying the difference of N58.5 (N145 minus N86.5) to the petroleum importers/marketers. That N58.5 is the subsidy.

Understanding the terminology will enable you see areas in which greedy petroleum importers have become billionaires overnight. Let’s analyse these main questions:
What happens if a company imports, say, 50,000 metric tons of Premium Motor Spirit (PMS), otherwise called Petrol, but documents (in connivance with government officials) that they imported 70,000 metric tons?
What also happens if some of the subsidized fuel imported into Nigeria are smuggled out of our national borders and sold to neighbouring countries where fuel pump prices are way higher than our official (subsidized) price?
After you think about these questions, you will understand the need for subsidy removal. Several individuals and companies involved in the importation of fuel are absolutely greedy and corrupt. Many are wealthy today, and moving around freely even as they have robbed the nation blind under the helpless watch of Nigerian citizens and the corrupt eye of government officials.

Reverting to the questions above, importers of petrol connive with inspectors at Nigerian ports and pertinent regulatory agencies of the government to declare false quantities of their imports (petrol) (thereby making bogus subsidy claims) from the government and ripping the nation of billions of dollars. Also, another scenario was described by the Group Managing Director of NNPC (Doubling as the Minister of State for Petroleum), Dr. Emmanuel Ibe Kachikwu, in an article published in The Nation online, where petrol which has been subsidized by the government is illegally exported to, and sold in neighbouring countries like Benin, Chad and Cameroon. Both activities have depleted the nation’s accounts and enriched the pockets of a few while bringing suffering to the masses.

Undoubtedly, a new dawn has come, one which may seem unfavourable at the moment because of its immediate adverse effects. However, I believe there is light at the end of the tunnel and in the long run, even some of the most ardent critics of the current decision of Buhari administration will praise President Muhammadu Buhari for his uncommon courage.

More at: http:///4QW1J1

My joy is APC has finally seen what Oga Jona saw from time Imo River that subsidy is not sustainable