Welfare Of Nigerians And Politics Of Fuel Subsidy

 By Adekunle Adekoya

Again, the matter of fuel subsidy has dominated national discourse in the last few days, with President Bola Tinubu, former vice-president and ADC presidential candidate, Alhaji Atiku Abubakar, NDC presidential candidate Mr Peter Obi and a host of others have had not a little to say about the issue.

The matter was reignited when Alhaji Atiku Abubakar said that if he should be elected, he would return subsidy on fuel energy. Expectedly, presidency officials descended on him, and in the exchanges that followed, harsh, near-uncivil words were used. The exchanges went as far as dredging up the matter of over $16 billion spent on the power sector during the Obasanjo administration. It just shows how deeply the issue of subsidy is affecting lives.

Beyond the brickbats however, what is clear is that nobody has interrogated Atiku Abubakar’s subsidy return plan, at least empirically. It is quite possible that the former vice-president is on a sympathy run, a vote-catching gambit to sway the voting populace to his side as January 2027 approaches. On the flip side, he may be altruistic; moved by the real and apparent suffering of Nigerians as runaway inflation makes nonsense of any amount held by anybody. 

The position taken by the president and his officials in defending subsidy removal is what it has always been — a rehash of previously spewed rhetoric about how the economy would have collapsed if it had not been done, and how the economy is on a skyward rebound, despite the fact that the people are simply suffering. Impressive GDP figures and positive ratings by Fitch and other agencies mean nothing if the average Nigerian still struggles to eat barely twice daily. 

Perhaps the easiest way to describe the situation is through the words of one Austin Okai, who, in a Facebook post said, inter alia, that “If your salary is not up to at least 300k in Abuja, the difference between you and Almajiri is just the plate.” The post, which stirred huge reaction online speaks only of Abuja residents. How many Nigerians earn N300k? And if you don’t earn that much, you’re just what he said — an almajiri. Truth is, many Nigerians are becoming almajirai; begging for urgent N2k from one friend to another. But I digress.

Back to the subsidy matter. I am of the belief that the issue has not been interrogated at all. A conscientious, people-centred interrogation of the subsidy issue will reveal that the political class ruling Nigeria at the moment, headed by Mr Bola Tinubu as President, simply decided to  sell Nigerians to the highest bidder, to say the least, in return for benefits accruing to them. 

The pricing template for imported petrol in place reveals this, and confounds the mind that same pricing template in place when imported petrol was the only option is still in use, months after Dangote Refinery began operations. From what we know, Dangote Refinery supplies no less than 80% of the petrol we burn daily., the remaining 20% made up by imported fuel. Why should the pricing template for just 20% be applied to 80%, which is domestically refined? 

With imported petrol, the following charges apply: These are 1. FOB cost — N434.32; 2. Freight cost— N86.48; 3. Insurance cost — N10.58; 4. Lightering cost — N23.45; 5. Jetty depot fees — N15.35; 6. Storage fees — N12.58; and 7. Financing costs — N34.67. Other charges are 8. Foreign exchange costs — N23.45; 9. NPA charges — N10.58; 10. NIMASA charges — N5.29; 11. Customs duties — N51.17; and 12. Other levies and charges — N50.00. Total is N757.87. Note that this template had been in place nearly12 year; inflation would have impacted it. Looking at these charges, some of them don’t apply to locally refined fuel. Cost of refining replaces Nos 1, 2, 3, for instance. 

NPA and NIMASA charges may also not apply, while foreign exchange costs should also not apply since refiners are buying crude in Naira. But this template is kept in use, perhaps to keep importers of fuel in business to the detriment of hapless Nigerian masses. In any case, if charges due NPA, NIMASA and Customs are waived, the cost will be reduced, and this will translate to subsidy, however little or large.

Beyond all of this, I have written earlier that when the US-Israel/Iran war broke out and caused an upsurge in global crude prices, about 60 countries have implemented no less than 200 different policies to reduce the impact on local economies. Here, we have been thrown to the scavenging dogs of international commerce. Nothing from our government. 

Even the much-hyped Presidential CNG Initiative has remained what it had been — hype, as CNG stations remain scarce. Given the state of the economy now, and what ordinary Nigerians are feeling, there is no need to deny the fact that the peoples of this country need a lifeline, and NOW. You may call it subsidy, or any other word from IMF/World Bank crafted jargon.

Beyond that, the economy needs to be reflated, and urgently too. Political brick-batting cannot deny the fact that Mr Bola Tinubu put the cart before the horse in the matter of subsidy removal. Not after his 2012 elaborate argument against President Goodluck Jonathan’s bid to remove subsidy. His removal of subsidy has worked only for the governors. 

Most of them now have far much more to spend but are hardly spending on what will benefit the people. What is worse, they are playing kalokalo with local government funds despite a Supreme Court judgement. Clearly there won’t be a return to subsidy under Tinubu. Nevertheless, we can’t take away the fact that we all need lifelines out of this self-inflicted hardship. Abi? 

*Adekoya is a commentator on public issues