Over the years, Nigeria's four decrepit refineries which were built to refine crude oil into petroleum products for local consumption and possibly for exports were left to rot just to make room for the importation of petroleum products by the governing elite and their contractors. This makes it pretty difficult for the importers or oil marketers to bring the products to the reach of the final consumers without incurring additional costs. The effect of this excess tax on the consumers in the name of landing and other costs of carriage from the ports to depots across the country is what government tries to cushion so that the products would be affordable for the common man. This extra payment government makes to the oil marketers in order to maintain an affordable price regime for the products is what is generally referred to as oil subsidy.
*Buhari
Subsidy is therefore a government policy that would act as a palliative due to fluctuations in the international market. But what makes this policy so controversial in Nigeria is that everything about the oil & gas sector is shrouded in secrecy. Ever since the military administration of General Ibrahim Badamasi Babangida introduced the Structural Adjustment Programme (SAP) in 1988, whose major intention was to vend juicy national assets to willing buyers, those companies not sold to government officials or their cronies, were allowed to rot in other to attract the sympathy of Nigerians for their privatization. The refineries, two in Port Harcourt, one in Onne near Warri and one in Kaduna, are part of those assets. Since the Babangida era, Nigerians have been living with this menace. It triggered a lot of civil unrest during which several Nigerians including university students were killed.
The Military junta under the late General Sani Abacha which inherited the crisis set up the Petroleum (Special) Trust Fund (PTF) headed by the current President, Muhamadu Buhari to manage the excess charges from the pump prices of petroleum products. The fund was meant for the provision of infrastructure across the country. In 1999, when Chief Olusegun Obasanjo assumed leadership of the country as a democratically elected president, he disbanded the PTF and insisted on the deregulation of the downstream sector of the petroleum industry. But the move was resisted by Nigerians who thought that they had long been shortchanged by government in the oil and gas industry.
