As we wait with sort of baited breath to see if petrol will continue to be subsidized or not, as queues at fuel stations snake around our roads for miles, obstructing traffic and raising aggression levels and as the debate and consultations continue to rage, there are a few aspects of subsidy which remain clouded in mystery, or for which there has been no satisfactory explanation.
A few people are taking advantage of the subsidy program to the detriment of Nigeria.
Why don’t we change the structure? Find the gaps, block them or revamp the entire system to get rid of the avenues for manipulation? To do that, one would have to understand the existing structure first. Sadly, the process is convoluted and proper understanding would require a large drawing board with lots of markers to draw arrows and links between the eight agencies involved in a fifteen-step process. What is interesting about the structure is that despite all the verification requirements, the system remains so ripe for abuse. Allegedly one aspect of subsidy abuse is round tripping – this is where the same cargo is ‘sold’ to NNPC more than once so that the importer of one million liters of petrol will enjoy a subsidy payment for two or three million liters worth. Another tactic is to divert the fuel which government has already subsidized to a neighboring country and sell it there – thus reaping benefits from two sides and shafting Nigerians. We would like to think that if man is now on the moon – admittedly not due to Nigerian intellectual or technological powers – we can create a subsidy system which is fairly abuse proof. Why are we not hearing about feet hitting the pavement as sack letters fly through NNPC and all its various subsidiaries and partners? Why are we not hearing about EFCC going after some of the organisations which are guilty of round tripping and cheating the federal government and the people of Nigeria?
The price of maintaining the subsidy is too high – it is not sustainable.
Have we considered sourcing for funding from other avenues? For instance if over 70% of our annual budget goes on maintaining government – why don’t we drastically slash government’s size and use that money for the fuel subsidy? The proposed 2012 budget for security alone can cover our fuel subsidy for 2 years but for arguments sake, the threat of Boko Haram and Niger Delta militants must be well funded – if we roll up a few of our 42 ministerial fiefdoms we could make up our fuel subsidy budget for at least a few years to give the administration time to put certain critical structures in places such as mass transport and rail.
Granted, the subsidy is not sustainable in the long term, but the government of Nigeria has been wasteful for over 50 years and now that it wants to allegedly adopt responsible fiscal management, it wants to start from the starving public instead of trimming the fat from its ponderous protruding belly.
If the current state of the Nigerian economy is unsustainable and we are heading for bankruptcy, why is the removal of the fuel subsidy the only solution? Why aren’t the federal, state and local governments restructuring to become more efficient and to reduce waste and opportunity for corruption and fraud? As Nigerians struggle into 2012 with lack of electricity (and the prospect of increased tariffs), shortage of petroleum products (and the prospect of a long siege and strike) and the reintroduction of road taxes, gamblers can safely bet that it will be business as usual in our ministries, departments and agencies with full personal and official benefits and perks even after the monetization red herring of the Obasanjo era.
A ‘cabal’ has hijacked the fuel subsidy programme.
At least once a day, since the subsidy removal debate began, there is someone somewhere who says through the media ‘they say a cabal is benefitting from the fuel subsidy – let them name the cabal’. Several things are simultaneously amusing and annoying about this insistence on the cabal being ‘named’. The funniest thing is that we already know who the cabal are…at least a good part of them on the, let’s say ‘external supplier’ side – they are major market importers and NNPC. What most of us might not know are the names and faces of the ‘internal regulator/customer’ members of the cabal i.e. the employees of NNPC, Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA), and the Ministry of Finance who control the subsidy program and as such are part of the problem. The annoying part of this obsession with names is that once we have the names…then what? Nothing. Nothing will happen to anyone who has unjustly benefitted from the subsidy even when we know who they are and where they live. Same way those who have looted our treasury for years sit happily in their hilltop/lake view mansions and even come round every once in a while to be accorded revered statesman respect by us.
How is the money no longer meant for subsidy going to be spent and how can we trust this government?
The subsidy on petroleum products has been whittled down at least a dozen times since the 70s – and always with no meaningful impact on Nigerians except with the Petroleum Trust Fund set up by Abacha. Although super minister Ngozi Okonjo Iweala has said at least once- during the Economist conference in October that the money meant for subsidies will be diverted to infrastructure, there isn’t a line in the draft budget President Jonathan presented to the National Assembly which earmarks the money meant for subsidy. Considering the blistering lack of trust between the government and the governed, it is only logical to identify the subsidy ‘money’ and ring fence it so that its use and disbursement can be closely monitored. Instead, we have a situation where there is no track of the money and we find that the subsidy is merely moving to support an over bloated government – which cannot live within its means.
It is not only the issue of the removal of the subsidy that bothers Nigerians; it is the fact that the removal will result in a big fat zero for most of us and those with access to government coffers will continue to live exactly the way they used to. If this government is sincere about its plans and aspirations for a sustainable economic policy for Nigeria, why is it so difficult to tag the money going from subsidy to infrastructure and share a blue print of how the money will be spent? According to SURE (Subsidy Reinvestment & Empowerment Programme) in a 7-page newspaper spread last week – some of the money will be spent on roads, railway, water and agriculture, irrigation etc. and goes so far as to list some of the specific items being considered e.g. 200km of Abuja-Abaji-Lokoja Dual Carriageway (hasn’t this project been underway since the 80s?). The problem with the spread is that it does not say how much has been allocated to the completion of this road and how long it will take to finish the projects. Which brings us to the last mystery.
What is the timeline for subsidy ‘spend’?
The argument the government has made is that the removal of the subsidy will mean the money can be spent on projects to benefit Nigerians. The SURE Board (another octopus arm of government is being created here) will focus on improving infrastructure, creating jobs (women and youth employment programme) and poverty alleviation but it is not clear how long the execution of these projects will take. Is the Federal Government anticipating the execution of all this by the end of 2012? If not, where is the money going to come from? Or are we going to be left with more uncompleted projects?
In 2010 we spent N673 billion on subsidy and in 2011 we spent N1.3 trillion – which of these amounts is going to be our 2012 phantom subsidy budget to go into these special projects? Considering the years of government incoherency when engaging the public about the need to remove the subsidy, one would expect a little more creativity and transparency. We would have better informed supporters of the subsidy removal if the government said ‘here is what we are going to do. In 2012, 2013 and 2014, we will earmark N500 billion in the annual budgets which would have gone towards the subsidy and spend it this way’. Instead we are left wondering why subsidy money is going towards building roads (when we have Ministry of Works) or irrigation projects (when we have ministries of Agriculture and Water Resources.
If the past is an indication of the future…the subsidy removal will mobilize civil society and labour and after some heavy negotiating (maybe we should stop strikes too because people allegedly benefit from negotiating strikes) we will agree to pay N100 per liter instead of the N160 or so being suggested and all will be quiet until the next time the debate comes up again. Only when we ask the tough questions and got the right answers with full disclosure will we start making the right decisions in Nigeria – until then the real position of things remains a mystery.