Subsidy removal: Coming full circle

In January of 2012, I watched with dismay as the labour unions, youth groups and civil society groups shut down the country in protest over the government’s deregulation of the downstream sector and the removal of subsidy on petrol. What started as mere protests by the youth caught fire and became a popular movement that almost brought down the government of the day. Despite the rationalisations of some of the protest leaders, it was apparent Nigerians were resolutely against the removal of the subsidy on petrol.

But I just could not see the sense in the protests/strikes. In 2011 alone, about N1.5 trillion ($9.3 billion) was spent on subsidising imported refined petrol. This represented about 30 percent of Nigeria’s government’s expenditure, 4 percent of GDP and 118 percent of the capital budget. In comparison, Nigeria’s education, health and works/roads’ budget for 2011 was just a mere $2.2 billion; $1.32 billion and $680 million respectively. This is besides the obvious fact that Nigeria was exporting its jobs and what it does not have while importing what it has.

How could any right- thinking government accept this nature of expenditure? It was quite clear to me then that the government was right in wanting to do away with the subsidy regime so as to free up such huge funds for other priority areas like education, health, infrastructure, and security among others. Besides, the removal of subsidy will ultimately lead to private investments in refineries that will obviate the need to spend hard-earned foreign exchange on importing petrol. The later revelations that the subsidy regime was riddled with fraud were all the more reason why I thought it should go.

What was more; evidence from other climes then showed that removal of subsidy on petrol was a global trend. It happened even in Ghana under late President John Atta Mills, who came to power on the strength of his virulent criticism of the Kuffor administration for daring to remove part of the subsidy on fuel. Atta Mills had to finally accept the inevitable and end the subsidy regime arguing with all humility that “subsiding fuel is not sustainable, and removing it is the right thing to do, so we can sustain our fiscal consolidation”.

But not in Nigeria! Buoyed by a sense of entitlement, Nigerians felt they should not be paying much for fuel and that it is part of the benefits they should enjoy since their country produces oil. And since it sold the cheapest fuel in West Africa and amongst its neighbours, those countries stopped spending their foreign exchanges to import fuel altogether and depended on Nigerian marketers who are all too willing to claim subsidy on importer petrol in Nigeria and divert the same to those countries and make huge profits.

But arguing for subsidy removal wasn’t a popular position to hold in Nigeria in January of 2012. Some of us who did were called names and I was even labelled a traitor by my close friends. Perhaps that is why thought leaders, prominent citizens and academics decided to bury their heads in the sand with some hypocritically claiming to side with the people when it was clear the people were being seduced into demonstrating against their true interest.

Organised labour on its part was only interested in protecting its interests – which is better served by government regulation of the industry so it can retain the privilege of protesting and going on strike anytime an increase in the price of petrol is announced. That was how they seduced late president Yar’adua into revoking the sale of 51 percent equity stakes in the Port Harcourt and Kaduna refineries to the Bluestar Consortium Limited for a princely sum of $721 million promising him, together with the NNPC, that the NNPC was capable of turning around the fortunes of the refineries to make them functional at 100 percent capacity within months. Of course, the refineries now produce nothing but the country still spends a princely N120 billion annually to maintain them.

Much more shameful however was the behaviour of opposition politicians who saw the protests/strike only through the prism of their ambitions. From Bola Tinubu to Muhammadu Buhari, they were vociferous against the removal of subsidy by the Jonathan administration. They not only fuelled the protests by concocting figures and arguments to show that there was nothing like subsidy and petrol should actually be selling below N45/litre, they actively participated in the protests and did all they could to weaken the government of the day and get it toppled through popular revolt. Of course, Jonathan was overwhelmed and had to give in and reinstate the subsidy.

By 2015 when the opposition came to power, it was confronted by the subsidy regime they vociferously defended in 2012. Going by their utterances before coming to power, many Nigerians were even expecting the president to reduce the price of petrol upon coming to power.

Sadly that hasn’t happened. During the recession in 2016/2017, the government increased the price of petrol to N145/litre. Still, spending on subsidies continued. Now the country is flat broke and can no longer afford to continue the irrational subsidy regime, the government has done the only rational thing left – which is to do away with the subsidy.

But for me, the most shameful aspect of the subsidy removal is the positive spin the government is trying to put to it. Some days back, the Senior Special Assistant to the President on Media and Publicity, Garba Shehu came out to offer a dishonest statement to the effect that successive administrations have lacked the courage to remove the fuel subsidy. Ordinarily, I do not rate someone like Garba Shehu whose only preoccupation appears to be serving any government or politician in power since 2003, but since he spoke for the president, it is good to remind them that they were to a large extent responsible for thwarting the efforts to remove the fuel subsidy in 2011.

It is truly interesting to see a Lai Mohammed and other All Progressives Party apparatchiks that were vociferous against the removal of subsidy now arguing to justify its removal. One cannot say whether they were recent converts to the subsidy removal school or had all along known the truth but choose to play politics with the issue. For the hapless masses, the civil society and youth groups that were used against their interests, the reality will now begin to hit home.

There is however, one more subsidy that needs to go – the foreign exchange subsidy. This has now supplanted fuel subsidy as the largest source of corruption and pilfering of scarce natural resources.

It is truly interesting to see a Lai Mohammed and other All Progressives Party apparatchiks that were vociferous against the removal of subsidy now arguing to justify its removal. One cannot say whether they were recent converts to the subsidy removal school or had all along known the truth but choose to play politics with the issue