The day they said would never come has passed, and the event they said would never take place was staged in a grand style. On May 29, Bola Ahmed Tinubu was inaugurated as Nigeria’s 16th president.
He was not, as the counter-social media and its denizens had predicted, seized as he arrived at the parade ground and whisked to prison to await the grim fate reserved for grand impostors, to be replaced at the seat of honor by Peter Obi, who had placed third in the presidential election, to the triumphal chants of the Obedient.
He did not collapse halfway through the ceremony, as had been bruited by those who wagered that no amount of steroids pumped into his bloodstream from vials sewn into the sleeve of his buba could keep him on his feet for more than one hour.
Even at his best, you could never accuse him of crisp delivery. But in the event, it was nothing near the mumbo jumbo they had primed their followers to expect.
But the Inauguration had been boobytrapped all the same by the collective vacillation, the irresolute posturing and, it has to be said, the complicity of the leaders who had ruled Nigeria for roughly four decades.
I am of course talking about what has come to be known as the oil subsidy.
Failure to address it forthrightly over the years had driven the economy to the edge of collapse. Papering it over or resorting to another cosmetic fix was no longer an option, Tinubu said in his Inaugural Address, adding tersely that the subsidy was ended.
Since then, his Administration has been grappling with the dislocations resulting directly from the announcement. The weeks ahead will most likely witness more of the same. There will be no honeymoon for the new government.
For the past 38 years or so, virtually every measure trumpeted as a solution to the instability in the supply and pricing of gasoline has turned out to be a gigantic swindle.
The epic swindle began, like most swindles in Nigeria’s recent history, during the era of the self-designated military president, General Ibrahim Babangida. The country was set to take a loan from the IMF, and as a sop to that latter-day Cerberus, the currency was to be devalued, import restrictions were to be lifted, and anything remotely suggestive of a subsidy was to be abolished immediately. “Market forces” had to govern every transaction.
Gasoline came to be identified as the soft underbelly of the Nigerian economy. It was grossly underpriced, they said, because it was heavily subsidized, with the pernicious result that a gallon of gasoline cost less than a bottle of soda or milk. One image that clings in my memory of that time is of the engaging correspondent Chris Anyanwu, later a Senator, peddling that line night after night on national television in her smooth, silky delivery.
What subsidy?
The difference between the price of a gallon of gasoline in Lagos and the same gallon of petrol in Fargo, North Dakota, they said.
Wasn’t that what economists call an opportunity cost? If the cost of getting a gallon of gasoline to the pump exceeded the retail price, you could perhaps talk about a subsidy. What were the actual costs? And whatever happened to comparative advantage and all that if Nigerians were to pay for gasoline produced on their soil the same thing as consumers half a world away were paying for it?
Was the whole thing not at bottom a tax?
Shifting gears, they said gasoline was so cheap that it was being mindlessly wasted.
How? Were Nigerians using it to wash their hands after a meal, or to prepare their vegetable stew in place of regular cooking oil, or as a beverage to entertain their guests, since it was so much cheaper than Coca-Cola?
Shifting gears still, they said because gasoline was so cheap in Nigeria, it was being smuggled to neighbouring countries to reap windfall profits.
Now, you could not do that on any meaningful scale by lugging 50-litre petrol cans through bush paths. Only sea-worthy vessels or motorised tankers driving on paved roads across international frontiers manned by immigration and customs and security officials had that capability. Those vehicles had to be owned or controlled by political and military officials with guaranteed access to refined petroleum products.
Why was it, then, that not one of those vehicles had been arrested and charged with this illegal traffick, only a few stragglers transporting smuggled gasoline cans in leaky dugout canoes or in rickety trucks across the border?
And why make genuine, honest-to-goodness consumers pay for the sins of syndicated smugglers?
Gasoline was so cheap, they piled on, that it was being adulterated. When substituted for kerosene in hurricane lamps and stoves, the adulterated mixture caused horrific explosions that maimed and sometimes killed entire families.
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Why not make kerosene cheaper than gasoline, then? In any case, why would anyone adulterate a product that was already obscenely cheap? Whoever heard of adulterated zinc?
From the funds to be realised from ending a subsidy, the existence of which was never proven, new oil refineries would be built not merely to satisfy growing domestic consumption but also for export, to generate foreign exchange. Those long, snaking lines at filling stations would be things of the past, they said.
Whether framed as “correct pricing” or “de-regulation” or under any other label, this has been the standard litany, with a few variations here and there, whenever the government has needed to raise revenues during the last three decades.
The more they cut the alleged subsidy, the more remained to be cut. It reminded one of what they said of the whale that was beached in Lagos in the early 60s that the more they hacked away at the carcass, the more remained to be hacked.
At every hint of economic decline, gasoline pricing has been the first resort and quite often the only one. The “subsidy” had to be cut or abolished; if not the economy would collapse. Humongous figures are conjured up as revenues that will accrue to the exchequer from cutting the alleged subsidies.
Committees are set up to manage the projected cash inflow and to ensure it is put to the most judicious use. “Palliatives” to cushion the average person from comprehensive price increases that will follow are announced.
Those measures sprang more from panic than from sound reasoning. Within a year, the “mass transit” buses running on subsidized fuel and charging subsidized fares vanish from the roads. A striking project here, a thriving scheme there, but much of the money went the way of other state money — to satisfy the awoof proclivities of officials high and low and their confederates.
The one thing they never built was a new oil refinery.
Rather, they patched up the old refineries at costs that defy all reason. They functioned fitfully at best. Periodic Turn-Around Maintenance (TAM) gulped vast sums of money, but only the fortunes of the contractors and the supervising officials actually got turned around
When the refineries produced at all, their output was shipped several miles from the loading platform and returned as imported fuel to reap windfall profits in subsidy reimbursements for an untouchable criminal syndicate.
Organised labour and civil society rouse themselves, vowing that the cuts will not pass. The government says there is no going back. The scene is set for a titanic struggle between an irresistible force and an immovable object.
Government yields a little ground, and so does organised labour, as well as civil society. A prolonged crisis is averted, but the seed of future conflict continues to germinate, undisturbed, until the subsidy phantom stirs again.
That, in sum, is the sad history of attempts to end a subsidy that has been underwriting the theft of 40 percent of Nigeria’s oil production for decades. The best time to end it, even some of the stoutest protagonists of a genuine subsidy are saying, is now, before the Administration gets bogged down by other issues.
Ending it is not going to be easy; certainly not for a government with the most progressive credentials in Nigeria’s history. It cannot proceed on the facile calculation that only the elite who operate fleets of gas-guzzling vehicles have been profiting from the so-called subsidy. They can absorb the steep price increases that will likely result from ending the subsidy.
Owners of capital, on the other hand, will pass the increase that will likely result from on to the general public, those eking out a marginal existence form one day to the next. This public must be cushioned from the impact, which will cut across every aspect daily living – be it the education of their children, food, clothing, rent, cooking, transportation, lighting, health care even at its most rudimentary, and child care.
The usual “palliatives” will not do. The protections will have to be substantial, well-targeted, and delivered transparently.
But what is to be done about those who corruptly appropriated the national patrimony for decades and brought the economy to the edge of ruin through syndicated scams? Should they not covenant to hand back quietly to the public treasury a negotiated but equitable fraction of their documented rip-off or face prosecution to the fullest extent of the law.
This teachable moment must not be wasted.
