Just Before You Remove the Fuel Subsidy!

By Starrys Obazei | April 6, 2023

The heavy burden of subsidy has become unbearable for Nigeria’s government.

But no matter the desperation to remove the subsidy, no government can deliberately put the cart before the horse. It can’t just work.

So, the first thing has to be done first.

To begin with, is there anything you can do as a government to stop the total paralysis of the economy? When fuel subsidy is removed amidst inadequate electricity supply, who will then be able to buy Premium Motor Spirit, PMS, (petrol), or diesel for generating electricity for small or big business productions?

How much will a liter of petrol cost if the subsidy is totally removed?

According to the Independent Petroleum Marketing Association of Nigeria, IPMAN, a litre of petrol will cost N750, and someone suggested N400 plus.

Also, for big private companies, how much will they pay for a litre of diesel?

There are two words to describe that price: totally unaffordable! At that time, even Guinness, Nigerian Breweries, Coca-Cola, 7UP, and other biggies will move to Ghana.

Things had never got to this point when Michelin and Dunlop (the biggest tyre companies then) moved to Ghana years ago. But which country is still their biggest market for their tyres produced with Ghanaian labor? Of course, Nigeria!

Fuel has to do with the energy needed by all in any domestic and economic activity.

Yes, fuel subsidy removal will affect everybody. Transporting commuters and goods will be very costly, and this will gravely affect all prices in the local market.

The government may earn more revenue to finance infrastructure development long overdue, and may also have enough money to provide palliatives for the citizenry.

But just look back and consider the palliatives of the past. Were they evenly, justly, and fairly distributed? Were the distributions not corruption-ridden?

Again, what do Nigerians actually need from their government? Just an enabling environment for engaging in various private economic activities: security, electricity or cheap source of energy, and single-digit interest rate loans from the banks.

Big private and Small Medium size Enterprises, SMEs, are the backbones of employment in Nigeria and great contributors to the country’s Gross Domestic Product, GDP. And today, Nigeria is still touted as the biggest economy in Africa. Even in spite of this grandiose glory, Nigeria is touted by cynics as the poverty capital of the world.

What then will Nigeria’s status be if it removes fuel subsidy?

Putting the horse before the cart, Nigeria has just one bold step to take, and that is: to sell all her refineries to foreign companies or Dangote if he can show interest.

If we begin to refine what we consume daily in Nigeria, nobody will talk about subsidy or the removal of subsidy again.

Instead of thinking about having our fuel consumption refined in Nigeria’s privately owned refineries, run like MTN, Airtel, GLO, and 9Mobile, the government is planning to keep importing fuel forever

Government has no business in business, and that was why our refineries for decades have failed us. At least, we have one good story to tell about privatization in communication.
When we had Nigeria Telecommunication, Nitel, what was our experience? We had a complete failure, even retardation! But the story of communications today is pleasant to our memory.

Ex-president Olusegun Obasanjo in the twilight of his administration almost sold Power Holding Company of Nigeria, PHCN, to bidders, but later changed his mind.

Right now, we do not understand the kind of privatization done with Nigeria’s investors that produced Ikeja Electric, Eko Electric, and Abuja Electric, among others.

These companies are still receiving subventions from the Federal Government. What a sham privatization!

The government should learn from the Ghanaian government how they were able to stabilize their national energy needs.

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