THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency (Part 1)

NOTE: This work is a series divided into 3 parts that will God’s grace be covered over the next 8 weeks.

I enjoin you (readers) to get yourselves locked on to this blog in due course over the next 8 weeks to see the subsequent and then concluding part of this work.

Thank you for taking out time to read through.

Introduction

Over the years, the government of Nigeria at the federal level has been known for carrying out actions unscrupulously. This have been due to the insensitive nature and approach to governance; the looming rate of corruption that its booming pace is one that could perhaps be compared to the speed of light and lastly I must add; the fact that Nigerians have always been perceived as the happiest people on the face of the earth, this however is a disclosure made by the BBC.

But irrespective of Nigerians being widely known for their “suffering and smiling” traits, the removal of subsidy on Petroleum by President Goodluck Jonathan on 1, January 2012 was indeed an act of negligence by the current popularly elected President on the plight of the citizens of Nigeria whom did not accept such an action this time with the usual act of perseverance or as Nigerians say in pidgin English “it go better” in order to exhibit an indestructible sense and act of optimism even when things really are not imminent to be better; but as against all these a counter response was ensued by the lot of Nigerians, a retort that took the Nigerian Federal Government by storm.

However, on Monday, 9, January, 2012 the convergence of Nigerians in every nook and crannies of the country irrespective of one’s culture, occupation, economic class and religions in their hundreds of thousands were for two reasons;

1. To speak against the ill- increment in the pump price of Premium Motor Spirit (PMS) from N65 to N 141 representing an increase of 116.92% which indeed is an iniquitous New year gift by a government that supposedly cares for the plights of its people which according to wikipedia.org comprises 64.4 and 83.9 percent of its population living under $1.25 and 2 per day respectively, thus the international poverty line.

2. To protest against the frivolous expenditures in and by a government that is rich in corruption.

This however was evident from the hundreds of thousands of Nigerians that trooped majority of the states across the federation in their battalions in protest of the “best” New Year gift Nigerians never expected.

Most notable of these gathering is the one at the Gani Fawehinmi Park, added to the mass protest that transpired across the federation.

This expression of discontent by Nigerians at refusing to accept the presidential New Year gift was at its best between January 9 and 13 not until the early hours of Monday, January. 16 2012 when the Federal government employed a dictatorial approach to suppressing the protest via the deployment of Army personnel armed to the teeth with guns, Armoured Personnel Carriers (APC) which indeed achieved the objective of squashing the protest and limiting its effectiveness via their presence.

That said, this work will focus on the issue of fuel subsidy, encompassing what really is fuel subsidy, the genesis of fuel subsidy in Nigeria, added to a handful of issues with respect to oil being the mainstay of the Nigerian economy and the need for the government to earnestly and prayerfully seek for wisdom at governing the nation through a proactively unprecedented approach and not the words of futility that she has been known to elucidate over the years.

At this juncture, due to the unrepentantly unprecedented failure of the Nigerian government in governance over the years, the words of the Nigerian government can be likened to an individual brushing his or her teeth with just the bristles of his tooth brush without the usage of toothpaste.

The History of Fuel Subsidy Removal in Nigerian

The incessant impenitent removal of subsidy on Premium Motor Spirit; popularly referred to as petrol, by the Federal Government of Nigeria over the years is a debate that will never, pending the incompetency of the Federal to utterly refine its crude oil for local consumption. With regards to the debate earlier mentioned, this is due to the verity that some Nigerians believe that in the first place there was never a subsidy on petrol which negates the stance of the government over the years on its inclusion.

According to the Punch Newspapers, the most widely read Newspapers in Nigeria, 1978 is the first of the increase series in the price of petroleum produce when Gen Olusegun Obasanjo (rtd) increased the price from 8.4 kobo per litre (l) to 15.37kobo per litre (l). Later in 1982, the Government of Shehu Shagari increased the price from 15.37 kobo to 20kobo; then Ibrahim Babangida on March 31, 1986 increased the price to 39.5kobo and later on April 10, 1988, it was further increased to 42kobo per litre with the imposition of a price differential for private cars on 1 January, 1989, in which the private car owners had to pay much more at the rate of 60kobo as against 42kobo paid by the commercial vehicles.

Further to this, on March 6, 1991, the price was increased from 60 kobo to 70kobo and on November 8, 1993, it was raised by a galloping price of N 4:30k/ l to N5:00/l. This represented a percentage increase of 614.3%, a careless, though selfish action by the government that is largely responsible for the high galloping rate of inflation that has been a drawback to the economic advancement of Nigeria.   

But on November 22, 1993 amid wild protest, it was dropped to N 3:25k/ l.

