Calls for the government to bring an end to the huge cost of the subsidy on fuel must be seen as a clear route to the economic survival of Nigeria , according to presentations made before the Senate committee probing the controversial matter.
Since 2006, the government has paid out over N3.6 trillion in fuel subsidy to a burgeoning list of well connected firms and individuals that have been admitted to the subsidy party.
In 2011 alone, it is estimated that about N1.3 trillion will be paid out by way of fuel subsidy, an amount that far outstrips the meager provision for capital expenditure in the 2011 federal appropriation act.
While the list of beneficiaries of the subsidy regime grows daily, the nation bleeds under the weight of dilapidated infrastructure and a decaying educational system, in an era where progress of nations become synonymous with knowledge and technological breakthrough.
According to the case for the removal of fuel subsidy, made in one presentation seen by Business Day, an end to the subsidy regime will lead to increase in government revenues and substantially raise the pool of funds available to the various tiers of government to fund crucial infrastructure programames.
Secondly, it will, say the proponents, lead to significant private investment in refineries and distribution networks, create quality jobs locally and end the traffic gridlock caused by petrol tankers in cities like Lagos.
Today Nigeria is exporting jobs to countries from where it imports her refined products requirement.
The presentation said ending the subsidy programme would end the massive cross- border fuel smuggling, estimated at around 20 per cent of the total fuel imported into the country, substantially reduce the corruption associated with it, result in vast improvements in the nation’s distribution infrastructure and bring to an end, the perennial product scarcity in several parts of the country.
Business Day learnt that the groups advancing the removal of the subsidy also say it will reduce the friction between the federal government and the states, over the legality of the subsidy administration and take away the frequent disruption in revenue flows for the states and local governments.
Because the federal government is relying on a vague Supreme Court ruling in 2002, the current subsidy administration can be successfully challenged in court, analysts have said.
The subsidy removal will also address the concern of some states which have argued that they are made to subsidise other states, either because petrol is never sold at the controlled price in their own states or because the burden of the subsidy which they bear is more than the proportion of the total domestic fuel consumption in their states or by their people.
The proponents of the subsidy removal say while they acknowledge the real potential of an initial increase in the cost of transportation, they insist that a significant portion of the commercial vehicles already run on diesel whose price has since been deregulated.