Time for Nigeria to accept ending electricity, petrol subsidy regime
There is no other policy in recent history that has elicited as much passion and emotions as the issue of the removal of subsidy on power and oil sector. This is understandable given their centrality to the economy and pride of place in the life of an average Nigerian.
It is the view of the EnergyDay Editorial Board that beyond the emotions and sentiments expressed by many Nigerians; who have no understanding of the nuances of the oil business, other than layman’s pontificating which finds expression in the slogan, ‘we own oil therefore we should not pay more’, there is an urgent need to end the subsidy regime.
Our view on removal of subsidy on electricity and petrol is sancrosanct.
The most pungent argument for removal of subsidy on petrol and electricity is that for the former subsidy regime has gulped about N4 trillion in five years without any impact, which has translated to about N120 billions monthly ; which in the main, has neither stopped the incessant outages nor stabilised the sector. This huge cost has gone down the drain with no impact.
On the other hand, about N2.32 trillion has reportedly been spent as subsidy on electricity in 5 years without any tangible result to show as electricity supply remains epileptic and erratic.
What this means is that a little over six trillions have been expended as subsidy payments for electricity and petrol in five years.This money could have used for provision of infrastructure and basic amenities had both been earlier deregulated.
Our stand is that a sudden removal without extensive consultation and sensitisation programme for the people may lead to social problems as in increase in violent crimes. Many may be tempted to resort to cutting corners and criminal behaviour to raise the money to pay for additional costs.
Already, we are weighed down by the negative impact of COVID and an economy in distress. Removing subsidy without social safety nets may draw the vulnerable and erring elements in our midst closer to breaking point.
Currently, the Nigerian petroleum industry is still exercising partial deregulation where government intervenes through subsidy in order to increase efficiency and protect consumers from exorbitant prices of petroleum products.
Most developed countries that deregulated their oil sector had experienced or achieved economic growth. This subsidy in the final analysis has not benefited the poor and ordinary people that are supposed to be beneficiaries; of truth, only the rich have bountiful lydia reaped the full benefits.
We should note that no country in the world elects for total deregulation in areas where removal may lead to social stress which may test our fragile security. Thus there is need to strengthen social safety nets by reorganising and monitoring such programs as Sure P, Trader Moni and other social interventions.
The issue of subsidy in Nigeria, as far as this newspaper is concerned, is a FRAUD.
It’s another conduit pipe through which the elite cheat on the ordinary people who are supposed to benefit from such programs.
Who truly benefit from petrol subsidy? Why are other white products such as diesel, kerosene, aviation fuel etc deregulated but not petrol? Who owns the big cars that consume petrol?
The poor citizens use kerosene, how much is a litre of kerosene? Why is Labour resisting the plan deregulation? It is on record that Labour stopped Dangote from acquiring PH Refinery in 2007, the man went to build his own, and Nigerians are now waiting for his refinery to salvage the country.
Interestingly, NNPC’s three none operational refineries consumed billions of Naira in salary payment, without beneficial impact on the people. The question is what percentage of Nigerians are in the public sector?
If the government is interested in salvaging Nigeria from the hands of the manipulators, deregulation is the way to go.
If we fail to deregulate investors will not come into the sector. Modular refineries currently available in the country are not designed to produce petrol because of price instability. Some economic saboteurs who work in NNPC, PEF, PPPRA, DPR etc are busy feeding fat on our common resources in the name of subsidy.
We have legion of examples, easy to recall is Lawal and Otedola saga; where did it lead us? The Elumelu electricity investigation panel, what happened to the outcome? The government should brace up, take the bull by the horns and do the needful.
Only a deregulated downstream sector can bring about true progress to the nation.
Investors will come in because they know we have the market. Since kerosene became deregulated is anyone asking NNPC to import the product again? The same marketers who find dollars to import kerosene, diesel etc can not find dollars to import petrol because of price regulation. Two parting gifts the sector wants from this administration are PIB and a fully deregulated downstream sector.
Deregulation is a feature of the global best practices of free market-economy for a sector as critical as power and petroleum product; and for the country, it is the way forward.