President Tinubu: Belling The Stubborn Subsidy Cat

Before the bold and audacious decision of President Bola Tinubu to end the era of fuel subsidy and free the Nigerian economy from the stranglehold of a life-threatening obligation to procure cheap fuel for local consumption, Nigerians were paying one of the cheapest prices for fuel all over the world. Perhaps with the possible exception of a few countries like Venezuela, Libya and a motley of few other countries, Nigeria enjoyed cheap fuel albeit on quite humongous costs to the economy. The fuel subsidy regime battled fiercely to keep the local price of fuel down, even when the fragile economy of the country bled profusely for such cheap fuel.

It would have been somehow tolerable if the subsidy was restricted to fuel consumption in Nigeria alone but strangely, through the porous borders of the country, Nigeria was indirectly subsidizing fuel for neighbouring African countries who depended on smuggled fuel from Nigeria to power their energy needs. Thus, by retaining the opaque subsidy regime, Nigeria was trapped in a huge financial man-hole where it had to fork out humongous resources each day to keep the prices of fuel down in Nigeria and about five other neighbouring countries.

The notorious feature of the fuel subsidy web that Nigeria was trapped in was that with each passing day, the costs to the Nigerian treasury burgeoned as well as the doubtful consumption.
For decades now, the stubborn fuel subsidy cat had assailed and pummeled Nigeria to stupor. It has morphed from an innocuous support towards accessing cheap petroleum products to a cancerous ennui that was ravaging the Nigerian economy to painful bankruptcy. The fuel subsidy regime became that wild cat that was ravaging the rat kingdom and which sowed dread, fear and danger in its trail.

It was not that successive regimes suffered the asphyxiating policy gladly; in fact they hated it. They merely tolerated it because they were helplessly choiceless. The subsidy regime had become a huge and dangerous booby trap solely because of the social angst and tempest its removal promises to provoke so no leader dared remove it, even when they desperately craved to do so.

Obasanjo. in his eight years in power tinkered severally to remove it but each time, he collided with threatening social upheaval and ended up scorching it but never totally removed it.

Jonathan went for its jugular on the first day of 2012. The gargantuan unrest that action engendered threatened his government such that he ran in fright. The Buhari government, caught in the intersection between its proletarian concern and the need to take the right and necessary economic action, and concerned about the social storm it will run into, should it remove fuel subsidy, ran into a crisis, managing that cancerous tumour. At the end of the day , the regime pushed the burden to NNPC thus making the state oil company to devote trillions of Naira it should funnel into the national coffers to funding subsidy.

So the subsidy regime has endured, not because it was comfortable for successive Nigerian governments to run but because these governments lacked the courage and will power to tame the social upheaval such removal could provoke. That the subsidy was poring deep holes on the national treasury was not in doubt. That huge resources that should go a long way in financing critical state infrastructure and service critical national needs were poured into paying huge subsidy for cheap fuel not only for Nigeria but also neighbouring countries, was beyond debate. While all agreed to the need to free the huge resources that go into subsidy to attend to the fiscal needs of the country, mustering the courage to remove subsidy and see through the ensuing social tempest was lacking.

So the inability to muster the political will and the wherewithal to deal with the social upheaval that attends efforts to remove fuel subsidy, has over the years, condemned Nigeria to live willy-nilly with the economic hemorrhage that the subsidy provokes. What makes the entire subsidy regime so opaque is that it burgeoned each day because of the dearth of reliable statistics of what the nation really consumes and most importantly, the inability to track the imported fuel products and prevent the smuggling of the heavily subsidized fuel across our leaky borders. Thus, we have a situation where our governments continue committing huge tranches of scarce foreign exchange to funding humongous volume of fuel; most of which were not consumed by Nigerians.

Over the years, successive governments have come to make the tenable point that the fuel subsidy regime ultimately robs Nigerians to enrich some few inordinate Nigerians wbo tapped into the subsidy regime to exploit it for their selfish ends.

Again, government has made a spotless case of the fact that the huge subsidy payment has come to shackle government’s commitment to other vital sectors that need be adequately funded for growth and development to thrive so the belief that government needs to divest of the huge overhead that goes into funding subsidy on fuel.

