My Thoughts on the Fuel Subsidy Removal Policy

The recent fuel subsidy removal by the Government has created so much tension in the country and I am sure the Goverment must be regretting her actions (and inactions) in some way.

The heat is on at the moment and I thank God for the Internet that has helped to cause a re-awakening in our Nation. People are angry and I mean very angry about fuel subsidy removal and have hit the streets to show that.

fuel subsidy removal

Kudos to Organized Labour and Civil Societies Coalition for creating the platform on which people have told Government how angry they are about the fuel subsidy removal policy. Hope this platform would not be dismantled soon, it is needed to solve more pressing National problems.

I have not made any public statement yet because I am very mindful of what I say due to the viral nature of the Internet which is my primary constituency 🙂

Below are my thoughts on the fuel subsidy removal policy

I am no Economist or Professor of business, so I speak as a layman, having listened to both sides of the argument, I wish to comment briefly as follows;

I agree with Organized Labour on the following points:

1. The timing of the fuel subsidy removal is totally wrong – there should more consultations since Government earlier said that everyone will be carried along.

2. The legal framework should be put in place i.e. the Petroleum Industry Bill (PIB) should be passed by the National Assembly and more credible people engaged for all the necessary oversight functions.

3. If the fuel subsidy removal policy must work then NNPC and PPPRA are high headed corruption dragons that have to be cut down.

According to Peter Esele, President of TUC, getting NNPC right solves 40% of the problems in the industry.

NNPC is simply a huge joke, an organisation that has earned multi-billion dollars yet looks so unserious.

NNPC cannot be a regulator, player, a manager of the refineries… 🙂 – there is no way the petroleum industry can get to the next level with this arrangement. So before the removal of fuel subsidy goes, NNPC should either be scrapped or restructured.

4. The issue of corruption must be tackled and the cabals brought to book.

It is likely that this so called Cabal might have people in Govt. as part and parcel of the racket, which is why the subsidy goes from 300 Billion Naira a few years ago to 1.3 Trillion Naira in 2011 (Crazy indeed) and this definitely makes the issue of corruption difficult (not impossible) to tackle in this case.

5. The cost of running Government is extremely high, so our leaders have to lead by example by ensuring that the cost of running Government is brought down drastically.

Let me quickly state, that the Presidential system of Government we have adopted is pretty expensive to run. For instance, what do we need 2 legislatures for? Why does the constitution make it mandatory for each of the 36 states to produce a minister? What about the federal character “crap” in parastatals and other commissions? How about the yearly religious pilgrimages that the Nation sponsors?

That said, I also agree with the Government on the following points:

1. One of the best ways to fight the so called cabal is to remove the incentive completely.

This can only work if the proper framework is put in place otherwise the smart cabal will put heads together and find a new way to exploit the fuel subsidy removal policy

2. Nigeria is better off with deregulated petroleum sector, PHCN, Water ways etc.

For me, wealth is better created in the hands of the private sector than the shameful public sector. It is time to encourage our Small Business Owners.

I understand that Nigeria has earned over 600 billion dollars from the sales of crude oil and we have nothing to show for it. But see how the likes of Aliko Dangote, Mike Adenuga etc have created massive wealth and have employed thousands of Nigerians.

Public Private Partnership (PPP) as opposed to full deregulation

The Eleme Petro-Chemical company is an example of a workable PPP arrangement. The company has gone from operating below capacity to operating above capacity and now, a planned (close to) 2 Billion Dollars expansion.

Which do you prefer Deregulation or PPP?

The Internet can build Trust for the Government

Government should not underestimate the power of the Internet. Social Media has made the fuel subsidy removal protests very successful, therefore, I suggest that the Govt. uses the Internet more for information dissemination and updates.

An Example of What Government can do to build trust

For Instance, starting in 2012 a website can be set up that will be used to inform the public how the budget funds are expended. It is not enough to just say it, Government should also state the name of the official (Government department), who receives the fund including the date and time – all these would have to be uploaded to the site.

Consequently, the Government official or department should then report back with the exact details of how the monies were expended, which should also go online.

This strategy won’t eliminate corruption completely but trust me it will demystify how Government is run. Imagine, if say you visit the site I talked about above and see a project that has been paid for in your area and then you go the location and see nothing…… all you need to do is visit the website and check the name of the officials, and then make some viral noise about it.

I doubt if Government at all levels would have the guts to implement this kind of strategy or do you think they would?

Sad to say, we have no opposition in the country. Opposition parties unlike labour should not just say No to the fuel subsidy removal policy, they should come up with their own alternatives and have it distributed online.

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