Home Analysis The sacrifice government and citizens must make

The sacrifice government and citizens must make

by Business News Report

When last week I said fuel subsidy should be removed once and for all because Nigerians are tired of the yearly ritual of fuel hike, the reaction from the public was violent and vehement. There is a palpable anger in the land against the government for one single reason – Nigeria leaders cannot be trusted to fulfil their promises. ‘We have passed this road several times and all the promises made to us were never fulfilled,’ said majority of the responses. Many said this time around, Nigeria will experience the Egyptian kind of protest.

From the reactions, most of which are unprintable, Nigerians are not against subsidy removal but the sincerity of those in government to faithfully implement the policies and revenue derived therefrom to the benefit of all. The great fear is that whatever money is realised, instead of being used for the benefit of the people, will find its way into the pockets of those in government. It borders on trust. Nigerians simply do not trust their political leaders. This being the case, the Federal Government must put in place machinery to begin to elicit and cultivate Nigerians. This government as a matter of urgency must redeem its image and credibility by embarking on programmes and projects that will convince Nigerians that its promises are its bond. Bonding with the people will begin by government showing evidence that its proposed palliatives are for real.

As things stand now, the government cannot embark on subsidy removal early next year. If it must be removed, it should be in the second quarter when strategies to cushion the effect of subsidy removal would have been put in place.

It is a well known fact that a hike in petrol price will trigger off hike in prices of almost every other commodity in the market place. It will affect the cost of transportation, housing etc. In fact, the cost of living will go up. By how much, no one can say precisely. However, if the government can demonstrate to Nigerians that in its envisaged strategic interventions into the economy as a result of subsidy withdrawal, it will quickly address infrastructure bottlenecks, unemployment and enhanced growth potential of the economy through the diversification of the economic base of the country. This will mean clear evidence that most of the bad federal roads across the country will be fixed in no time for the easy movement of goods and services, government can be sure that Nigerians will support it in this bid.

It must also show Nigerians that it is capable of ensuring cheap and affordable food supply. In this case, its intention to intervene in the economy through the rehabilitation of the railway, power, textile, support to development financial institutions for on-lending to the real sector of the economy, with particular focus on Small and Medium Enterprises, low-income housing and for-export-oriented industries is for real. It must show how it intends to revive agriculture in practical terms.

Availability of regular power supply will encourage every Nigerian to be gainfully employed. If there is ample power supply, many who buy fuel to power their generating sets will no longer do so. Such saved funds can now be used for other investments in the economy that can create more jobs. Many Nigerians will be encouraged to be self employed. The Federal Government’s plan to resuscitate the textile sector has not taken off fully. That is a sector that employs thousands of people. The Federal Government must move away from rhetoric to real action. Nigerians do not need promises this time around; they want to see evidence, away with sweet talks, now is the time for action if the government intends to succeed on the path it has chosen to tread.

The Federal Government should between now and December show Nigerians that its plan to support ongoing mass transit efforts by states and local governments, especially those in urban metropolitan areas in a bid to ameliorate the pains that the envisaged deregulation would visit on Nigerians, is real. It must provide the buses through reduced ownership cost of means of transportation in the country. This certainly will reduce the upward pressure on transportation fares when subsidy is eventually removed from fuel.

According to government strategic intervention plan, it is to invest in National Railway Networks and support/invest in Metro Rail projects. If this were on ground and there exists any evidence that the government is making moves to develop the rail system and provide the people means of cheap transportation, there would have been no resistance to the planned subsidy removal.

Investment in railways and metro rail will reduce the current pressure on roads and maintenance expenses. It is felt that migrating Nigerians from road transportation to rail will reduce the demand for petrol and that inter-city rail will further reduce the cost of transporting goods, especially food products. Railway project as a palliative may be relatively long-term, and tough to sell as part of an immediate impact palliative measure.

What is so difficult in Federal Government, in collaboration with local governments, providing vans and trucks to farmers’ cooperatives to haul products to major distribution centres and cities which will help mitigate the cost of hiring vans to haul agricultural produce and reduce the cost of transporting goods into cities.
If what Wikileak said that about $60 million is set aside annually as largesse for the President by NNPC, which accounts Nigerians have not seen in the last ten years, calculate how much will have gone into the private pockets of principal officers of government. Who then is losing, the people or those in power and have access to cheap money from oil in the name of subsidy? If this is the case, then fuel subsidy must go in order to save the Nigerian state from the shame of this hydra-headed monster called corruption. If this government is serious as it pretends to be, it should show its will power by starting the implementation of the palliatives.

Like I said last week, what labour and civil society should be asking the government to do is the channeling of the fund to be saved from the exercise to productive use and intervention in the critical sectors of the economy. The Federal Government had in 2007 in its bid to remove this same subsidy envisaged some sectoral intervention in the economy as palliatives. The envisaged sectoral interventions were meant to cushion the immediate, medium and long-term effect of subsidy removal. The challenge for labour and civil society is to discuss these interventions with government on behalf of the masses since the 2012 budget is still in the works.

Many known names that hobnob with those in power make huge money from the oil industry. The only qualification is access to political power. All they needed is access and the rest is money rolling in through either importation of products or oil block. This is made possible by the huge differentials they are paid for bridging products from Lagos to other parts of the country because petrol must be sold at government price. It is a huge racket going on in the downstream of the oil sector.

If Nigerians are tired of corruption and want it dealt with, they must be prepared to go through some hardship and support policies that deny rent seekers, commissionaires and other parasites access to cheap money.
For the nation to achieve this, subsidy on imported petroleum products, which runs into hundreds of billions of naira through the Petroleum Support Funds (PSF) must end. The colossal sum of taxpayers’ money spent on the bridging of petroleum products through the Petroleum Equalization Funds (PEF) the source of subsidy and economic rent should go. Are Nigerians not aware of the profound integrity and transparency issues associated with the management of subsidies? What about the bridging funds and the refineries that never function? Nigeria spends about N72.8bn monthly on petrol subsidy; can’t that be used for a more productive venture? According to the pricing template of the Petroleum Products Pricing Regulatory Agency as at August 15, 2011, the landing cost of a litre of petrol is N129.21; the margin for transporters and marketers is N15.49; the expected pump price is N144.70; while the official pump price is N65. This means that the Federal Government pays N79.70 as subsidy on each litre of petrol. Let’s think of saving the nation from these parasites.

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