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Again, the fuel subsidy regime is riddled with fraud, as it is bereft of the right and proper statistics to ensure financial probity. This made it very vulnerable for ulterior manipulation by shady interests who employed it to feed fat on the resources that could have otherwise been employed to attend to the multifarious needs of the country.

Most Nigerians have come to agree with these government’s views on the overwhelming negative effects the continued payment of fuel subsidy has on the nation and its economy. Even as many are seduced by the attractiveness of cheap fuel, the negative flip sides that threaten to crash the Nigerian economy was too scary to ignore. This was the reason why almost all the presidential candidates that participated in the last election promised to stop the subsidy regime, if elected into power. Talk is cheap as it remained to be seen how they would have mustered the will to surmount the predictable social wildfire such decision would have taken-and here lies the scarce courage to take bold decisions, which itself had shackled the country to the fuel subsidy wild cat for decades now. It still remained a case of who will bell this rampaging cat!

The decision therefore, of President Bola Ahmed Tinubu to end the subsidy, communicated right in his inaugural address, speaks of courage, boldness and the sheer audacity to not only bell this stubborn cat but chain it. Equally, that decision was risky, as it threatened to unleash the feared potentates on a regime that was just berthing.

Tinubu showed, by that decision, that he is prepared to walk the tough and seemingly unpleasant routes to get things done and for the fact that the social upheaval that has always loomed threateningly over the fuel subsidy removal never happened showed that, even with the temporary strictures that the decision will bring, Nigerians are convinced that removing the fuel subsidy is the best decision to salvage the country from the brinks of bankruptcy.

Having dealt with this stubborn problem, the onus is on the Tinubu government to walk its promises of using the savings from the abridged subsidy regime to fund critical infrastructure, invest in transportation,medicare, education and other sectors that directly impact on the masses. Beyond increasing salaries and emoluments of workers, I would suggest to government to invest heavily in agriculture (like the Buhari regime did), expand the food chain and possibly subsidize some food items that enjoy mass patronage with a view to driving down food inflation, which will,in turn, drive down the spiralling inflation that is ravaging the nation presently.

All said, President Tinubu showed guts, courage and leadership by dealing with the subsidy issue and pulling Nigeria up from economic doom.

Peter Claver Oparah

Ikeja, Lagos. Tinubu: Belling The Stubborn Subsidy Cat

Before the bold and audacious decision of President Bola Tinubu to end the era of fuel subsidy and free the Nigerian economy from the stranglehold of a life-threatening obligation to procure cheap fuel for local consumption, Nigerians were paying one of the cheapest prices for fuel all over the world. Perhaps with the possible exception of a few countries like Venezuela, Libya and a motley of few other countries, Nigeria enjoyed cheap fuel albeit on quite humongous costs to the economy. The fuel subsidy regime battled fiercely to keep the local price of fuel down, even when the fragile economy of the country bled profusely for such cheap fuel.

It would have been somehow tolerable if the subsidy was restricted to fuel consumption in Nigeria alone but strangely, through the porous borders of the country, Nigeria was indirectly subsidizing fuel for neighbouring African countries who depended on smuggled fuel from Nigeria to power their energy needs. Thus, by retaining the opaque subsidy regime, Nigeria was trapped in a huge financial man-hole where it had to fork out humongous resources each day to keep the prices of fuel down in Nigeria and about five other neighbouring countries.

The notorious feature of the fuel subsidy web that Nigeria was trapped in was that with each passing day, the costs to the Nigerian treasury burgeoned as well as the doubtful consumption.
For decades now, the stubborn fuel subsidy cat had assailed and pummeled Nigeria to stupor. It has morphed from an innocuous support towards accessing cheap petroleum products to a cancerous ennui that was ravaging the Nigerian economy to painful bankruptcy. The fuel subsidy regime became that wild cat that was ravaging the rat kingdom and which sowed dread, fear and danger in its trail.

It was not that successive regimes suffered the asphyxiating policy gladly; in fact they hated it. They merely tolerated it because they were helplessly choiceless. The subsidy regime had become a huge and dangerous booby trap solely because of the social angst and tempest its removal promises to provoke so no leader dared remove it, even when they desperately craved to do so.

Obasanjo. in his eight years in power tinkered severally to remove it but each time, he collided with threatening social upheaval and ended up scorching it but never totally removed it.

