Bebe Akinboade
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IS NIGERIA RIPE FOR OIL SUBSIDY REMOVAL?

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As January 2012 draws closer, the question that has been on my mind is whether Nigeria is ripe for the oil subsidy removal. This subject which is a crucial part of the Jonathan administration’s economic blueprint next year has generated a lot of controversy ever since the President made the announcement couple of months back.
President had proposed the stoppage of subsidy and a liberalisation of the oil market. The president says the more than N1.3 trillion to be saved from the removal, will be used in funding infrastructural projects.
As the Federal government deliberates on matters that will rather than divide us as a people, BOLA AKINBOADE presents some findings on this sensitive issue.

PRESIDENT GOODLUCK JONATHAN GAME PLAN
President Goodluck Jonathan has reiterated his resolve to go ahead with the planned withdrawal of the oil subsidy, just as he said that efforts are in top gear. With this economic strategy, he aims to create job opportunities for the nation’s teeming youth and also strengthened some sectors of the economy, especially agriculture, to ameliorate the suffering of the citizens.
Jonathan harped on the need for government at all levels to see agriculture as a potential tool for eradicating poverty in the country
President Jonathan also disclosed the plans by the Federal Government to put structures in place to tackle corruption outright and called on all Nigerians to participate in the war against corruption by reporting and exposing any corrupt act.
The Federal Government, however, in the framework is targeting marginal increase from N2.37 trillion to N2.47 trillion between 2012 and 2015 from oil revenue, using $75 as the benchmark price.

HOUSE OF REPS REJECT PLANNED OIL SUBSIDY REMOVAL
The House approved the resolutions advising the president to jettison the plan, and urged him to rather seek funding elsewhere.
‘The proposal that fuel subsidy removal as contained in the revised Fiscal Strategy Paper is premature,’ the lawmakers said as suggested by the committees on Finance, Appropriation, Legislative budget and research and National Planning.
‘Sources other than relying on savings from proposed subsidy removal, as part of financing items for expected deficit, should be explored,’ they added.
The lawmakers also urged the president to limit the plans from four years to three years as stipulated in the Fiscal Responsibility Act, and also reviewed the benchmark from $75 to $70 per barrel.
‘The original presented benchmark price of $75, though reasonable, is considered too optimistic,’ they said.
However, if the move is backed by the Senate, it will be a severe blow to the government’s hope of winning support for the controversial plan.

DAVID MARK’S CONNECTION
A source said the Senate president, David Mark told President Goodluck Jonathan that the Nigerian people are against the removal of Petroleum subsidy. He said that if the subsidy is removed, what else can the masses say they are enjoying or benefiting from government? He said in a situation where there is widespread poverty, lack of proper infrastructure, no adequate power, overwhelming unemployment, the issue of deregulating petroleum will cause more harm than good at this point in time.
“Since you know who the cabal that is sabotaging the subsidy on petroleum products is, you can deal with them by having them arrested and prosecuted. What will the Nigerian people benefit from the government if you remove the subsidy,” Mark allegedly asked Jonathan.
Mark clearly told the President that it was better for the President to address the current insecurity in the country by squarely facing Boko Haram before contemplating deregulation in the oil sector.

SUBSIDY REMOVAL WILL LEAD TO MASS REVOLT- NLC
The Nigeria Labour Congress (NLC) are also against the planned removal of fuel subsidy in January 2012 by the government which will lead to serious revolt, because Nigerians will be left without any option than to openly kick against the anti-people policy.
President of NLC Comrade Abdulwaheed Omar, however, warned that NLC would mobilise Nigerians for the action and called on Nigerians to take their destiny in their hands.

THE NEGATIVES OF OIL SUBSIDY REMOVAL IN NIGERIA
Experts have argued that removal of the subsidy would worsen condition of every Nigerian, and it will be inhuman on the part of the Jonathan-led administration to withdraw fuel subsidy when the successive governments in the country had failed to maintain the existing refineries or build new ones.
The removal of fuel subsidy will worsen the plight of the already suffering Nigerian masses and could send the country down the precipice of further violence.
If the subsidy is removed, people will pay more for almost all services in the country because petroleum has a ripple effect on the economy
Another reason given is the fact that dealings in the petroleum industry have been enmeshed in corruption, those responsible for the importation of petroleum products have been giving Nigerians wrong figures which had contributed in the high cost of the products.
The worrisome aspect of the situation is that there is so much inefficiency in the system and wondered why Nigerians should continue to pay for the inefficiency of those they put in charge.
They also stated that no country that has the interest of her people at heart exports her products in a crude form only to import the refined one at a very high cost. If the local refineries were operating at their full capacity, there would be no need to import the products with their adverse consequences.
Experts advised the Federal Government to work towards revamping the nation’s four comatose refineries and building new ones before taking step on the removal of oil subsidy.

THE POSITIVES OF OIL SUBSIDY REMOVAL IN NIGERIA
If oil subsidy is removed, Natural monopoly (by the NNPC) will automatically be destroyed, giving room for private companies and thus competition. Just as it was in the days of NITEL (Nigerian Telecommunications), before the telecommunication sector was deregulated and the door was opened to private investors and thus a revolutionary good to the Nigerian economy. Just as it was then, when new companies flood in there will be an increase in price, SIM cards then were as high as N50, 000. In the face of competition, this dropped as low as N100. Same will be the case for oil, when the subsidy is removed, petrol may sell as high as N160 per litre, but when competition comes in it will drop to the barest minimum, possibly lower than N65 per litre.
The amount the Government pay on subsidy can be channeled to meeting social needs like free and quality health care and education for all. This is therefore a right step in the right direction, and is capable of helping Nigeria achieve her vision 202020. Removal of Fuel subsidy is a hard one to sell; this is due to the fact that we, the masses are not ready to look the other way on this issue. The removal of oil subsidy, if properly done has inexhaustible benefits. Removal of subsidy from black gold in Nigeria is an awful tasting medicine, but the Nigerian patient is in dire need of it.

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