REVIEW SUBSIDY REMOVAL POLICY – By Dr. Aliyu U. Tilde

Preamble

Summary: Subsidy is for the everybody. Complete removal is bad for the economy.  Suspend removal. Constitute a credible committee to get you actual fuel consumption figures to fix a new price. Maintain some level of subsidy.

Public expectations.

Introduction

As a supporter of your Presidency, I feel compelled to write this piece of advice for your benefit and that of the nation. It is not a one-off. Many of its kind may follow whenever there is a hot issue at hand that instigates the ink of my pen to flow.

My President, you have surely, as expected, hit the ground running with an audacity that is unmatched in the Presidency for over a decade. The public is left in no doubt that the driver on the wheel is a ‘Bawa Driver’ of the 1940s who never decelerated in deference to sharp bends or even collapsed bridges.

Excising the tumour of fuel subsidy was an operation which the past three presidents avoided. Few minutes after your swearing in, you announced your intention to carry out the operation instantly. The previous administration was defiant to calls by experts for a unified Dollar exchange rate. You answered the call instantly. The following day, you summoned the NNPC and CBN chiefs for your orders. A day after that meeting, the subsidy was removed and the CBN is also at the instance of announcing a unified rate of exchange for the Dollar.

On the third day, the DSS barricaded EFCC personnel from entering their Lagos office. If it were during the previous administration, the situation would be left to degenerate into fatal fracas which no one at the top would intervene to stop. But by the end of the day, you told the DSS to back off. The following day, you called the service chiefs and read the riot act for them: You will not tolerate their working at cross purpose with one another and they must immediately come up with their blueprint to address our urgent insecurity matters like banditry and oil bunkering.

These are signs of a responsive and responsible leadership which if blended with accountability and wisdom will make you stand out among your peers. The first two characteristics seem to be your default setting, so I will not discuss them. Today, I will discuss the wisdom aspect as it relates to fuel subsidy removal and leave accountability part for another day.

The Dust

The dust of the fuel subsidy removal has not settled. Labour, this time with the massive support of the public, will shut down the country come Wednesday. There are 27 days before the provision of the budget on the subsidy elapses. I feel the time is sufficient to review the issue of the subsidy withdrawal such that a common ground is found between the agitated citizenry and your government. The review is necessitated by the need to probe the half-truths that experts peddle about the subsidy and suggest ways by which actual statistics of our consumption can guide us to arriving at a new rate that is palatable to both government and the citizens.

Half-truths

Yesterday, Engr Mele Kyari, the NNPC boss, was on BBC Hausa program where he explained that subsidy means government paying for the difference between cost of buying, storing and distributing refined fuel that the NNPC buys from the international market and what the citizen pays as pump prize. Every time the NNPC goes back to buy the same quantity of fuel for us, government must top up with billions of naira.

Subsidy is Not Evil

In the program, Mr. Kyari agreed that every government subsidizes life for its citizens, sometimes even on items as basic as bread. The problem, he said, is that the ‘top up’ money has become so colossal that the half-empty coffers of our government cannot afford. Therefore, Nigerians, he pleaded, should be patient with the new rate, for now, until government can afford to pay; then subsidy can be reintroduced and the price can be reviewed downward.

Here, we have the first half-truth debunked by the NNPC magnate himself: that subsidy is evil to the economy. How can a global practice be deemed as an unnecessary evil in Nigeria? Why must Nigeria be the only country to buy the false testament of zero subsidy? Why cannot it be like the advanced countries that we are eager to copy and listen to?

Subsidy is for The Rich

Another big lie peddled by experts is that subsidy is for the rich. In the past three days, this lie has been debunked by the reality of subsidy removal. The poor are the ones suffering. The rich can afford to fill their tanks even at N100,000. Parents cannot afford to send their children to school in other towns, villages or neighbourhoods. The number of out of school children will skyrocket. Workers cannot go to work five days a week. All sectors of the economy and society will be affected once movement is impeded by high cost. It is not enough for a body to have blood. The blood must circulate, otherwise there will be an instant death. That death is what N600/litre petrol portends.

The statistics regarding the rich are also false. For example, so much is mentioned of the rich having four cars fueled by government subsidy. Having four cars does not translate to a quadrupled consumption rate. You can have ten cars but must use only one at a time. Even where a family has four utility cars, which is very rare, it is better for the economy because more drivers will be employed, more mechanics and spare part dealers will be patronized and so on. Consumption of the rich is good for the economy. The rich is not an enemy, anyway, but only another citizen of the country.

My President, please agree with me now—the simple way—that subsidy is for everybody, but more especially the poor who form 99% of your voters and whom you must keep at all cost against 2027. I agree that there is in its administration a scam perpetrated by a cartel and whose activity I will address now.

Fictitious Figures

All experts tell us that government  cannot afford the subsidy. And they eagerly roll out intimidating figures to convince us. Listening to them, what they quote falls between the range of N12billion to N18billion per day with a petrol consumption rate of up to 66.8million liters per day. But how true are these figures? Do we accept them because they are coming from NNPC? How do we trust the testimony of the culprit so easily?

My President must not rush to accept these figures at their face value. Even experts like the former CBN governor, now Muhammadu Sanusi II, have on several occasions questioned the authenticity of such claims. In one of his interviews, he outrightly rejected the idea that there is enough storage capacity for the volume of imports claimed by marketers back then. Many others say we just do not have the capacity to consume up to 50 million litres of fuel per day.

Efforts were made to justify the huge figures by factoring in smuggling to neighboring countries. When someone, I think NLC, computed the number of trailers that must be crossing our already sealed borders every day for such a level of smuggling, the factor did not make any practical sense. Yes, there is smuggling into Benin, Niger, Chad and Cameroon and it will continue naturally, but not at the scale of 20 or 30 million litres per day. Those countries do not even have the population, not to mention the vehicles, to consume that much fuel.

