Widening Subsidy Concerns

THERE are hardly new reasons to adduce for the removal of fuel subsidy, except that the huge figures associated with the opaque practice are increasing in an economy that is almost on its belly. In simple terms, the burden of subsidising fuel is too heavy for the economy. The people, who the economy should serve, have their reasons for asking for subsidy.

Others insist that there is no subsidy. However, the debates progress, it is time the country found a solution to debates on this matter which have lasted more than 30 years. Gradual removal of the subsidy has not solved the problem. The persistent corruption in the system heightens anxieties over how the country, and its peoples, would survive.

President Muhammadu Buhari says he will remove the subsidy on petroleum products. Nigeria could have stopped the annual pumping of billions of Naira into the controversial policy to stabilise the supply and price of petroleum products. We think it is something that should still come with a lot of consideration for its general impact on the economy, which literarily runs on petroleum products. More than N3 trillion has been spent on subsidy payments since the botched January 2012 attempt to increase the prices.

President Buhari has already promised to use subsidy savings to fund education and social welfare. We urge the government to consult widely before deciding how to remove the subsidy in a way to serve the greatest good of the Nigerian people, and spend it to benefit all levels of our society. The subsidy regime not only worked in favour of a few privileged individuals linked to the ruling class, it also helped balloon corruption to unprecedented levels and eventually created the impetus for regime change.

Subsidy removal should be part of a general oil industry overhaul to make it more beneficial to the common people. The industry should throw its doors open to accommodate more investors and provide more jobs. Numerous local refining facilities could benefit from the new regime, by filling the gaps imports covered. Subsidy removal should not leave us at the perpetual mercy of fuel import cartels.

Within a reasonable period of implementation of the policy, we could see the benefits of the reforms as we did when the telecommunications sector was privatised. More choices resulted in the consumer being king.

However, a major linkage that the President has to deal with is electricity. None of the debates about the importance of the savings from subsidy has established how electricity and transportation could be improved to save people from costly petroleum products. If electricity supply improves, new prices of petroleum products would hurt less.