Why Oil Subsidy Removal Is Not The Answer–By Theophilus Ilevbare
Nigerians celebrated the new year with cautious optimism in spite of repeated assurances that subsidy will not be withdrawn by the federal government in the new year. For an administration renowned for its double standard, January 1, 2013, brought memories of President Goodluck Jonathan’s new year gift to Nigerians in 2012 – the partial removal of fuel subsidy.
The occupy Nigeria protests, took centre stage at about this time last year as Nigerians took to the streets to protest the hike in pump price of fuel from N65 to over N141 before it was reduced after negotiations between the organised labour and the federal government pegged the price at N97. The Subsidy Reinvestment and Empowerment Programme (SURE-P) was set up by President Goodluck Jonathan, as an interventionist committee to manage the proceeds from fuel subsidy removal. It is now officially the latest addition to the ever increasing conduit pipes employed to fritter away public funds and a perpetration of the legacy of failed promises that Nigerians have become accustomed to.
Lamentably, the Jonathan administration has demonstrated with the SURE-P that proceeds from total withdrawal of subsidy at any point in time will translate to nothingness to Nigerians. The Christopher Kolade-led committee has been very busy duplicating projects and defrauding the nation by making double payments for projects already embarked upon and financed by the various ministries and agencies amid other frivolous reasons the committee chairman outlined for expending billions of its budget.
During the Obasanjo tenure, billions were paid to the Paris Club as debt relief facilitated by the present Minister of Finance, Dr Ngozi Okonjo-Iweala. In connivance with her economic team, she told Nigerians at that time that settling its huge debt will mean freeing up much needed funds in subsequent years which will translate to prosperity for Nigerians in the long run. But this turned out to be just another utopian ambition of the Nigerian government.
Echoes of the Structural Adjustment Programme (SAP) of the General Ibrahim Babangida military junta resonate with the SURE-P of the Jonathan government. SAP’s high hopes of improved social services, infrastructure and human resource development were dashed. Till this day, those promises never came to fruition.. .
The Refineries are part of the grand fraud perpetrated and perpetuated by the Jonathan government. The proposed $1.6billion announced by the Minister of Petroleum Diezani Alison-Madueke to be spent on Turn Around Maintenance (TAM) on the moribund refineries, is just another indication of the perfidy and insincerity in the oil industry. This is in addition to the colossal funds injected since 1997 that have left the refineries in worse states. The Idika Kalu National Refineries Special Task Force recommendation that the government dispense with refineries in 18 months should immediately be implemented.
General Sani Abacha, awarded a major contract valued at $215 million in 1997 for the Kaduna refinery. In 1998, the Abdulsalami Abubakar administration set aside $92million for the refineries without achieving any result. Former President Olusegun Obasanjo frittered about $350million on rehabilitation of refineries and pipelines. The absurd injection of billions continued in 2007 when $54million was doled out for TAM of the Kaduna refinery. The rot in the oil sector can’t get any messier. It is not rocket science for the Jonathan government to comprehend that these refineries are a waste of tax payers money.
The world over, refineries are constantly changing hands with private sector partnership. The Nigerian government with its awful antecedents of managing its establishments should not have any business with the day-to-day management of refineries. They should inject funds into it and make it viable for private investors to takeover.
It is a ruse the government peddles around that the price of petroleum products will remain high except the sector is deregulated by removal of subsidy. The likes of Singapore, India and some other countries without oil deposits import about 70% of their crude oil, they refine sufficiently, petroleum products for use locally and even more for export to other countries like Nigeria.
For the foreseeable future, government must forget about total removal of fuel subsidy after all most OPEC countries still subsidise fuel prices. It should rather channel its efforts to prosecute those indicted by the House of Representatives Ad Hoc committee on fuel subsidy and whoever is found guilty, must return his share of the stolen billions in subsidy loot. Rather than spend N251billion on the repair of three refineries in the country as the Minister of Petroleum, Mrs Alison-Madueke, recently intimated the Senate Committee on Petroleum (Downstream), brand new refineries running at full capacity, working alongside some proposed modular refineries is the way forward to ensure sufficiency in local refining of petrol. It is only when these are on ground that the government can revisit the TAM for the near obsolete refineries on ground.
In 2013 and beyond, Nigerians must resist every attempt to remove the partial fuel subsidy, a policy that the President and his aides have long made up their minds to withdraw. He only appears to be buying time before he completes the last lap of his systematic removal of the other half of what remains today as subsidy. Sadly, the Jonathan government is a lot more perturbed by the subsidy regime than the corruption in the scheme and other sectors of the economy and his only solution to the sleaze appears to be to completely remove subsidy.
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