The pains and agony over the 164 per cent hike in petrol price would have been drastically reduced if the withdrawal of subsidy was planned and implemented in a way that shows consideration for Nigeria’s inconsequential majority.
Consumers had prepared their minds for the hyper inflation that petrol subsidy withdrawal would usher in when it is eventually yanked off at the end of June.
Suddenly the munificence was yanked off in a manner that even the man who read the speech to end it was not sure whether it should take immediate effect. No one talked about the palliatives to cushion the effect of the impending hyper inflation on Nigeria’s 133 million people toiling below poverty line.
Even the duplicitous Nigerian National Petroleum Corporation Limited (NNPCL) did not know that subsidy would be withdrawn before the end of June. It took something close to two days before it could respond to the conundrum.
As usual its response was pathetically incoherent and catastrophically clumsy. It reeled out a list of pump prices at a time when prices should be determined by market forces.
The federal government had in its tardy withdrawal of petrol subsidy handed consumers to merciless retailers who hiked pump price to N700 per liter.
A planned withdrawal would have allowed government to consider palliatives that would reduce the pains of the massive price hike on millions at the lower end of the social strata.
It would have allowed NNPCL enough time to organize its regulatory arm to monitor the retail outlets to ensure that no one hoards petrol to compel consumers to buy at outrageous pump prices.
None of those pre-emptive steps was taken. The outcome was organized chaos and an avoidable torment of consumers emanating from artificial scarcity engendered by hoarding.
Petrol subsidy was predicated on unfathomable fraud. That is why it is unsustainable. The merciless looting was done by top politicians and retired generals who are above Nigerian laws.
No one in government was bold enough to challenge the mindless looting of the treasury. Successive governments know the looters but could not touch them because of their enormous influence.
The son of a former chairman of PDP was charged with collecting N2.1 billion in subsidy for petrol that never landed the shores of Nigeria. The alleged crime was committed in 2012. Some 11 years down the line, the case is still being prosecuted. He is just one of the hundreds of well wired dealers who duped the federal government of N2 trillion in petrol subsidy in 2011.
Since the return of petrol subsidy in 2018, Nigeria has allegedly been defrauded of trillions of naira by tripling the daily petrol consumption figures. The federal government and state governors know that Nigeria does not consume more than 30 million liters of petrol per day. Ironically no one is bold enough to challenge the fraudster.
Femi Falana, the human rights lawyer dared to challenge NNPCL. He demanded import documents supporting its claim of daily petrol consumption in the neighbourhood of 100 million liters. NNPCL rebuffed the senior advocate with claims that daily consumption figures were its trade secret. No one in the federal government countered the deceitful argument.
Now the federal government has thrown away the baby with the bath water because it lacks the courage to confront those stealing from the largesse.
The World Bank and the International Monetary Fund (IMF) see nothing wrong with America’s social security system which has contributed immensely to the world’s largest economy’s debt burden of $31.4 trillion.
The bank knows that Nigeria has no social security programme. Unfortunately, it is very critical of a subsidy scheme that reduces the cost of commuting and evacuating food items to make them affordable to the poor.
The pump price of petrol in Britain is the equivalent of N330.6 per liter. British monthly minimum wage is the equivalent of N955, 876. That compares to Nigeria’s N30, 000 minimum wage where petrol now sells at N500 per liter. The World Bank is ignorant of that reprehensible analogy.
The bank’s argument that petrol subsidy benefits mostly the elite, is an incoherent economic logic. It is yet to find a palliative that benefits everyone like petrol subsidy.
The N5, 000 monthly stipend to 40 million of the 133 million Nigerians in poverty floated by the previous administration was an expensive palliative that would unleash hyper-inflation on everyone and even worsen the poverty rate of the beneficiaries.
Besides, in a country where consumers generate 70 per cent of the electricity mostly with micro-power generators running on petrol, it is not only the rich that benefit from petrol subsidy. Those at the lower end of the social strata own what is derisively tagged “I pass my neighbor” (micro Tiger generators).
The danger on ground is that petrol subsidy withdrawal could push food inflation perilously close to 40 per cent and price food items beyond the reach of 20 million more people. The World Bank would be the first to announce Nigeria’s new poverty rate.
That is when everyone would realize that we could have made petrol subsidy sustainable by naming, shaming and prosecuting those who defrauded the system.
Those who argue that Ghana now sells petrol at N619 per liter and no one complains are drawing the wrong analogy.
Ghana is a highly organized economy where the laws are strictly enforced. Even as it operates a market economy, the government regulates transport fares strictly. No one dares to exit the fixed transport fare.
Besides, with regular power supply, no one needs subsidised petrol to generate power.
Nigeria’s transport system is in highly organized chaos. The day petrol subsidy was unceremoniously withdrawn, bus fare from Alakuko to Oshodi in Lagos moved from N500 to N1, 000. No one in government was there to defend commuters.
That chaos would permeate the food haulage system and price food out of the reach of millions.