There Was a Subsidy

The Nigerian political sphere is characterized by intrigues and bizarre plots. In most of these political plots, the plight of the common Nigerian is hardly considered. It’s all about politics. One man removed petroleum subsidy, and fled back after intense opposition. Another claimed subsidy did not exist, yet paid huge sums as subsidy. Mr. Thomas has now seen the light. He now agrees that there was a subsidy.

“But tough choices have to be made to safeguard the economy and our collective survival as a nation…the truth is that we are all faced with two basic choices with regard to the management of the downstream petroleum sector: either we deregulate and survive economically, or we continue with a subsidy regime that will continue to undermine our economy and potential for growth, and face serious consequences”.

With these words, President Jonathan tried to explain the removal of petroleum subsidies by his administration in 2012. Appalled at the 1st January subsidy removal ambush, labour unions and the political opposition, supported by civil society organisations, galvanized Nigerians to protest against the removal of subsidy. From Lagos to Kano, #OccupyNigeria protests pressured the government to rescind its decision. Some Nigerians even lost their lives during the protests, which some hoodlums exploited. Instructively, there was hardly any protests in the south-south region whose residents were already used to high petrol prices.

With the heightened tension, Jonathan stepped back. The subsidy removal was moderated. The pump price that earlier moved from ₦65 per litre to ₦141 per litre, was brought down to ₦97. This was seemingly a win-win for the government, labour and the Nigerian people. Nigerians, relieved, returned to work.

Back in 2012, the arguments for subsidy removal made economic sense to me. Some persons indicted Jonathan of seeking the easy route by avoiding collision with beneficiaries of the “subsidy scam”. However, since economic principles show that unrestrained subsidies and excessive government controls impede economic growth. I believed (still believe) that the subsidy regime was unhelpful to Nigeria. With hundreds of billions of naira wasted in subsidizing petroleum products, it was inevitable that the subsidy regime had to go someday.

Economics was not the only viewpoint concerning subsidies. Political considerations played a much larger role than economics. In an interview in 2015, President Buhari famously declared that he did not believe in the existence of any petroleum subsidy. His assertion was viewed to mean that there was nothing like subsidy in the petroleum sector. Some APC apologists, most notably, revered Prof. Tam David-West, a former minister of petroleum, did some wonderful calculations and declared that petrol ought not to cost more than ₦40 as against the official price of ₦97 per litre (revised to ₦87 before the general elections).

The question to be asked is: “What has changed?” Since Buhari entered office in May 2015, Nigerians have become used to long queues at petrol stations. Those without the time, patience or strength to queue for hours have to buy from black marketers, with some buying petrol for as much as ₦400 per litre. This contradicts the APC’s campaign promise to make petrol cheaply available for Nigerians.

On Wednesday, 11 May 2016, Nigeria’s defacto oil minister, Dr Ibe Kachikwu, announced the “official” removal of petrol subsidy. Part of his statement read: “…and the challenges of the current times imply that we must take difficult decisions on these sorts of critical national issues”. This statement resonates with Jonathan’s 2012 explanatory speech. I ask again: “What has changed?”

Let me clearly state that I am NOT against the removal of subsidy. My views on the debilitating results of the subsidy scheme have not changed. Subsidy is bad for the Nigerian economy. I understand the pains being suffered by Nigerians. I am one of the Nigerians sometimes forced to use my opulent “leggediz benz” for transportation. However, I recognize that the travails of the present time work for us a better future. As Nigerians, we would suffer for a while, but hopefully, if the government sincerely guides the economy into productive waters, there would be light at the end of the tunnel. With proper regulation, Nigerians would not be ripped off by marketers enjoying price freedom. Having said this, let me return to Buhari and the APC.

There is a limit to hypocrisy and propaganda. How can the Buhari administration remove what “never existed”? Can the dead be killed a second time? Statesmanship demands that principles and actions should be guided by the truth, not a reckless reliance on demagoguery. The APC made some Nigerians believe that subsidy was a figment of the PDP’s corrupt imagination. In an expression of confusion, the same APC that claimed the nonexistence of subsidy, excoriated Jonathan for trying to punish Nigerians by removing a non-existent subsidy. Despite the numerous flaws of Jonathan, his subsidy removal plan would have stopped the bleeding of the economy. The APC opposed him, not because they had an altruistic drive, but because they felt they had to oppose him for the sake of opposition. After all, they were “the opposition”.

Those who said petrol ought not to exceed ₦40 per litre should explain why the “official limit” is now ₦145. By the way, for several weeks, many Nigerians have bought petrol above the newly announced price limit. The ₦40 proponents may use the scarcity of foreign exchange to explain the ₦145 limit. They may be right. Nonetheless, they owe Nigerians that explanation—officially. We would like to see figures and calculations. It should not be difficult since it was easy to prove ₦40 last year.

Nigerians have awoken to a life without petrol subsidy. Petrol may have lost its subsidy, but foreign exchange still has its—for those with the right links. I hope that labour would let the subsidy go without causing chaos. I also hope that the PDP would not be foolish to oppose Buhari’s administration. Let the subsidy go. Let the economy have a chance at positive change. At least, we all, including Buhari and the APC, now agree that there was a subsidy.

Image Credit: doomsteaddiner.net
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PS. I’m aware that the APC did not exist in 2012. However, some of the principal players in the APC were principal backers of the 2012 protests. The APC as a party also spoke out against the PDP (on the issue of subsidy removal) in the run-up to the 2015 General Elections.