However, barely a year after this drop, precisely on 2 October, 1994, it was jacked up to N 15:00/ l but reduced 2days later to N 11:00/ l.

At this point, one would have expected that the heave to the price of fuel would have stopped but indeed, it had just begun.

On December 20, 1998, it was increased to N 25:00/ l and barely a month later on January 6, 1999, there was a reduction of N 5 to N 20:00/ l.

Also on June 1, 2000 petrol price was increased to N 30:00/ l and again reduced to N 25:00/ l one week afterwards.  Then 5 days later on June 13, 2000, the price was further reduced to N 22:00/ l.

However, on January 1, 2002, it went from N 22:00/ l to N 26:00/ l and N 40/ l the following year on June 23, 2003, then later to N 70/l in June 2009.

Though not documented in the source to this history it is pertinent to note that the rate was later dropped to N 65/l, before the most recent increment to 141/l which was later dropped to N 97/l on Monday 16, January, 2012 representing a 31.2% percent fall from the initial 117% increase.

However, the outrage that began on Monday, 9 January, 2012 by majority of Nigerians was widely attributed to the wrong timing by the president on the removal of fuel subsidy due to the fact that the act was implemented prior to widely the expected date of April.

In defense to this account, the government over the years have come up with all sorts of measures, sweet words and promises targeted at making Nigerians perceive such acts as credible with effective long-run impact on the National and individual economy but sadly, in most cases they were futile and unproductive. Most notable is the Petroleum Trust Fund founded during the General Sanni Abacha era which had the primary motive of distributing the gains from the increase in petrol courtesy the removal or better put, the reduction of subsidy on it into the provision of infrastructural facilities.

This indeed broadly speaking is very synonymous with the Subsidy Reinvestment and Empowerment Programme (SURE) by the current government of Goodluck Jonathan aka G.E.J.

That said, the formation of the latter agency indeed does affirm to what I will dub “the misplacement of an efficient approach to the continuity in government policies by the Nigerian government over the years” which however has been palpable due to the bizarre lack of continuity and failure of proceeding government to continue or at best, build on the implementation of “awesome projects” by preceding government.

To the best of my knowledge, this exclusively entails that every new government feels working on innovations by its predecessor is a mark of lack of creativity by it “current government in power”. In this realm, rather than build on innovative and economically advantageous projects, different governments over the years have come up with their own ideas that most times lack pedigree and the right impact it is meant to have on the people which contravenes the fact that continuity is key.

As against these years of subsidy removal from PMS, complemented by an increase in the price of the aforesaid product, Professor Tam David-West during an interview he had with the Punch Newspapers on Tuesday, January 17, 2012 was of the opinion that subsidy never and does not exist but it is a fraudulent act by the government over the years on its citizenry due to the government’s deliberate act of sabotaging the refineries thereby fraudulently importing oil with its accomplice “the so called cabals” identified by President Goodluck Jonathan.

Professor Tam David-West also pointed out that having carried out a self investigation on all the four refineries, he was appalled to have noted that the government was fond of simultaneously carrying out routine maintenance on all four refineries, an act I perceive to be a very carelessly nonsensical act by the government. He went further by relating this to a company having only four vehicles and carrying out routine maintenance on all four vehicles at the same time. This as expected which would slow down the production process of this firm, heading the firm to a downturn, an instance that is synonymous with the aforementioned with respect to the oil sector of the Nigeria, the reason Nigeria is economically worse off today, fifty-one years after independence in 1960.  

Fuel subsidy on PMS in Nigeria being in existence or not as earlier talked about is a mirage that has got divergent views tarrying infinitely at a level that its extinction is limited to one thing, the construction of refineries to meet the local consumption and export needs of Nigeria.

An efficient government is the only key to putting an end to the gimmicks by the governments’ government as prevalent in Nigeria as against the people’s government that is a mark of an effective government in well run countries of the world.

Sources:

• http:// nationalaccordnewspaper.com/index.php?option=com_content&view=article&id=4259:history-of-protests-against-subsidy-removal-&catid=41:viewpoint&Itemid=77 “History of protests against subsidy removal”

• http:// www.thehappinessshow.com/HappiestCountries.htm “The World’s Happiest Countries”

• www.news.bbc.co.uk/2/hi/3157570.stm  Nigeria tops happiness survey  

• en.m.wikipedia.org/wiki/List_of_countries_by_percentage_of_population_living_in_poverty  “List of countries by percentage of population living in poverty

• The Prof. Tam David-West Interview, (17 January, 2012). “Govt can’t punish Nigerians for its inefficiency”.The Punch(Lagos) (Punch Nigeria Limited)

Please watch out for part 2 of this series. Thank you!