We all support Fuel Subsidy Removal but…You are still missing the Point
By Senator Iroegbu
We all support the removal of fuel subsidies, but it’s important to address some critical points that have been overlooked. The Nigerian government’s decision to end the fuel subsidy regime is not new, but the fact that the NNPC still controls the pricing raises questions. To understand the context, let’s take a brief look back at previous attempts, like the spirited efforts in 2012 under then President Goodluck Jonathan’s administration.
The previous administration of Muhammadu Buhari also claimed to have removed or partially removed subsidies, only for the nation to later discover the staggering amount of money paid to fuel marketers. What’s even more perplexing is that the reported fuel consumption doesn’t align with the actual consumption in Nigeria.
However, it is widely agreed that fuel subsidy is no longer sustainable, as acknowledged by major candidates in the last election, including Mr. Peter Obi and Alhaji Atiku Abubakar. The crucial issue since 2012 has been how to implement this policy without unnecessary hardship for the people and potential harm to the economy through inflation.
The then opposition figures, especially the arrowheads in the persons of Muhammadu Buhari and Bola Ahmed Tinubu, raised valid concerns about removing the subsidy without proper measures to mitigate its negative effects on the populace and the economy, as the reasons for the campaign of calumny against GEJ and Ngozi Okonjo-Iweala’s attempt. In addition, the timing of the 2012 announcement without prior notification or adequate enlightenment, created an unfortunate situation where people had incurred expenses during the yuletide season only to face a sudden 100% fuel price increase on New Year’s Day. This misstep damaged the credibility of the government’s efforts and provided ammunition for the opposition.
While the previous opposition’s stance against subsidy removal may not have been genuine, the issues they raised were valid. It is, however, disheartening that these same figures now have the opportunity to implement it better but seem to have failed spectacularly.
The argument then, and still relevant today, was that removing fuel subsidies without necessary steps to cushion the negative effects would be detrimental. Measures such as reviving refineries, building new ones, and improving mass transport, railway networks, and power generation could have alleviated the burden on the citizens. Unfortunately, despite significant budget allocations for refinery maintenance by the immediate past PMB administration, they remain in a worse state, indicating a lack of forward-thinking and a tendency to shift responsibility onto the citizenry.
Unlike other countries, Nigeria’s economy heavily relies on fuel, given the underdeveloped nature of our infrastructure. Our transportation system heavily depends on PMS, and our power generation is inadequate, leading to widespread generator usage. In contrast, advanced economies have multiple alternatives like rail, cable cars, trams, and bicycles, reducing the need for cars and PMS consumption. Our government’s failure to revive and expand our refineries to cater to domestic needs exacerbates the issue.
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Considering our low minimum wage and per capita income, coupled with the fact that we are an oil-producing nation, it becomes evident how the government has let down its citizens. The absence of designated bicycle tracks on major roads poses a challenge for cyclists, and the impact of fuel prices ripples through various sectors, from transportation to food and electricity.
While criticism has been directed towards the PBAT for implementing such a consequential policy without proper consultation and the absence of essential teams, we must acknowledge that the decision has been made. To salvage the situation, a phased removal of subsidies could be considered, alongside the implementation of cushioning measures. These measures should include developing infrastructure such as rail connections, bicycle tracks, refinery revival, and modular types, as well as improving mass transportation and minimum wage. By redirecting the funds saved from subsidy removal towards infrastructure development, a more sustainable and inclusive approach can be achieved.
It’s time for the government to act swiftly and rectify the shortcomings in its approach. Only through comprehensive measures and a focus on infrastructure development can we mitigate the negative effects and ensure a brighter future for our nation. This is a crucial moment for the government to prioritize the well-being of its citizens and demonstrate effective governance.
Implementing a phased removal of fuel subsidies would allow time to put in place the necessary infrastructure and support systems. Connecting all states and major cities with a reliable rail network would provide alternative transportation options and reduce the dependency on personal vehicles. Building dedicated bicycle tracks would encourage eco-friendly commuting and promote a healthier lifestyle.
Reviving and expanding our refineries, along with constructing modular types, would enhance our domestic fuel production capabilities. This would reduce our reliance on costly fuel imports and create job opportunities in the energy sector. Additionally, improving mass transportation systems, such as investing in buses and improving public transport routes, would ease the burden on commuters and lower transportation costs.
It is essential to address the issue of minimum wage. Our current minimum wage falls far below international standards, making it difficult for individuals and families to meet their basic needs. By increasing the minimum wage to a more reasonable level, the government can alleviate some of the financial strain on the citizens, ensuring a fairer distribution of resources.
Redirecting the funds saved from fuel subsidy removal towards infrastructure development is a strategic move that would have a lasting positive impact on the economy. By investing in infrastructure projects, the government can create jobs, stimulate economic growth, and improve the overall quality of life for Nigerians. This approach would enable us to transition to a more sustainable and diversified economy, reducing our dependence on fuel and fostering development in other sectors.
In conclusion, while the removal of fuel subsidies is a necessary step, it must be accompanied by a comprehensive plan that considers the welfare of the people and the long-term stability of the economy. The government should act swiftly to implement cushioning measures and prioritize infrastructure development to mitigate the negative effects of subsidy removal. By doing so, we can build a stronger and more prosperous Nigeria for generations to come.
Iroegbu, a journalist writes from Abuja