Jonathan went for its jugular on the first day of 2012. The gargantuan unrest that action engendered threatened his government such that he ran in fright. The Buhari government, caught in the intersection between its proletarian concern and the need to take the right and necessary economic action, and concerned about the social storm it will run into, should it remove fuel subsidy, ran into a crisis, managing that cancerous tumour. At the end of the day , the regime pushed the burden to NNPC thus making the state oil company to devote trillions of Naira it should funnel into the national coffers to funding subsidy.

So the subsidy regime has endured, not because it was comfortable for successive Nigerian governments to run but because these governments lacked the courage and will power to tame the social upheaval such removal could provoke. That the subsidy was poring deep holes on the national treasury was not in doubt. That huge resources that should go a long way in financing critical state infrastructure and service critical national needs were poured into paying huge subsidy for cheap fuel not only for Nigeria but also neighbouring countries, was beyond debate. While all agreed to the need to free the huge resources that go into subsidy to attend to the fiscal needs of the country, mustering the courage to remove subsidy and see through the ensuing social tempest was lacking.

So the inability to muster the political will and the wherewithal to deal with the social upheaval that attends efforts to remove fuel subsidy, has over the years, condemned Nigeria to live willy-nilly with the economic hemorrhage that the subsidy provokes. What makes the entire subsidy regime so opaque is that it burgeoned each day because of the dearth of reliable statistics of what the nation really consumes and most importantly, the inability to track the imported fuel products and prevent the smuggling of the heavily subsidized fuel across our leaky borders. Thus, we have a situation where our governments continue committing huge tranches of scarce foreign exchange to funding humongous volume of fuel; most of which were not consumed by Nigerians.

Over the years, successive governments have come to make the tenable point that the fuel subsidy regime ultimately robs Nigerians to enrich some few inordinate Nigerians wbo tapped into the subsidy regime to exploit it for their selfish ends.

Again, government has made a spotless case of the fact that the huge subsidy payment has come to shackle government’s commitment to other vital sectors that need be adequately funded for growth and development to thrive so the belief that government needs to divest of the huge overhead that goes into funding subsidy on fuel.

Again, the fuel subsidy regime is riddled with fraud, as it is bereft of the right and proper statistics to ensure financial probity. This made it very vulnerable for ulterior manipulation by shady interests who employed it to feed fat on the resources that could have otherwise been employed to attend to the multifarious needs of the country.

Most Nigerians have come to agree with these government’s views on the overwhelming negative effects the continued payment of fuel subsidy has on the nation and its economy. Even as many are seduced by the attractiveness of cheap fuel, the negative flip sides that threaten to crash the Nigerian economy was too scary to ignore. This was the reason why almost all the presidential candidates that participated in the last election promised to stop the subsidy regime, if elected into power. Talk is cheap as it remained to be seen how they would have mustered the will to surmount the predictable social wildfire such decision would have taken-and here lies the scarce courage to take bold decisions, which itself had shackled the country to the fuel subsidy wild cat for decades now. It still remained a case of who will bell this rampaging cat!

The decision therefore, of President Bola Ahmed Tinubu to end the subsidy, communicated right in his inaugural address, speaks of courage, boldness and the sheer audacity to not only bell this stubborn cat but chain it. Equally, that decision was risky, as it threatened to unleash the feared potentates on a regime that was just berthing.

Tinubu showed, by that decision, that he is prepared to walk the tough and seemingly unpleasant routes to get things done and for the fact that the social upheaval that has always loomed threateningly over the fuel subsidy removal never happened showed that, even with the temporary strictures that the decision will bring, Nigerians are convinced that removing the fuel subsidy is the best decision to salvage the country from the brinks of bankruptcy.

Having dealt with this stubborn problem, the onus is on the Tinubu government to walk its promises of using the savings from the abridged subsidy regime to fund critical infrastructure, invest in transportation,medicare, education and other sectors that directly impact on the masses. Beyond increasing salaries and emoluments of workers, I would suggest to government to invest heavily in agriculture (like the Buhari regime did), expand the food chain and possibly subsidize some food items that enjoy mass patronage with a view to driving down food inflation, which will,in turn, drive down the spiralling inflation that is ravaging the nation presently.

All said, President Tinubu showed guts, courage and leadership by dealing with the subsidy issue and pulling Nigeria up from economic doom.

Peter Claver Oparah

Ikeja, Lagos.