By Peter Ovie Akus
SIR: The president-elect, Asiwaju Bola Ahmed Tinubu, while on the hustings, promised to remove fuel subsidies if elected to power. If the removal of fuel subsidy can be done in such a way that it wouldn’t lead to inflation, Nigerians would heave a sigh of relief.
Before the removal of fuel subsidy, there is the need to enlighten key stakeholders in the petroleum sector, the labour unions, and the general public on the immediate and transient effects, as well as the future benefits of the policy.
The reason most Nigerians have vigorously opposed subsidy removal over the years is due to ignorance of the long-term benefits that it would bring. With proper enlightenment through the appropriate media channels, they would develop the fortitude to bear whatever temporary pains that would result from the process of its implementation.
Palliatives are the answer. The incoming administration needs to fashion out an effective framework for palliative implementation and management that would be devoid of corruption. The PDP government came up with SURE-P, but it was bogged down by corruption and nepotism. The APC government needs to do better by coming up with a programme that would be beneficial to all and sundry.
The genesis of the problem in the oil sector which led to the importation of refined petroleum products and the institutionalisation of the subsidy regime, was the collapse of the nation’s four major refineries. Efforts to revive them have proved abortive, with billions of dollars spent on turnaround maintenance gone down the drain.
It is a shame that we produce crude oil, export it overseas for refining, and import refined petrol for consumption. Our failure to refine crude oil means that we lose out on the benefits of by-products like gas, asphalt, and other petrochemicals.
The N60 trillion annual subsidy budget is bogus and inexplicable. It is a drain on scarce resources. Do we really consume 80 million litres of fuel daily? How much crude is lifted daily? How much is diverted to neighbouring countries? There is a need for forensic investigation on this matter.
Subsidy benefits a few and not the majority. Aside from a few big cities, most parts of Nigeria have never bought fuel at the government approved pump price. Even the towns and villages which have petroleum deposits, do not buy fuel at subsidised rate.
Private investors in the petroleum sector are reluctant to invest in building refineries because of the subsidy regime which is a negation of the capitalist principle of laissez-faire. We need to revive our refineries and also create a conducive environment for private investors to set up refineries through the removal of subsidies.
The resort to borrowing to keep the subsidy regime afloat is economic nonsense. We would soon owe so much that it would be impossible to pay or service our debt. This would destroy our credit-worthiness in the international financial community.
There are two major gains that would be realised from the removal of fuel subsidy. One is the elimination of fraudsters who profit maximally from the current subsidy regime. Two is trillions of naira that would be saved and channelled to productive and developmental projects that would be beneficial to the citizenry.