The Politics Of Fuel Subsidy

Politics is defined as the activities associated with the governance of a country or area. It simply involves the sharing of resources within a given geo-political system. It is centred on who gets what, when, where and how.

There is no gainsaying the fact that Nigeria’s economy depends on oil, since over 70% of the nation’s revenue is derived from oil. The nation’s over dependence on oil revenue is the reason why when there is any “cough” from the oil sector the nation shivers or trembles.

The politics of  withdrawal or removal of subsidy on petroleum products dates back to the reign of General Ibraham Badamosi Babangida, popularly known as “Maradona”.

The withdrawal or removal of fuel subsidy has severally manifested as deregulation of the down stream sector which results in most cases, an increase in prices of Petroleum products, more benefits or financial gains, not only to government but individuals mostly in oil sector, has been a reoccurring decimal in the nation’s politics right through the governments of General Babangida, late Abacha, Chief Olusegun Obasanjo and late Alhaji Musa  Yar’Adua.

It is on good record that anytime attempts were made touching either on the deregulation of the down stream sector or removal of fuel subsidy, Nigerians through the organised labour have resisted it. Hence no government even the dictatorial military regimes have successfully implemented its programme on the issue of fuel subsidy or deregulation of the down stream sector.

This may be as a result of the conflicting interests in the issue bothering on who will gain or get what or lose, if it is fully implemented.

The concept of oil subsidy according to Prof Kayode Soremekun of the Covenant University, Sango Otta, Ogun State derives from a situation in which Nigeria sends her crude oil to other country for refining.

Nigeria has been unable to process her crude oil and sends it to foreign countries which have the strength, the refining capacities and facilities to process the crude into refined products, after which Nigeria now imports same back into the country. By the time crude comes back to Nigeria in refined form, a lot of value would have been added to it. And to that extent, it is bound to cost a lot.

However, according to Prof. Soremekun in the bid to ease the pains of the populace, the government decides to shoulder some of the burdens. This he said is what is called oil subsidy.

The multinationals produce the crude oil, take it abroad, process it and sell same to us.

According to Prof. Soremekun when the government talks of oil subsidy and the removal of oil subsidy she is indirectly saying its inability to manage and maintain its refineries in refining its crude products.

The major beneficiaries of oil subsidy comprise the five oil majors, members of Independent Petroleum Marketers Association of Nigeria (IPMAN), Nigeria Independent Petroleum Company (NIPCO), depot and tank owners and those simply described as feeders.

These groups according to sources have been said to be importing petroleum products to enjoy subsidy from the government and over the years they have been benefiting from the fuel subsidy. They are the five oil majors in the downstream sector, members of IPMAN/NIPCO, owners of depots and tanks and those simply identified as traders.

The federal government led by President Goodluck Ebele Jonathan has recently proposed to remove subsidy on Petroleum products.

The Federal government has said that its aim of removing subsidy was to redirect the money it would save from the withdrawal of subsidy on products that will benefit the citizenry and overall interest of the country.

The federal government has spent more than N600 billion which is more than the N240 billion it budgeted for fuel subsidy this year. It is believed that government would have spent N1.2 trillion by the end of the year.

Backing the removal of subsidy, the Governors of the 36 states including Abuja Federal Capital after a meeting of the National Economic Council (NEC) presided over by Vice President Namadi Sambo on October 6, said subsidy removal was part of the difficult decisions that leaders must take to impact on the people.

The governors said, the gains of the removal would outweigh the pains.

The removal of subsidy the governors opined will save money for the development of the economy and would also provide opportunity for the greater number of people.

As at previous times when attempts were made on this thorny and stormy issue, Nigerians from all walks of life and sectors of the economy, have not been of one voice. This is probably because of the politics of who takes what, how, where and when.

Deputy Senate President Ike Ekweremadu said on Sunday October 16, that Nigerians will be shocked if the list of subsidy beneficiaries is released.

Although the government is reaching out to all the sectors, the National Assembly, organised labour, the organised private sector  (OPS) over the inpending fuel subsidy removal, it has convinced a good percentage especially, the common man that the withdrawal of fuel subsidy will not hurt the nation’s hard earned nascent democracy.

There is no doubt that the removal of subsidy at this point in time definitely will result in hike in prices of petroleum products which will have multiplier effect on other sectors – food prices, transportation to mention a few.

The Nigerian Labour Congress (NLC) has already expressed the fear that the planned removal of fuel subsidy will rubbish the new N18,000.00 minimum wage approved by the federal government.

The Nigeria Labour Congress is skeptical of the intention of Government in removing the subsidy when government has just reluctantly implemented the new minimum wage.

The NLC executive reasoned that by removing subsidy, government is indirectly removing or taking back the increase it approved in workers’ salary.

The NLC has therefore vowed to resist the proposed removal of fuel subsidy.

Speaking to The Tide in a telephone interview, on the removal of fuel subsidy, the Archbishop of the Eccelestical Province of the Niger Delta and Bishop of the Diocese of the Niger Delta North, Most Reverend I.C.O. Kattey cautioned President Goodluck Jonathan against being stampeded into removing the subsidy on Petroleum products.

Most Rev. Kattey, a stakeholder in the Niger Delta, advised President Goodluck Jonathan who is from the Niger Delta to be careful with those urging him to remove the fuel subsidy in his tenure which his  (Jonathan’s) predecessors, have not succeeded in doing.

He advised the President to remove the subsidy in phases and not at once which he said would minimise the suffering of the people.

In his view, a stalwart of the ruling Peoples Democratic Party (PDP) in Bayelsa State, said “President Goodluck Jonathan should not be used as a scapegoat by detractors of the Niger Delta, especially those who vowed to make his government ungovernable.

The PDP stalwart who preferred not to be mentioned on print said Goodluck Jonathan’s predcessors, who are from the majority tribes, moreover who are not from the oil producing states, have been able to play the politics of deregulation, and withdrawal of subsidy without actually implementing it adding that Jonathan should learn from them. He opined that a Niger Delta man should not be used to bring hardship on the masses.

It is reasoned that Government should first recapitalise the three oil refineries to refine oil locally instead of exporting crude oil to be refined and  then import it back and sold on subsidised price.

The implication of subsidy removal according to Prof. Soremekun, is that oil would now be sold at going market rates, so, anytime the dollar goes up the price of oil goes up.

He said if subsidy is removed in countries where oil is not produced like Kenya and Tanzania there would have been no problems but Nigeria produces oil and that she owns the products, so, removing the subsidy he said would be trying to slap God in the face who give Nigeria such a rich natural resources.

A former Minister of National Planning and Finance Dr. Shamsudeen Usman said in May this year, that Nigeria achieved reasonable growth in Gross Domestic Products (GDP) since 1999 but with no significant effect on poverty or unemployment.

Dr. Usman who was speaking at the 2011 May Day lecture said between 1999 and 2009, GDP increased from about 36 billion US dollars to 250 billion US dollars while the number of unemployed people increased from 5.9 million to 17.5 million.

The questions that are begging for answers are how can there be national economic growth with increased national poverty? Why should Nigeria be rated among the World first twenty oil producing countries yet she still imports oil and the average Nigerian is poor? Why Nigeria cannot get her three refineries functional?

The Bible says in Isaiah, Chapter one, verse nineteen that “you shall eat the good of the land”. This means that any national progress must show and impact on her citizens.

Let the natural resources given to Nigeria, by God in form of crude oil be a source of blessing to Nigerians as a whole, not to few.

Soye Young-Itiye