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Thursday 12 January 2012

Fuel Subsidy: When the return to status quo is not the victory desired!

The question running through my head right now is what should happen if the Federal Government of Nigeria rescinds its decision on the “fuel pricing methodology” (subsidy or no subsidy, this how I understand what is happening. This is another conversation for a different time) as was announced on the 1st of January 2012? Should the streets suddenly go empty and should we all heave a sigh of relief?



What the president has unconsciously done with the announcement on removal of subsidy is to stoke up a delicacy of underlying issues that has bedevilled the country (and to be fair, not entirely the making of this current administration) for such a long time.  I will not go into all of the issues as I intend to keep this write-up as short as possible.



I have great respect for Ngozi both in her personal achievement on the international stage at the World Bank and in her first stint as a Minister of the Federal Republic (and of course the not too fancy return to her motherland in a time when trust in the institutions of government is at its lowest). Sanusi’s impact in building on Soludo’s foundation on the Nigerian Banking industry is also worth taking note of (notwithstanding any misgivings one may have in some aspects of execution of the banking reforms); his contribution cannot be denied even from the worst cynic. But that said, having these two individuals as the mouthpiece of the government and at the forefront of the current imbroglio is a square peg in a square hole, but they are standing on a one-leg stool. We appreciate what you have both done for this country and in many instances you do inspire some of us, but on this issue of removing the subsidy (if the fuel subsidy is actually a subsidy in the first place) based on the arguments you have put forward, kindly indulge us if we disagree with your solution (particularly the priority ranking of your policy instruments) to the fundamental problem we have as a country.



I don’t want to bore with analysis here as inherently I may betray the anger being expressed on the streets, but let me add to this debate by proposing in a very limited way here how I think the current issues should be looked at and conversations beyond this stage should be guided going forward (whether the follow-up conversations will be on the streets or at a possible negotiation platform between the Government and the Nigerian people).



Should Jonathan withdraw his earlier pronouncement and revert Petrol pump price back to N65/litre, I suggest we take note of the the following:



The Government (All Levels)

Draw up a list of priorities that can be realistically accomplished in the next twenty-four months. These priorities should lay a foundation that allows for Nigerians to easily mitigate the effect of a full/partial deregulated downstream sector (remember Nigerians currently subsidise the government by providing for everything else for themselves like water, power, security etc. What you think we “under-pay” for in petrol prices, we “over-pay” when we have to provide these things individually as citizens). You may want to consider a maximum of 2-3 priorities along the following categories (I make some suggestions…):
Economic priorities: Power Supply & Holistic Transport Infrastructure System (Rail, Inter/Intra-City connections etc.)
Social priorities: Employment Generation, Security Overhaul
Political priorities: Reduction of Government Waste, Restructuring of Key Government Agencies in the Downstream oil sector
Consider a graduated approach to the phasing out of current fuel “subsidy”. Nigerians have a trust problem with the government (and rightly so); so let’s have a performance agreement on how this trust can be regained. For example, let’s consider a bucket of issues that we can use in a “give n take” scenario: What is the total power supply needed for Nigeria to be on 24/7 electricity? We can consider when you achieve 60-70% of this supply, you can reduce your subsidy further by say 40-50% and this will continue until 100% is achieved by you and we the citizens allow you claim 100% pricing on Petrol (only when our local refineries are operating efficiently and at full/near-full capacity).
Nigerians have a BIG problem with how you distribute/share resources and more importantly, how you spend their money! Let him who has ears listen to the voice of the elders (and their children and children’s children)…
Labour/Unions/NGOs/Civil Rights etc

The goal of any agitation is to drive the government towards ensuring the efficient management of the country’s resources. The government should be hounded when it fails in this regard, but also you should not be found wanting in this regard as well.
Upon reversion to N65/litre, let’s be more proactive and be willing to meet with the government at the negotiating table on progressive steps and approach to national development. Agree a workable plan with government and ensure adequate monitoring.
Nigerians can understand the issues at stake, present the facts/issues (not just your opinions and interpretations) and let’s use the various mediums available to pursue meaningful dialogue
International Community

Be on the side of the Nigerian people! We are not asking for subsidies, only saying put the horse before the cart.
The reason most people here live under $2/day is not because we like freebies. It’s because after an average Nigerian provides almost everything (which you take for granted in your countries and expect your governments to provide) like build his/her own roads, supply his/her electricity, bore his/her own well for water, pay for his/her children’s education/health etc., you are most likely to be left with nothing!
Nigerian Protesters (Youth/Old, Male/Female, Adopted/Original)

Start preparing for 2015 in 2012! (Understand the party, the man and the underlying interests!)

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