Wednesday, 4th October 2023

Subsidy is gone, wahala has come

By Ray Ekpu
06 June 2023   |   3:44 am
During the campaign for election as President of Nigeria, Bola Ahmed Tinubu, presidential candidate of the APC, had said that if elected he would stop paying subsidy on petrol. In his inaugural speech on May 29, he said bluntly and matter-of-factly: “Subsidy is gone.” He did not waste too many words on the subject apparently because it is a subject, which Nigerians are familiar with.

Petrol pump

During the campaign for election as President of Nigeria, Bola Ahmed Tinubu, presidential candidate of the APC, had said that if elected he would stop paying subsidy on petrol. In his inaugural speech on May 29, he said bluntly and matter-of-factly: “Subsidy is gone.” He did not waste too many words on the subject apparently because it is a subject, which Nigerians are familiar with.

Over the years, the various governments of Nigeria had struggled with subsidy payment. They had struggled to convince Nigerians who think that as an oil-producing country, refined petroleum products ought to be cheaper here than elsewhere. But they had managed to remove subsidy on such other refined products as diesel, aviation fuel and even kerosene, which is largely used by low-income people.

However, there has been stiff resistance to attempts to remove completely the subsidy on petrol, because the product is the most widely used fuel in Nigeria. Almost all the governments of Nigeria have been increasing the price of petrol instalmentally, so as to reduce the amount of subsidy they have to pay on the product. None has had the temerity to remove it in one fell swoop because the price jump would be the equivalent of a high jump. This is the first time this has happened.

Last Sunday, I went out to buy petrol in Lagos so as to know the state of affairs after the subsidy-is-gone speech. Many of the fuel stations were not selling anything, either because they do not have the stuff or they are simply shutting their stations and watching how the public will react to the high jump in the price of petrol.

At one NNPC station, where petrol was sold, there was a very short queue, meaning that most people are just waiting to see if indeed subsidy is gone. The price for a litre at the station was N488. From the figures published by the NNPCL the figures are higher in some parts of the country. This is an indication that the equalisation of prices in all parts of the country is now gone. Now, the price in any part of the country is based on market forces. I used to fill the tank of my car with N10, 000 worth of petrol. On Sunday I paid N25, 000 naira to fill the tank. A new reality.

The Buhari government did not provide for petrol subsidy payment in the 2023 budget beyond June this year. It knew that the country had reached a point where there was no alternative to scrapping subsidy on petrol. It went to the World Bank and got a loan of $800 million, part of which it intended to use in providing cushion for some 50 million people who are the poorest of the poor in our country. That fund is likely to be used by the Tinubu government to calm frayed nerves as the no-subsidy-era begins.

Tinubu has mentioned the fact that workers salaries will have to be reviewed to meet with current realities. That means that the minimum wage will be upped and when that is done the salaries of other workers will be reviewed upward too. The GMD of NNPCL, Mr Mele Kyari, has also announced that palliatives are on the way. What will be in the palliative basket is not yet clear.

However, the Trade Union Congress (TUC), we learn, has given the government a shopping list for negotiation. On the other hand, the NLC has asked the government to reverse the petrol price increase before it can engage in further discussion. It has also announced that there will be a nationwide strike as from tomorrow, Wednesday.

Even though the government did not consult the unions before announcing its decision I would urge the NLC to tarry awhile because the country is several feet inside a deep hole in the ground. Buhari dug a deep hole and put the country there, at a place where we have never been before. The country’s debt burden is N77 trillion; the Federal Government also reportedly owes the NNPCL about N2.4 trillion for past subsidies; Tinubu is also inheriting N16 trillion uncompleted projects.

The country spends 96.4% of its revenue on debt servicing. The Tinubu government deserves our pity because the country is down, very much down. The Buhari government had been pouring our money down the rabbit hole, which puts the Tinubu government between the rock and the hard place. The rock is rocky and the hard place is hard. So there is very little room for manoeuvre right now. The government should show these sad figures to the labour unions. Strike is not necessary now. What is necessary is negotiation.

It is a pity that the government did not consult the unions before now. That was a mistake. But two wrongs cannot make a right. The unions must engage the government in a conversation. A nationwide strike can wait. It is the right of the unions to go on strike when necessary but for now the timing is not right. A strike will damage more and deliver less than expected.

A few weeks ago, I wrote in this column that subsidy will have to go at some point. I was looking at the figures spent by the past governments on subsidy, money that could have been more fruitfully utilised. Here are the figures: Between 1999 and 2006 the Obasanjo government spent N812 billion on subsidy; between 2007 and 2009 the Yar’Adua government expended N794 billion on it; between 2010 and 2014 the Jonathan government squandered N3.9 trillion and between 2015 and 2023 the Buhari government frittered away N11 trillion on subsidy.

These governments all ran away from the problem because of the hostility of the unions to any attempt to scrap subsidy. I have said before that it is not fair for anyone to live on the banks of a river and wash his hands with spittle. But if the river dries up, spittle can be an inconvenient replacement for water. These monies spent on subsidy were not accounted for in any transparent manner. How they arrive at these humongous figures has not been interrogated. These fabulous figures are just thrown at us by those involved and we have no way of knowing whether they are fair or foul.

Also, we are told that we consume 60 million litres of petrol everyday in Nigeria. Another guesswork. But we are told that in order to ensure that there is no scarcity, about 100 million litres is often imported. This seems to provide an opportunity for people to smuggle the balance to neighbouring countries where petrol costs more. It is a bit surprising that in all these conversations about subsidy not much is said about our four refineries, which in the past had filled a bit of the importation gap and reduced the amount of subsidy paid.

The Tinubu government must take the bull by the horns by doing something about our refineries. It is either we make them functional or we auction them and build new ones. A refinery is a major economic and security facility and there is no reason why a major oil producing country like Nigeria should not have a major functioning refinery that can produce petroleum products for local consumption and for export.

It is a thing of joy that the Dangote Refinery has been inaugurated but that is a privately-owned facility. If a private company can build a major refinery like the Dangote Refinery, even if it is with government’s support why can’t a government build a new refinery or maintain the existing ones?

The turnaround maintenance of our four refineries has gone on for ever as if maintaining a refinery is the equivalent of rocket science. It is not. Tinubu’s government must take a decision on these refineries. They are public assets that have been wasting away for years. This shows how irresponsible we are, how uncaring we are in the maintenance of our public utilities. I am sure that small African countries that have efficiently run refineries are laughing at us.

We learn that NLC has written to all the 43 affiliate unions to get ready for the commencement of a nationwide strike on Wednesday. Strikes are permissible if negotiations have broken down. The NLC should not bring more discomfort to the people who have gone through hell in the last eight years of the Buhari administration.

As we speak many states are owing workers’ salaries and pensions. They do not need a further complication of their problems. Recently, the court upheld the no-work-no-pay policy of the Federal Government. If workers go on strike now and they are not paid, who will pay them? This is a time for the unions to show that they understand the laws of the land and will make their contribution to make us come out of the deep hole in which we are right now.

Wahala can wait.