LAST week, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said that the Federal Government would remove the controversial petrol subsidy before the end of President Muhammadu Buhari’s tenure on May 29. Speaking during a courtesy visit to the headquarters of the Voice of Nigeria (VON) in Abuja, the minister, who linked the delay in the removal of subsidy as provided for in the Petroleum Industry Act (PIA) 2021 to the 2023 general election and the forthcoming national population census, disclosed that the Federal Government was yet to reach a conclusion on how to mitigate the effects of the plan on Nigerians. As Nigerians are well aware, the PIA signed by President Buhari into law on August 16, 2021 provides for total deregulation of the downstream sector, which implies the removal of subsidy and the enthronement of a free market regime for the sector. However, in January 2022, the Federal Government deplored that section of the PIA and postponed subsidy removal to the end of June 2023, citing the pains it would cause poor and vulnerable Nigerians.
Ahmed said: “The fuel subsidy is one of those political, economic decisions that you don’t want to take, but you are stuck with them anyway. We have come to the point when almost everybody has agreed that this is really not serving the people that it is supposed to serve and the cost has become so high that it is adding to our deficit. And right now, we have an approval within the Appropriation Act to exit subsidy by June 2023. Or at least I can say that the Appropriation Act made provision that only allows subsidies up to June 2023. So, we have to find ways in which we have to remove the subsidy and allow the market to flourish. When you remove subsidy, then you have marketers that would be able to invest and bring this fuel product and sell it at market prices right now. And NNPC is the sole importer. The subsidy per litre now ranges from N350 to N400 per litre. Just imagine what you can do with N250 billion per month, because that is the average cost per month to the nation.”
To be sure, we are, in principle, not against the removal of subsidy. Evidently, there are some advantages attached to it, one of which is the opportunity for more investors to bring in the product into the country. Besides, subsidy removal will, ceteris paribus, make fuel readily available and allow competitive prices. But there are also demerits, with serious implications for the economy. Sadly, the government is trying to put the cart before the horse. Subsidy being about the only thing that Nigerians enjoy from their government, it is strange that the government is yet to decide what to do to ameliorate the pains that will come with its removal. In effect, the government’s approach is akin to laying landmines. It is hard to ignore the fact that for eight years, the government could neither build nor rehabilitate any of the existing oil refineries despite spending billions of scarce resources and paying redundant workers. We have addressed this wanton haemorrhage in previous editorials but the government has stuck to its guns, flushing humongous sums of money down the drain.
For a government that has been in office for the past eight years, it is a reflection of its utter tardiness, ineffectiveness and irresponsibility that it is on the eve of its departure from office, it is planning to take action on the vexed issue of petrol subsidy. Of course, it is true that removing fuel subsidy in a country where perhaps the only visible benefit the people derive from the government is the opportunity to buy petrol at prices lower than market rates would carry enormous political risks. Yet, it is the duty of government, in the final analysis, to address matters of public concern, taking into consideration the overall interest of the country. And this ought to have made the government to have a well-laid-out plan for addressing this vexed issue earlier in the course of its tenure rather than dumping such a volatile issue on the body politic at the very tail end of its tenure. This is sheer irresponsibility and speaks to how cavalier Nigeria’s ruling class has always been in administering the affairs of the country.
It is a no-brainer that the Federal Government’s decision to remove subsidy in May amounts to setting a booby trap for the incoming administration. It is a time bomb since nothing has been done to pave the way for a seamless process and implementation of such a critical and fundamental economic policy. What manner of government implements such a volatile policy on the eve of its exit from power? Why has the outgoing government failed to muster the political will to remove the subsidy on petrol before now? It is clear that there is nothing to put in place as a working plan for this kind of decision with less than three months left for the present government. This is an unfortunate step to take at this point and we expect the incoming government to immediately put a stop to the irresponsible decision to enable it to work out a more well-thought-out plan to address the issue of petrol subsidy.
