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The fuel subsidy shuffle


A petrol pump nozzle is used to pump petrol at a station PHOTO: REUTERS/Shannon Stapleton<br />

At long last, the penny dropped with a quiet but disturbing thud. It finally shattered our illusion that President Muhammadu Buhari was the man to take on the oil cartels – and win.

On Apri1 11, The Guardian newspaper reported that the Federal Government had deferred the removal of subsidy on petroleum products for six months.


According to the newspaper, the president “…has asked the Nigeria National Petroleum Corporation, NNPC, to suspend any idea on subsidy removal for five to six months so that a plan that does not harm ordinary Nigerians is evolved if the deregulation must go on.”

So, here we are, once more witnessing the famous Nigerian policy shuffle of one step forward, two backward. Recall that even before Buhari formally assumed office six years ago, he served notice that the subsidy regime administration, one of the most corrupt in the country, was about to be interred in the dark wombs of history and free the Nigerian state from being forced to subsidise a lavish lifestyle of some Nigerians at the expense of ordinary Nigerians. Some of us encouraged him by clapping for him with two hands. On several occasions, the president repeated his commitment to the subsidy removal. In 2020, the government formally announced the deregulation of the industry and the subsidy removal. It turned out to be a charade in one of the worst cases of a government fooling the people most of the time. It merely stopped formally budgeting for it.

The inevitable shuffle began with some wretched attempts by the administration and the NNPC to hide the truth from the people but let them soak in the fiction of the deregulation that never was. Under a new system, according to a Daily Trust editorial, “it diverts some proceeds from the sale of crude oil abroad to finance the import of refined fuel for domestic need, which is, in turn, sells at a fixed price to marketers.” The newspaper asked the Federal Government “to come clean” on this matter and tell the people the truth. The new mago-mago meant that the government was paying one trillion Naira a year to maintain the fiction of subsidy removal.


It is pathetic, shameful even, that our authentic knight in shiny armour, who gallops on a steed, leading the anti-corruption war, has now been humbled by the same corrupt forces that defeated his predecessors in office. Buhari’s defeat by the oil cartels leads to a) the continued vulnerability of the Nigerian state to the sickening manipulations of faux market forces against which the people must be supposedly protected with the fuel subsidy and b) it leaves unplugged one of the avenues for corruption and corrupt practices in the rather opaque policies in the oil industry.

By this shuffle, NNPC would continue to formally pay N720 billion monthly as a subsidy on petroleum products. On March 25, Abba Kyari, the Group Managing Director of NNPC, said that the corporation was subsidising fuel to the tune of between N100 billion and N120 billion monthly and that it was not a burden the corporation with a smile. It was paying this below the table since the petroleum sector was supposedly deregulated last year. That the subsidy has now jumped to N720 billion in less than one month, points to the fact that the opaque administration subsidy regime is a riddle wrapped in confusion. This is a monumental disaster and makes the president’s record here, as almost everywhere else, rather spotty.

Arguments over the fuel subsidy removal have a long history. By 2011, the year of public protests over it, it had become an open sore on which varieties of flies fed fat. That year, it had reached the trillion Naira mark. Wives and children of political leaders, all of whom were strangers to the petroleum industry, became fuel importers in the crowded field that needed only godfathers and godmothers. Some of them did not import a litre of fuel yet they were handsomely paid from the national treasury.


When EFCC tried to look into it and found the trail led upstairs, it beat a hasty retreat. Pastor Tunde Bakari and other patriotic Nigerians believed that if the government was allowed to continue with this corrupt practice, our country would pay a stiff price then and in the future. Instead, the protests were stopped when soldiers were called in to disperse the protesters. Still, Bakare and co succeeded in drawing public attention to the public-private sector conspiracy at the root of our wobbly national economy.

Yes, every federal administration has had to deal with the fuel subsidy in its own way but none has had the courage to end the scourge destroying our national economy. As a result, the cartels have grown more powerful with tentacles wherever political interests need to be oiled with oil money.

I thought Buhari would have no problems dealing with this lingering national shame. He was commissioner for petroleum resources in the Obasanjo military regime. It is safe to assume that he knows something about the petroleum industry and its inherent mago-mago and wuru-wuru. Perhaps, it was for this reason that in 2015, he allocated the ministry to himself as the substantive minister. I thought we were in for pleasant surprises. Surprises, yes, but apparently, not in the way we expected them.

Buhari has repeatedly said that we need to do things differently in the country. But so far, we do not see the president doing things differently. He appears to be stuck in doing the same thing and expecting the magic of different results. It is not in the nature of human development to get a different result from doing the same thing.


The fuel subsidy is a mess. It is a mess that Buhari, who marketed himself as a mess cleaner, has had problems with cleaning up. The president cannot pretend to be unaware of the repeated advice of the World Bank and the IMF for the government to reflate the national economy with the total removal of fuel subsidy. I keep going back to the view expressed by the then Emir of Kano, Muhammadu Sanusi II, at a workshop organised by the office of the accountant-general of the federation sometime in 2019. As governor of the Central Bank of Nigeria, Sanusi had repeatedly advised against retaining the fuel subsidy because it had become an unnecessary burden the national economy could no longer bear.

Removing the fuel subsidy would not dramatically make things so much better for us such that India would take back its crown as the poverty capital of the world but it would plug the loophole, end the corruption and end the policy of using the so-called interests of the ordinary people to maintain a system that is clearly against their economic and social interests.

In case the government chooses to keep its head in the clouds, the emir said: “The country is bankrupt.” There is no disputing this anymore. A government that chooses to manage its financial resources with foreign loans cannot pretend not to know that the good times are not rolling by. An administration that has seen the country go down in recession twice within three years, cannot continue to live the lie that money is not its problem but how to spend it. The IMF and the World Bank cannot be wrong. I do not think the president has more superior knowledge of the situation than these world bodies and other knowledgeable economists and economic managers. It is such a huge shame that the Buhari administration chose to ignore their advice and maintain the fuel subsidy despite the clear and incontrovertible fact that it does the economy and the people more harm than good.

Buhari can make a difference by winning the war against the cartels in the oil industry as well as those in the energy sector. The fuel subsidy argument should not be a permanent shadow that follows all federal administrations. It is a problem crying for solution, not cosmetics. Using the people’s interest as a pretext to retain it is fundamentally dishonest. I fear that if the forces that defeated Buhari’s predecessors in office defeat him on this matter, our national economy is doomed in the foreseeable future and corruption may have the last word on his regime.


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