₦airaland Forum

Group Managing Director and Chief Executive Officer of Nigerian National Petroleum Company Limited, Malam Mele Kyari, said on November 23 that the Buhari regime will inflict yet another pain at the pump by jacking up petrol prices to N340 per liter in February 2022.

If this materializes, it would be the fourth time the regime has increased petrol prices in a five-year period. Every indication points to an irreversible resolve on the part of the regime to go through with the increase. The perennially predictable propaganda against “subsidy” has already started.

Whenever funds in the public trough that people in power steal from runs low, the default revenue-generation strategy they have is to increase the pump price of petrol and to justify it by rehashing the same old, trite, tired, banal emotional blackmail of the poor who will bear the brunt of their cruelty.

Since I came of age, governments have deployed the same pre-made rhetorical template to rationalize increases in fuel prices: subsidy is bad because it’s wasteful and benefit only fuel marketers; we need the money we save from removing fuel subsidy to invest in education and infrastructure for the greater good of everyone even when that never happens; Nigeria has the cheapest petrol price in Africa; because our petrol is the cheapest, it is smuggled to other parts of the continent, so we must increase petrol prices to stop this; we’ll come out with palliatives to ease the hurt that increases in fuel prices will exact on the poor.

These and many other rationalizations are, of course, bald-faced, self-contradictory, inane executive lies. As I’ve pointed out repeatedly, fuel price increases are not and have never been about “deregulation,” “subsidy removal,” “liberalization,” or such other empty but fashionable neo-liberal mumbo jumbo whose meanings the utterers themselves obviously don’t even understand.

In perhaps the only time he ever told the truth in his entire lifetime, Information Minister Lai Mohammed said in May 2016— in the aftermath of one of the steepest increases in fuel prices in Nigeria— that “The current problem is not really about subsidy removal. It is about the fact that Nigeria is broke. Pure and simple.”

When Nigerian political elites say Nigeria is “broke,” they often mean no more than that they don’t have enough to steal after paying measly salaries to workers.

The last time the Buhari regime increased fuel prices last year, it said it had completely done away with fuel subsidies and had left the price of petrol to the vagaries of demand and supply. Now, the regime’s honchos say again that the subsidy they said they’d completely removed, for which there was no allocation in the 2021 budget, must be removed again!

As compensation for removing a non-existent subsidy on petroleum, Finance Minister Zainab Shamsuna Ahmed said the government will pay a monthly transport bonus of 5,000 naira to 40 million Nigerians.

I am no mathematician, but even I can point out the mathematical absurdity of Mrs. Ahmed's proposal. If the government actually fulfills its promise (you can’t trust this compulsively mendacious regime to live up to any promises it makes) to give 5,000 naira monthly to 40 million Nigerians, it will be picking up a N200 billion monthly bill. That will add up to N2.4 trillion naira a year.

Now, consider that, according to an April 18, 2020 press statement by Senior Special Assistant to the President on Niger Delta Affairs, Senator Ita Enang, Nigeria spent “N1.5trn spent on fuel subsidy in 2019.”

Again, on July 1, 2021, Finance Minister Zainab Ahmed, according to TheCable, “subsidy gulps N150 billion every month.” N150 billion is still less than the N200 billion monthly transport bonus bill the regime will pay to 400 million Nigerians.

In other words, Nigeria will spend more money on transport bonus to an amorphous, unidentifiable, and probably cooked-up 40 million poor Nigerians than the subsidies it says it pays on petroleum subsidies, which it says are too expensive to be sustainable. That makes absolutely no sense.

Also thanks to Buhari’s infernal incompetence, Nigeria overtook Indian “as the country with the most people living in extreme poverty.” By many accounts, up to 100 million Nigerians live in abject poverty. By what logic did the regime decide that only 40 million people will need to be shielded from the consequences of the cruelty it will inflict on Nigerians in February 2022?

And, in the aftermath of the inflationary conflagration that a petrol price hike will ignite, how much help will N5,000 render to anyone in a month? N5,000 is currently useless in Nigeria. Imagine how much more useless it will be in 2022 after the prices of everything go through the roof.

