Mr. President, Before Subsidy Removal

For over a decade, subsidy removal on some petroleum products, notably, Premium Motor Spirit, PMS or petrol and household kerosene has elicited polemic debate. While some have succinctly argued that subsidy should be removed in view of the prevailing circumstances, others have kicked against the removal.

The fuel subsidy regime in Nigeria has since 2012, been fraught with controversies, such that many believe it is capable of crippling the Nigerian economy if not properly handled. The issue took a worrisome dimension, when it was realised that between 2006 and 2013, Nigeria had spent over N5.42 trillion subsidising petrol. This does not include the huge amount expended on kerosene subsidy.

Sources in the oil and gas sector have put the amount spent on petrol subsidy alone in eight years at 15.57 percent higher than the N4.69 trillion 2014 National Budget, and also 10.61 percent more than the 2013 budget of N4.93 trillion. To buttress their point, for 2014, the Federal Government budgeted N971.1 billion for payments of subsidy, keeping it at the same level as in 2013.

At the current rate, subsidy payments over the last four years, including payments made in the last eight years, would have amounted to about N10 trillion. The amount the country is spending on subsidy is almost twice the amount allocated for education in the 2014 budget, which is N495.28 billion; more than three times the N262.74 billion budgeted for health; and 148 percent more than the N655.47 billion allocated for the Universal Basic Education Commission, UBEC and the Tertiary Education Trust Fund, TETFUND.

As gloomy as the removal of subsidy appears to be, proponents have argued that in view of the current situation the system is not sustainable and should be done away with in order to move the economy forward.

Nigerians came to a sudden realisation that the subsidy regime, as operated between 2009 and 2011 were laden with endemic corruption and entrenched inefficiency.

Much of the amount claimed to have been paid as subsidy was actually not for consumed PMS. The arguments for removing subsidy on petroleum products in Nigeria have remained largely the same irrespective of the government in power; yet, the expected improvement in the welfare of Nigerians has not been realised. 

It is expected that before the government contemplates a removal of the remaining subsidy, it is important that it proves to Nigerians that it has effectively and efficiently managed the proceeds of the last subsidy removal. The opponents maintained that the disbanded SURE-P should have done a better job of communicating how its programmes and projects will palliate the effects of the rise in fuel prices, alleviate poverty, stimulate economic growth, and catalyse job creation across the country.

They also posited that Nigerians will support the removal of the fuel subsidy if they can verify that tangible results have been achieved with the recent partial removal of subsidy on petroleum products.

 

Given the arguments advanced by the proponents and opponents of the subsidy regimes in Nigeria, it is the view of this newspaper that if the subsidy must be done away with, then it is incumbent on government to initiate other policies and socio-economic issues to re-ignite the faith of Nigerians in their leaders.

 

 

 

 

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