Saturday, 9th December 2023

Petrol subsidy: Making palliatives work for the people

By Editorial Board
25 July 2023   |   3:50 am
The controversy and public pessimism generated by the Federal Government’s policy on palliatives to cushion the effect of the removal of fuel subsidy are to be expected. For one, the government in the past has not demonstrated credible and reliable approach to addressing the plight of the poor; and there is so far little to suggest a change of heart from public officers

The President’s request for N500b palliatives was approved by the Senate.

The controversy and public pessimism generated by the Federal Government’s policy on palliatives to cushion the effect of the removal of fuel subsidy are to be expected. For one, the government in the past has not demonstrated credible and reliable approach to addressing the plight of the poor; and there is so far little to suggest a change of heart from public officers.

For another, it does appear that the Tinubu administration is a bit too ambitious to resolve the issue of palliatives too quickly, and without adequate interaction with workers’ unions, particularly the Nigeria Labour Congress (NLC).

This is unhealthy, as there are probably as many suggestions as there are interest groups on the matter; and the wise course is to consult widely towards reaching a consensus. It is therefore just as well that the government has directed a review, in addition to indicating that there is more to the palliatives package than what has so far been unveiled. Ideally, the relief efforts should be work-in-progress at all times, to fine-tune the processes and to remove encumbrances.

Following the removal of subsidy on Premium Motor Spirit (PMS), otherwise known as petrol, the Federal Government approached the National Assembly with a request to approve N500 billion to share as palliatives to 12 million Nigerians at the rate of N8, 000 per family. The beneficiaries of the sum are persons identified to be among the most poor in the country. It was also said that the palliative will be paid for six months. The National Assembly wasted no time in approving the request.

There was, however, public outcry over what is considered in some quarters as the hasty manner the Federal Government went about deciding what amount was sufficient to cushion the debilitating effect of petroleum subsidy removal, at a time the rate of inflation had climbed to 22.79. There were concerns as well over how the Federal Government came about the figure of 12 million Nigerians, when more than 100 million Nigerians have been classified as multi-dimensionally poor.

The register that was in use by the previous government for administering the Conditional Cash Transfer programme was to be used in identifying those to benefit from the subsidy palliative.  The Ministry of Humanitarian Affairs, Disaster Management and Social Development in the last government, was in charge of distributing various sums to supposedly vulnerable households in a manner that was queried for its lack of transparency.

The idea of those conditional cash transfers was to reduce the poverty levels in the country, but it turned out that more people became poor after years of conditional cash transfers, meaning that something was wrong with the system and its processes. Nigerians therefore kicked against use of that register, questioning its authenticity and spread.

Nigerians have also not forgotten the TraderMoni, a Federal Government Enterprise and Empowerment Programme Initiative created to boost the economy through enabling self-employed individuals who lack access to credit facilities. Both this and other interventions by the Federal Ministry of Finance, Budget and National Planning were criticised for lacking transparency, particularly disbursements made during electioneering seasons. Critics of the government and the opposition characterised such cash transfers as vote-buying methods disguised as poverty alleviation interventions.

Good enough, the outcry against the government’s palliative proposal was loud enough to cause the planners to beat a retreat. Organised Labour described the proposal to share N8, 000 to 12 million households as robbing the poor to pay the rich, querying the justice and morality in approving N70 billion for the National Assembly. Labour said it does not have confidence in the government’s data on 12 million vulnerable households, threatening to pull out of the subsidy committee if the government did not review the amount and the process.

Government has since called for a review of the amount to be shared among most impacted citizens, while more lasting measures would be rolled out soonest. A meeting of the National Executive Council (NEC) comprising 36 state governors, the Federal Government, the World Bank and other agencies met to take a broader look at the planned palliatives after prices of PMS took another leap from above N500 per liter to N617 per liter.

The meeting decided to use a fresh register to be generated by state governments for the palliative disbursement, rejecting the one that had been in use. The NEC also agreed to allow a measure of federalism in the process by allowing governors to let their peculiar experiences weigh on the disbursement of palliatives.

What is clear is that the Federal Government was pushing the palliative idea alone instead of partnering critical stakeholders, particularly the workers. And there is a noticeable rush by the government to get done with the process, especially when it had not unveiled the totality of the post subsidy alleviation programme beyond sharing cash to vulnerable Nigerians. Stakeholders expected the unveiling of the entire process to include immediate palliative (cash disbursements) as well as medium and long-term remedies.

It also meant that the NASS that was supposed to thoroughly debate the subsidy proposal from the Executive failed to do a good job of it, considering that it took ordinary Nigerians to point out the weaknesses in the proposal.  It was a missed opportunity for the legislators to deploy critical thinking in performing oversight functions, before rushing to carry out approvals on the executive bills.

Attempts by NASS to justify the rushed approval, saying it was only an interim measure to alleviate the burden of the hike in price of fuel was short of public expectation, if indeed they know that other more sustaining measures would be unveiled by the Federal Government. The rush, it claimed, was because it cared!

Government’s decision calling for a review is commendable.  Going forward, weighty state policy decisions that have far-reaching implications on the well-being of citizens should be painstakingly thought through with all relevant stakeholders carried along.

The eventual cash to be transferred may make sense to a good number of both urban and rural poor, who will no doubt find the cash handy. There should be equitable distribution to all citizens that are deserving of the money in a transparent and accountable manner.

Beyond cash transfer, the government should focus on using savings from fuel subsidy to develop agriculture and transportation, the two aggressive drivers of inflation. Sub-national governments are particularly reminded that states are where people inhabit as well as where farming takes place.

They should seize this opportunity to do things differently and complement the Federal Government by ensuring that savings from fuel subsidy are not diverted to private accounts outside the country. This is the time to cut the cost of public expenditure and put an end to waste, sleaze.

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