My submission here is that we must know our actual daily consumption rate before deciding whether government can or cannot pay for the subsidy, in full or in part. And the NNPC cannot be a trusted journalist for the crime it commits.

Fraud

That is why there is a consensus even among experts that the fuel subsidy administration in the country is marred with corruption. It is often referred to as a scam. During the campaigns, Mr. Peter Obi, the Labour candidate, called it “an organized crime”. The people behind it are now regarded as so powerful that no government can fight. So the best way to beat them is not to try and stop them but removing the carpet from beneath their feet by withdrawing the subsidy and then saying to the citizens, “Sorry, you have to suffer because government cannot fight these few criminals.”

But this was only true before your arrival, My President. I cannot throw my weight behind your ticket had I considered you lacking in the courage to fight criminals. You cleared ghost workers in Lagos and even fought a sitting President over the rights of its citizens. On your journey to the Presidency, tall hurdles were placed on every inch of your path. Enemies of all kinds came after you. You successfully jumped over every hurdle, crossed every ditch and fought every enemy so much so that I was proud of sticking my neck out for you. How can you now submit to a cartel of few individuals whom you, as our President, can summarily lock up when you unleash your arsenal—the police, EFCC, ICPC, NFIU and so many others at your disposal? How can you prefer the suffering of millions of Nigerians in submission to a band of criminals? No, you cannot. You are the Jagaba.

Suggestions

Now, let me quickly submit my suggestions:

1. Make a tactical withdrawal. Forget the idea that there will be no subsidy. Rest your mind that subsidy is not evil or bad to the economy, that it is still part of the responsibility of governments to their citizens even in our post-communist era. It is only when it is hiked by corruption to unreachable heights that it becomes bad. All governments do subsidize the needs of their citizens, each according to its wealth and income level of its citizens. Ours cannot be different.

2. Put aside the fictitious figures that the NNPC and liberal experts are pushing down your throat. Dig out the facts yourself and know precisely the quantum of subsidy that the nation needs from verified consumption figures. Then base your decision on these facts.

3. Constitute a committee: To arrive at the actual supply and consumption statistics, form a committee of people of impeccable character and competence, with no connection to the NNPC at all, drawn from the private sector, academia and labour. Give them 3 weeks to submit a preliminary report that is revealing enough to give you a good projection of the final figures. They can investigate further in the maximum of 2 additional months and give you concrete data and suggestions. It is not a tall order. It can be done.

4. Supplementary budget: At the end of June, send a supplementary budget to the National Assembly before proposing an extension of the subsidy until September when actual decisions on the matter would be taken. Adding only 3 months to decades long practice can be easily understood.

5. Fix a new price. Based on the outcome of the findings by the committee, engage stakeholders to arrive at a reasonable amount which government can afford as subsidy and what citizens would themselves sacrifice without disruption to their lives. Transparency at its best.

6. Avoid the forbidden fruit. Disband, now, the present NNPC management and show no personal interest in the outfit. Replace its members with trustworthy individuals who can use whatever means possible to truly rid the Company of corruption and ensure that the subsidy monster does not resurrect.

To achieve this, neither you nor any member of your family or friends must be interested in the Company or be appointed into its management. We have seen some previous presidents make their girl friends or daughters Ministers of Petroleum or NNPC Board members. This was how they were neutralized by the subsidy cartel. To you, NNPC has became the forbidden fruit. Resist the temptation of eating it, else you commit an original sin.

7. Take on the cartel. As the Jagaba, probe the NNPC and the subsidy cartel. Recover the loot and jail its criminals. I do not mind if you give them Prince Muhammad bin Salman’s treatment. He locked up all the corrupt Saudi royals and made them part with the loot they made from the Kingdom. You are our Bin Salman. The scammers are the criminals. Go after them, recover the loot and be assured of the full support of Nigerians. If you run away from confronting them today, you will live to fight them tomorrow. Never be misled to fighting the citizens or labour. Fight the criminals.

8. Review the Petroleum Act to rid it of the contradictions that will undermine your good services to Nigerians. Since it became a Company under the Act, NNPC has become a sacred cow. It does not account for anything. It declares profit of any kind at will, post its wish into the consolidated revenue account and tell the nation to take it or leave it. We do not need such a monster. It must be regulated by government so long as oil remains the government’s main source of cash.

9. Privatize the refineries. Along with Dangote and other upcoming refineries, make Nigeria a big exporter of refined oil products. It is achievable.

Benefits

The benefits from adopting my suggestions above will include the endearing fairness that you treat your citizens with, the wisdom of taking knowledge-based decisions, deflecting the lethal fury of the citizenry against you, and the ridding our cash cow of a cancer that has debilitated it for years.

Yes, the NNPC has been suffering from a debilitating cancer. Corruption has made it inept for three decades now. It cannot even refine oil, repair our refineries or build new ones, something that Dangote did alone in few years and which all oil exporting nations do easily. Thanks to its cancer, we are the only OPEC country that imports refined oil. It is time, now that the nation is under the Jagaba, to rid the company of its malaise.

If my suggestions are adopted, I am confident that Nigerians can get petrol at not more than N300/litre. It will demand some affordable subsidy from government but its pregnancy with ‘organized crime’ will be aborted, as in other nations.

Finally, I assure you that nothing in this proposal will demean you or diminish your powers. Instead, adopting it will make Nigerians hail you as a considerate, responsive, audacious, wise leader who is ready to put their interest first. A tactical withdrawal to re-strategize is an art of war.

Thank you, My President.