In any case, the Senate revealed on Thursday that there is no provision for a N2.4 trillion-naira transport bonus in the 2022 budget. So, this is probably another scam. Well, since the regime won’t stop its sterile propaganda to justify its asphyxiation of the poor through unjustified petrol price hikes, I won’t be tired of repeating what I’ve written in the past in response to their lies.

Petrol is the engine of the Nigerian economy in ways it is not elsewhere. When the price of petrol goes up in Nigeria, everything else goes up except the already measly salaries of everyday people. This is not the case in many countries. So, you can’t just arbitrarily jack up petrol prices and ignore its other unsettling effects on other facets of the society.

A way bigger waste than the “waste” of petrol subsidy is the humongous amounts we expend monthly to subsidize the obscene opulence that Nigeria’s political elite from the president down to a councilor luxuriate in. Nigerian political elites are some of the most remunerated elites in the world. They even earn more perks than their American counterparts. But no one is talking about this subsidy.Only the comparatively miserly “subsidy” that makes life just a little easier for the common people is subject to scrutiny.

The canard about why the fraud in the oil subsidy regime justifies its discontinuance is disingenuous. It's the government's responsibility to catch and stop the fraud. If it can’t fix something as basic as fuel subsidy fraud with all the powers and resources at its disposal, the government has no reason to exist. It has no business being in the business of governance. It is conscienceless to transfer the burden of government’s incompetence to the masses who are already reeling under the weight of an unbearably crushing existential misery.

Every responsible government in the world subsidizes the products its citizens use to survive. State govts in America collectively spend $10 billion to subsidize the fuel consumption of their citizens. The Biden administration just ordered the release of emergency oil reserves in its bid to bring down the prices of petrol, which have gone up in the last few months.

The American government also spends $20 billion every year to subsidize agriculture in what is called "farm income stabilization." That’s why food is dirt cheap in America. And we are talking of the world’s wealthiest country. If anyone tells you America doesn’t subsidize the fuel consumption of its citizens, stare him straight in the face and call him or her a fraud without blinking!

Subsidy isn’t just a moral imperative; it’s also an existential imperative. If people are left to grapple with the smoldering violence of unchecked capitalism, they will either die off (if they are stupid and docile) or revolt against the source of their misery (if they are smart and active). There is no middle ground.

Nigeria has one of the lowest and most stagnant wages on earth. A further increase in petrol prices, which will add more fuel to the inflationary fire that is already burning Nigeria to the ground, will only deepen the misery and torment that everyday Nigerians are going through.

What is the benefit in being an oil-producing country if the money that accrues to Nigeria from oil merely subsidizes the epicurean pleasures of the elite while the poor are metaphorically forced to hold cream on their hands while their faces are dry? I would be at peace if Nigerians pay high prices for petrol like our neighbors because we don’t have it.

If Nigerians choose to accept this with listless abandon, it’s their choice. In any case, labor, which used to fight price hikes, has been dead like a dodo since the Buhari regime came on board. Labor activists are now safely ensconced in the filthy pockets of the government.

I only worry for the millions of people who have no alternative, who live on less than $1 a day, who literally vegetate on the very edge of existence, who will be consumed by the hyperinflationary inferno that is sure to follow the impending cruelly insensate punishment of the masses.

Would you rather buy petrol at the market price — currently about N264/litre — but get quality healthcare and education in return? Or would you prefer to keep buying subsidised petrol — currently at N162/litre — but our public hospitals and schools will remain abysmal? This is the perennial predicament presented to Nigerians for the past three decades since the fierce argument over fuel subsidy began. From the days of Gen Ibrahim Babangida as military president, the subsidy debate, framed in different ways, has always been a source of fiery relationship between the government and the people. It has led to strikes, protests, riots and killings at various points.

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I would love to enjoy the best of both worlds, so why should it be an either/or question? I would say I want to buy petrol at N162/litre and, at the same time, get quality education and fantastic healthcare. I want government-owned schools in Nigeria to be as good as state schools in the UK when it comes to modern classroom infrastructure and excellent instruction — and for free. I want government-owned hospitals to have the best of qualified and motivated doctors and other personnel, as well as the most modern of medical equipment, super-adequate hospital beds, and the best of care — topped up with free consultation, free treatment, free surgery and free drugs.

