After famous 2012 fuel subsidy removal, we’re still talking about subsidy’
Lead Partner, Edoigiawerie and Company LP, Mr Omoruyi Edoigiawerie, Esq, speaks on the planned subsidy removal by the Federal Government in 2022 and the proposal to provide succour for 40 million Nigerians, among other issues, in this interview with Olusegun Olanrewaju
As part of measures to cushion the effect of the post-petrol subsidy regime, the Federal Govt recently proposed a monthly N5000 grant for 40 million poor Nigerians from 2022, which is the decision in the right direction?
Well, I do not think the government gave this a very careful thought. I think it was a hasty attempt to assuage the public outcry that will follow the decision to permanently remove subsidies from petroleum products. However, in reality, how does N5000 help cushion the effect of the hike that will come with subsidy removal? I just don’t see it.
However, if you do a quick maths, you will see that cumulatively it will give you N200 billion monthly, which can be ploughed into infrastructural development, improved public transportation schemes. Many people drive their private cars because public transportation in Nigeria is unreliable, partly unsafe, and often unpredictable in terms of comfort and security. Now imagine investing that in developing our public transportation infrastructure.
If you critically review the facts, you will discover that the cost of fuel is central to almost all economic facets in the country and I would expect the government to examine those line items that would lead to price hikes and see how to ensure this doesn’t happen. I won’t even bother talking about the refinery because I still do not understand why we do not have functional refineries and we have to import fuel when we produce and export the crude oil. It doesn’t make logical sense to me.
There had been numerous backlashes over the proposed plan, for instance, Nigerians are asking how the Federal Government will identify the 40 million indigent Nigerians, and there is the suspicion of corruption, among others. Do you share this view?
I share the same concerns. Let’s not deceive ourselves, we are not big on data in Nigeria and if you look at this critically, you will see that this scheme if not adequately handled would become another tool for political favouritism and domination by politicians.
I think it’s a counterproductive idea. The Federal government should take more time to think through the idea. See the average Nigerian is hardworking doesn’t need this sort of meagre assistance if we had certain infrastructural and economic cushions in place. Let’s get infrastructural development in place, create avenues for Nigerians to make wealth, and provide economic cushions for them. That’s better than giving out N5000, which would most likely be spent by the beneficiaries on the spot.
The senate also questioned the move by saying the 2022 budget that is being scrutinised at the National Assembly does not have such provision, isn’t this a big error?
Of course, it’s a very big error. The law is very clear- the government cannot appropriate money that is not budgeted for. We are looking at an expenditure of N2.4 trillion and the executive cannot just spend such money without recourse to the National Assembly. That is why we have the principle of checks and balances, this plan must be scrutinised, but even more importantly, it must be adequately justified.
Our refineries, which is the main reason for these subsidies, are still comatose, don’t you think that is the first way to address this fuel price hike that is determined by escalating exchange rates? For me, it is really difficult to comprehend how Nigeria is the only country among the OPEC (Organisation of Petroleum Exporting Countries) member countries that cannot produce its refined petroleum products and thus relies heavily on the importation of refined petroleum products.
I cannot also understand why after spending over $26.5bn, which is how much the Federal Government has so far spent on the maintenance of our local refineries, none are working and we still have to import fuel. Even with my limited knowledge, I know for a fact that this amount is capable of building three new refineries by any standard. So, something is wrong and we must not gloss over the issues.
Why are our refineries not working? Why are we spending these large sums of money on turnaround maintenance instead of building refineries? Kuwait for instance is building Al Zour Oil Refinery for $16b. The capacity of the refinery is 615,000 BPD.
Let’s not even go far, Dangote Refinery is estimated to cost about $15 billion and is set to be completed in just over six years with a capacity that surpasses that of all our refineries. If a private individual can do this in Nigeria, then why can’t the government do the same and even surpass it. We need to start asking the right questions, we need to look deeper to see where this leak is coming from and plug it.
Our non-performing refineries have made us a major importer of oil products, despite our huge production potential, so what you have is upstream oil explorers export the crude product to foreign refiners before importing it back to the country for sale to the downstream players at an unbearable price and Government spends its resources to subsidize the cost.
When the government should be the one exporting refined petroleum products and making the money it is spending. Other sectors, like health, education, and agriculture have borne the brunt of this faulty process for too long and this is impacting directly on the wellbeing of Nigerians. For instance, in the last five years, the Ministry of Agriculture received just a little over N500 billion. If Nigeria had spent trillions of naira earmarked for the refineries on providing for food sustainability, road infrastructure, there would have been a great impact on human lives.
The President Goodluck Jonathan-led administration claimed to have removed subsidy which was the reason for fuel hike at some period and the present administration continued in that light, is this subsidy not an issue of corruption?
The problem we have in Nigeria is an accountability problem. Those in positions of authority have a problem with being accountable and even the citizens do not understand that they are legally empowered to ask questions and demand not just answers but evidential proof to back those answers. So, here we are nine years after the famous 2012 fuel subsidy removal, we are still talking about fuel subsidy.
The price of petroleum products has continued to go up, the cost of governance has increased, the standard of living is off the roof and we’re not too far from where we were in 2012. In my opinion, we would never really understand what the issues are unless a thorough audit is done. What I think is that subsidy is a convenient cash cow and while every government in the world provides some sort of subsidy for its citizens, what we have in Nigeria is a problematic hybrid version.
Taking into consideration that the Organised Labour has threatened industrial action if the FG goes ahead to implement the subsidy removal plan, is Nigeria ready to bite this whole bullet?
Nigeria is not ready and cannot afford another strike, we haven’t recovered from the COVID-19 lockdown. I also do not think a strike is a solution. If we recall, in 2012, Nigeria’s economy lost out on an estimated N207.4bn due to the eight-day fuel subsidy strike, and let’s not deceive ourselves that it isn’t the masses who will bear the brunt of these losses. Now we have an opportunity to discuss the issues, Labour and the government must be engaged in an honest conversation on the issues. It’s not about grandstanding, but an impassioned review of the issues with a way to find out what is best for Nigeria and Nigerians.
What is the way forward?
The Federal Government cannot continue to emphasise oil above other key economic drivers. If the subsidy is to be removed, our internal production capacity must be running above average. We must develop internal capacity because only then will we be able to provide petroleum products to Nigerians at a sustainably affordable rate.
I was offered Osimhen’s shirt by NFF officials – Ighalo
But I also know that that we need to be more ingenious with our focus on the issue of fuel and its uses, NNPC has now begun to refocus its energy on fresh revenue streams. To be competitive, NNPC now privatised should divest itself of money sapping assets.
Also, the world is moving away from PMS, what does that portray for Nigeria? For instance, instead of capitalising on refineries, why not look into renewable energy. We have a huge gap in gas supply, why don’t we leverage on that. We cannot continue in a system that is biting hard on our pockets and producing the minimal result.
