Beyond Fuel Subsidy

Beyond Fuel Subsidy

By Audu Dan Fulani

The recurring debacle in the relationship between Nigerians and their golden goose layer of the salvation egg of subsidized petrol (NNPC) is rearing its rancorous head again. But this may be the last time such an unpleasant disruption of mutually beneficial relationship between citizens and their most precious national company will occur because both citizens and company have, as it were, come of age.  The situation is akin to that between a mother and her suckling child when the inevitable time to wean the child comes. It is a coming of age with rites of passage that entail a transformative process that redefines the relationship.

The game changer is that the Petroleum Industry Act (PIA) has an overriding effect on the terms of the relationship between NNPC and the generality of Nigerians and their legitimate entitlement to benefits of the nation’s oil endowment. Enhanced transparency and accountability, strengthening agencies and facilitating investment are the main goals of the new dispensation expected to introduce radical changes to the operations and structure of NNPC and indeed the entire oil and gas industry.

This translates into a significant departure from the ways and means template under which NNPC operated as a government parastatal, more subject to political exigencies than international best practices and standards of corporate governance applicable to the world oil industry. Due to the much delayed process of re-aligning its policy and operational framework to compare and compete favourably with its highly rated counterparts, the NNPC was unable to set the stage for the dynamic emergence of the oil sector as catalyst for rapid socio-economic transformation and infrastructural development as witnessed in other leading oil producing nations.
We only need to consider the pathetic stagnation of petroleum refining facilities and the lack lustre performance of the petro-chemical sector to establish the adverse impact of the parastatal era on NNPC and its debilitating ripples such as incessant fuel supply shortages, ever-rising transportation fares and cost of living. These were the discomforting circumstances that created the fuel subsidy fiasco whereby Nigerians got fixated on the bogey of “cheap” petrol as an entitlement of living in a leading oil producing nation, oblivious to the astronomical economic cost incurred and the lost opportunities for more meaningful infrastructural and socio-economic development derivable, as witnessed with the Petroleum Trust Fund (PTF) projects.

The endless recycling of the fuel subsidy agenda without lasting acceptance of its viability or compensatory value to the masses as well as the emergence of new regulatory and corporate structure under the PIA are sufficient conditions for a comprehensive review. In the new dispensation, the discretionary determination of parameters of a subsidy on petrol pump price and the legality of NNPC’s facilitation role have both been overtaken and invalidated.

In particular, the much-anticipated deflationary dividend of subsidized pump price of petrol remains a pipe dream to be conjured as a talisman against perceived loss of the only popular dividend of democracy for people in a system hostile to social welfare schemes or as a bonus event in NLC ‘s roster of pretentious posturing.

The contentious offer from government of a token N5,000 cash-transfer to only 40 million out of at least 120 million citizens is a non-starter that further highlights the necessity for an all inclusive multi-faceted investment of the trillion naira subsidy spin-off for the tangible transformation of lives of citizens and development of the nation ala PTF.
Another controversial but popular “logic” of the pro-fuel subsidy lobby is that because Nigeria is a leading oil producing nation, its citizens should enjoy cheap petrol, suggesting that other citizens of oil producing nations enjoy such benefit.

As a convenient peg to strengthen the clamour for subsidized pump price of petrol, this sounds impeccable and even portrays the Nigerian case as an absurd exploitation that violates God-given birth right to enjoy a natural resource. As a matter of fact, however, nothing could be further from the truth!

A random survey of international petrol pump price per litre in comparison with Nigeria’s current 165.600 Naira and even the projected 340 Naira for 2022 translates to 0.403 USD and 0.83 USD respectively, whereas in an even more prolific and prosperous oil producing Saudi Arabia the price is 2.330 Saudi Riyals or 0.621 USD, in the United Arab Emirates it is 2.81 Arab Emirate Dinar or 0.77 USD. In UK it is 1.475 Pounds or 1.975 USD and in the US its 0.87 USD!  Obviously, it is misleading to believe that there is anything like “birth-right entitlement” in the determination of petrol pump price and it is in fact more  subject to the pricing and production dynamics of the world oil market and the demand for more substantial contribution to national development budget.

From the foregoing it is beyond contention that Nigerians have to shake-off the “old school” attitude of sentimental considerations, short-term euphoria and perpetual attachment to irrational “dividends of democracy”, much of which is the result of governance challenges and mass misinformation. It is amazing for us to remain obsessed with fuel subsidy as an entitlement of citizenship accruing from bounteous oil resources even after frustrating familiarity with its limited coverage, epileptic benefit, economic adversity and corrupting capacity.

We should be going for more rational and impactful utilization of the lucrative earnings of our enviable status as a leading oil producing nation for optimum development strides across all socio-economic sectors in all six geo-political zones, with special focus on youth empowerment on an unprecedented scale, establishment and expansion of rural and urban rail systems as the ultimate “transport subsidy”, infrastructural transformation and export-oriented industrialization based on raw material exploitation and processing.

Meanwhile the on-going repositioning and revitalization of NNPC under the Mele Kyari PIA-compliant management team must be insulated from all forms of “political” interference and the scourge of elitist excesses that he has persistently identified as the plague that must be comprehensively eradicated to free the full potentials of Nigeria’s oil and gas industry to power the progress and development of the country.  Let’s stop the subsidy fraud, once and for all !
AUDU DANFULANI wrote from Bauchi