But there are serious problems with my choice because they are based on some outrageous assumptions. One, I am assuming that Nigeria is “rich” and, therefore, has enough money to fund petrol subsidy and still offer excellent healthcare and education to hundreds of millions of its citizens. I am ignoring the fact that the country now services its debts with over 90% of its revenue and is running on empty. Two, I am assuming that it is my birth right to buy cheaper fuel because Nigeria is an oil-rich country. That is why I think I should buy petrol at a price that is lower than what obtains in other countries, even though I bought my car at a price that was not subsidised.

On the other hand, if I argue that I should buy petrol at N264/litre and then begin to enjoy world-class healthcare and education for little or nothing, I am also making many ambitious assumptions. One, I am assuming that the money that would have been saved this year would have been spent by the government (federal and state) to improve social services. From experience, the money is more likely to go into building ultra-modern governor’s lodges and constructing airports than go into improving healthcare and education. Two, I am assuming that the government even has the capacity and the will to manage social services in a way that would be beneficial to the people on the streets.


Yet, the fuel subsidy burden is no longer a joke. According to analysts, the bill would likely hit N2tr by the end of 2021 as crude oil prices keep going up. NNPC says we are consuming 60m litres per day. The higher the crude oil price, the higher the petrol subsidy. We must have spent over N10tr on petrol subsidy in the last 10 years and I cannot say our lives have been bettered by that. Nigeria is practically bankrupt. At this rate, states may go to FAAC meeting one day and come back in tears. All kinds of ailments are surrounding us at the same time: low oil revenues, low FX inflow, high debts and a monumental subsidy bill. In the meantime, economic productivity is hampered by insecurity.

Why are oil subsidies bad economics?
Every year, the Nigerian government runs huge budget deficits that could have been avoided if money budgeted for oil subsidies was allocated to other critical projects.

Subsidies should be used to spur investment in activities that raise the productive capacities of an economy (such as education, health, entrepreneurship, and infrastructure). They should be targeted at strategic sectors of the economy. They should not be used to finance non-durable consumption items like petrol.

Oil subsidies are inequitable, as they transfer the national wealth to those who own several cars and add little or no value to the national economy

poiZon:
All those who r saying fuel subsidy have to go are just the fortunate ones and think their riches will hide and guard them from the sufferings ahead.
Unless they will all relocate to nexus or mars while earning and working in Nigeria.
U can't escape the impending disaster that lies ahead even with ur enormous wealth, the beggings from poor families and the criminals that will be unleashed by this simple feat.

backbencher:
On the other hand, the continued spending on the fuel subsidy is going to

1.Drive us into more and more debt as we keep spending more on subsidy to keep up with rising costs of keeping prices low

2.Worsen the value of the naira, and overall inflation because of us using our forex from oil revenue to spend more and more on subsides

3.Not allow enough of a profit to be made to build refineries, and so on and do forth...anbd stifle investment...which means less and less chances of jobs being created.

If we want more money for subsides, we got to do as developed countries do and fund it from taxes. Meaning we have to tax everyone and everyone to raise the money.

It is going to be a harsh few years, but hopefully the benefits will kick in.Either we remove fuel subsidy now, or get into more and more debt, until the economy collapses under its weight. You won't want that.If we want subsides for petrol, then we all, including the poor, would have to pay taxes to pay for it

backbencher:
On the other hand, the continued spending on the fuel subsidy is going to

1.Drive us into more and more debt as we keep spending more on subsidy to keep up with rising costs of keeping prices low

So spending 2.4T naira to augment the subsidy removal which on a average isn't up to 2T naira yearly won't compound our debts abi?

2.Worsen the value of the naira, and overall inflation because of us using our forex from oil revenue to spend more and more on subsides


So far we r importing fuel from other countries using dollars, our naira value will continually be worthless.
Stopping subsidy won't, i repeat will never make our naira strong.

3.Not allow enough of a profit to be made to build refineries, and so on and do forth...anbd stifle investment...which means less and less chances of jobs being created.

This notion and conjectures is one of the most absurd reasons they always make...
So dangote that is building refinery, will it be at a loss for him?


If we want more money for subsides, we got to do as developed countries do and fund it from taxes. Meaning we have to tax everyone and everyone to raise the money.

It is going to be a harsh few years, but hopefully the benefits will kick in.


Either we remove fuel subsidy now, or get into more and more debt, until the economy collapses under its weight. You won't want that.

