Many people do not understand the politics behind fuel subsidy and it’s dangers to the development and growth of Nigeria.
The intension of the government to subsidise petrol was simply to make the product affordable for Nigerians and make life easier. So, the average price of petrol in the world can be as high as N590, however, the Nigerian Government will subsidise the product and fix price at N185 bringing total amount of subsidy per litre to N405.
The average consumption of litres of petrol in Nigeria per day is 60 million litres. However, Marketers of the product loads as much as 100 million litres and above per day.
This means the Nigerian Government is expected to pay as much as N405 × 100,000,000 (litres) as subsidy per day to the Marketers of the product to keep prices at N185 for instance. This brings the amounts to N40.5 billion daily and about N1.2 trillion monthly. Kindly take note that this amount can either decrease or increase following prices of petrol at the international market.
So, just try to wrap your head around it and know what Nigeria expends on fuel subsidy alone in a year – obviously some billions of dollars.
Here’s the irony of whole arrangement
1. Petroleum Marketers (major petrol dealers with tank farms) usually divert larger quantity of the subsidised petrol to neighbouring countries to resell at the international market price. So, they make same amount of money the Nigerian Government has paid on the subsidised petrol at the neighbouring countries.
2. This makes the product relatively scarce in Nigeria as the left over becomes lower than the daily consumption in the country. The implication is that petrol stations will be selling fairly higher than the fixed price of N185 (some sells N190, N205, N225, N250 and so on depending on the area). And during peak periods of scarcity, which are also engineered by the marketers, Nigerians still buy same subsidised petrol for as high as N400, N500 and even N800 as the case was in first quarter of this year while sleeping in filling stations. Again, marketers make double.
3. Marketers also import above the daily consumption of 60 million litres as seen above and still force the federal government to pay subsidy on the excesses, which are usually part of what they smuggle to neighbouring countries. Again, marketers dupe Nigeria.
4. This entire scenario makes a mess of the good intention of the Nigerian government to make petrol affordable for Nigerians.
5. This scarcity and high cost of the product despite subsidy leads to arbitrar increase in the cost of living. Transportation for instance, goes up crazily.
Moves to Remove Subsidy & Reactions
Therefore, successive federal governments having seen the outright abuse of the subsidy policy have always tried to cancel the policy so that market forces can determine the cost of petrol.
More so, the huge amount of money paid into the pockets of Marketers can be channeled to other meaningful venture such as infrastructural development, agriculture, social security, technology, health, etc.
However, whenever the move to remove subsidy is made, the Marketers are quick to shutdown their filling stations and deprive Nigerians access to the already subsided fuel in their possession. This leads to instant scarcity regime and hardship (like we are already witnessing).
And while the marketers make more money on one hand, they force and instigate Nigerians against the federal government with the hardship created on the other hand.
Then, the innocent Nigerians who do not understand the politics behind subsidy goes on strike, attacks the government and force her to
continue the subsidy regime. We pay more for our ignorance at the long run.
By: Jamiu Julius Adébáyò