If we want subsides for petrol, then we all, including the poor, would have to pay taxes to pay for it

Racoon:
The last time the Buhari regime increased fuel prices last year, it said it had completely done away with fuel subsidies and had left the price of petrol to the vagaries of demand and supply. Now, the regime’s honchos say again that the subsidy they said they’d completely removed, for which there was no allocation in the 2021 budget, must be removed again!
https://gazettengr.com/farooq-kperogi-same-old-cruel-lies-to-justify-fuel-price-hike/

I have NEVER seen a government that tell lies like this Buhari's regime!

No shame! No integrity, no good managerial skills just total chaos and disaster! Robing citizens in broad day light!

No wonder his signature reeks of poverty

Later, he will be blaming middlemen upandan!

Spits

Will Nigeria ever recover

poiZon:
So spending 2.4T naira to augment the subsidy removal which on a average isn't up to 2T naira yearly won't compound our debts abi?

So far we r importing fuel from other countries using dollars, our naira value will continually be worthless.
Stopping subsidy won't, i repeat will never make our naira strong

This notion and conjectures is one of the most absurd reasons they always make...
So dangote that is building refinery, will it be at a loss for him?

If u check every political office holder their pay package, u won't be asking or suggesting the poors to be taxed.
What tax will the poor, unemployed pay?
Outside the taxes they pay in using essential and basic ammenities?
Can u mention the tax they should pay again?

Racoon:
This fuel subsidy issue would have long been a forgotten thing were the hypocrites in government today never sabotaged it in the past even calling it a scam.

FallenShitHole:
Don't trust any fulani that is writing any article against buhari and his government. Farook Kperugi is not an exception. All fulanis are the same in their game of destruction of nigeria. Aisha yesufu, the fulani woman from Auchi is part of them.
They shared themselves between critics and loyalists. The critics are the ones to confuse you into thinking that fulani still has anything to offer you. Those people are brainless and have only destruction in their brain wherever they migrate to. Check their history in all African countries where they settled. They bring in only destruction.

backbencher:
Newsflash...we have reached the 2.4 trillion mark this year...and it is going to increase next year. Plus we have spent 10 trillion on subsides over the last 10 years.

Keep in mind that a subsidy is the money paid to compensate the petroleum industry for selling fuel at a loss. If it cost N200 to produce a liter of fuel (hypothetical example) in Nigeria in a certain year, and government forces it to be sold at N160 per liter...that's a loss of N40 per liter sold...and government pays subsidy of say N40 to compensate for the loss.

THis means that profits cannot be made, because for a profit to be made, fuel has to be sold above the cost it takes to make it.

Then the cost of production is also rising because of rising maintenance costs, rising salaries, inflation, etc etic.

That's why subsides are rising.


It won't make our naira a strong currency now now...but it would

1.Reduce the amount of forex earned from oil we spend on paying subsidy...naira goes up due to forex being freed up.

2.Attract more investment into domestic refining, and the fuel industry...since profits can now be made in the fuel industry thanks to no subsidies, and crucially no price controls..



Assuming Dangote has to spend N250 to refine one liter of fuel, and we insist on him selling that fuel at N145 or even at N40 in the name of subsidy to help the poor...yes.

Poor profits= no money for refinery repairs, and refinery upgrades= loss of jobs, loss of income-= refienries collapsing and back to imports. We were here before with the NNPC refienreis, where IBB stopped TAM to save costs on subsides. Big mistake.




Note I said everyone would have to pay a tax, and that includes the rich and corrupt politicians and they most likely would have to pay higher than the poor.

That's the only way we can fund subsides for all...short of oil being above $130 per barrel from this week till perpetuity.

poiZon:
U r just blabbing buharinomics...

How many times will buhari's govt remove subsidy from fuel?
I thought buhari said subsidy is a scam, that it is just an invention by Gej to steal money. What changed?
We r paying more for fuel today because of buhari's poor handling of economy and forex.
Crude price is down, less than 80dolls, fuel should be less than 80naira a litre.
But we pay more cos of scarce forex...
Lemme educate u how subsidy works, fg thru nnpc buys fuel, they pay in dolls, since they r exposed to cheap forex, they bring it, they sell it at the price range set up by pppra. They bare the lost incured from what they sell.
For now there is no subsidy, they called it underrecovery...
Once they end subsidy regime, they will still buy the exact litres consumed by Nigerians currently which is 60million litres, the only difference here is they will make profit cos they r now doing business. No price regulation.
They profit made will be in naira and not in dolls.
The excess profits now goes to federation account which is own by the entire 36states and fg.
They share it and governors will always mismanage it.
That profit isnt going into a special account for development or buildng of new refinery, but will be shared amongst the 36states.
At the end we will all be left with nothing.
States governors will have more funds to loot, no salary increment, we that r jobless we will still be buying from the same markets that salary earners r buying from.
At the end i don't benefit, u don't benefit, the only people that benefits are the governors and ministers plus senators.

backbencher:
This is not buharinomics and you are making the same arguments that people opposed to subsidy removal have made over the years, especially in 2012 by buhari and company.

And that is why it hasn't gone and why we keep on getting into debt.

I am not a buhari supporter and never will be. I woke up in 2012 to how subsidy was damaging our economy. What you see here is the result of ten years of reading and thinking about the issue. Before 2012 I was pro subsidy.

You politicians should wake up and realize that everything is not buhari Vs PDP.

Anyway good evening.

I suggest you read Simon Kolawole's article The fuel subsidy dilemma for more detail on why subsidies are bad.

Again my support for subsidy removal has nothing to do with buhari and it is annoying me when people like you think it does. In 2012 I yhought that the people opposing subsidy removal were wrong based on my change of mind then. I still think they were wrong.


And yes it bothers me that removing the fuel subsidy is going to cause a lot of problems. Lord knows it upsets me. But keeping it is going to cause more problems long term too.

backbencher:
On the other hand, the continued spending on the fuel subsidy is going to

1.Drive us into more and more debt as we keep spending more on subsidy to keep up with rising costs of keeping prices low

2.Worsen the value of the naira, and overall inflation because of us using our forex from oil revenue to spend more and more on subsides

3.Not allow enough of a profit to be made to build refineries, and so on and do forth...anbd stifle investment...which means less and less chances of jobs being created.

If we want more money for subsides, we got to do as developed countries do and fund it from taxes. Meaning we have to tax everyone and everyone to raise the money.

It is going to be a harsh few years, but hopefully the benefits will kick in.

Either we remove fuel subsidy now, or get into more and more debt, until the economy collapses under its weight. You won't want that.

If we want subsides for petrol, then we all, including the poor, would have to pay taxes to pay for it

udemzyudex:
So borrowing from China will no drive us into debt, oga if you have nothing reasonable to post just read and move on.

Just look at the nonsense you posted naa, did you even bother to read it?

Rexwalters1:
Who said this Urhobo man is Fulani, is Muhammed Ali Fulani?

Subsidy gulps N150 billion every month.” N150 billion is still less than the N200 billion monthly transport bonus bill the regime will pay to 400 million Nigerians. In other words, Nigeria will spend more money on transport bonus to an amorphous, unidentifiable, and probably cooked-up 40 million poor Nigerians than the subsidies it says it pays on petroleum subsidies, which it says are too expensive to be sustainable. That makes absolutely no sense.

The last time the Buhari regime increased fuel prices last year, it said it had completely done away with fuel subsidies and had left the price of petrol to the vagaries of demand and supply. Now, the regime’s honchos say again that the subsidy they said they’d completely removed, for which there was no allocation in the 2021 budget, must be removed again! ....."

On the other hand, the continued spending on the fuel subsidy is going to

1.Drive us into more and more debt as we keep spending more on subsidy to keep up with rising costs of keeping prices low

2.Worsen the value of the naira, and overall inflation because of us using our forex from oil revenue to spend more and more on subsides

3.Not allow enough of a profit to be made to build refineries, and so on and do forth...anbd stifle investment...which means less and less chances of jobs being created.

If we want more money for subsides, we got to do as developed countries do and fund it from taxes. Meaning we have to tax everyone and everyone to raise the money.

It is going to be a harsh few years, but hopefully the benefits will kick in.

Either we remove fuel subsidy now, or get into more and more debt, until the economy collapses under its weight. You won't want that.

If we want subsides for petrol, then we all, including the poor, would have to pay taxes to pay for it