Wednesday, 18 January 2012

Fuel Subsidy: What Government should not have done?

The thrust of this article is to identify and discuss the 5 pertinent issues that government failed or handled poorly and how and how it negatively impacted the fuel subsidy issue. These key issues are germane to the ongoing nationwide strike action.
1.       Cost of fuel subsidy.  The Executive Director, PPPRA, Reginald Stanley, told the Senate Committee that the gross amount spent on fuel subsidy from 2006 to September this year stood at N3.655trillion. The figure contradicted the N1.426 trillion submitted by the NNPC as subsidy on the products as at August 2011. Government dented its own credibility badly from this incident as it cannot accurately tell the amount of subsidy paid so far. This incongruence is what made many to believe that the whole process itself is a sham. How do you explain, contradicting figures with such gaping variance from 2 government agencies. The NNPC tried through advertorial to justify and reconcile this figure unsuccessfully.
2.       Beneficiaries and Cabal:. Anybody that buys fuel at N65 benefits from the subsidy. By context, all Nigerians can therefore be adjudged beneficiaries of fuel subsidy. Companies that imports fuel and entitled to subsidy refunds are therefore claimants. Cabals, this term have been loosely used to refer to all the companies that have received subsidy claims. Government erred with the list as it shows that it does not conduct due diligence on the companies that does business with. How can a contraction company be involved with fuel importation? The cabals of this construction company are so mindless that they cannot even register a new company to perpetrate the nefarious act
3.       Consultation –The Presidency set itself up against the legislature, an important arm of the government. What about the masses, what consultation did government do with them? As one activist said, government had already broken the round table. What about the oil marketers? Informed sources also said that while consultations were ongoing, the government also came to down like a bolt from the sky. And if the PPRA pricing template is anything to go by, the fortune of the marketers will not fare any differently if petrol is sold at N65 or N141. This goes to reinforce the position of some economists that this government is actually broke and in debts with removal of subsidy seen as a fulcrum to get out of the doldrums.
4.       People oriented implementation – If government is by the people and for the good of the people. It stands to reason therefore that the Federal Government will implement its budget in a way and manner that it will not hurt its people knowing fully well that 90% of its population live on less than $2 a day( according to UNDP Human Development Index). Announcing the commencement of the removal on the first day of the year was a wrong timing in a country that the bulk of the population remains fatalistic of what you start a week, month or year with will be your success story throughout the period. The President must have been deluded by the success of the IBB regime that announced similar measures on January 1, 1986.
5.       Emasculating Opposition – In the public relations parlance, crisis is often seen as an opportunity to turn adversity into advantage. This government massively failed to see the growing agitation on subsidy removal as a platform for engagement and tell its economic transformation agenda to the organized labour unions. Government was ill advised to see it as an affront and therefore went for the bloke. It obtained a court injunction to stop the proposed strike. This action only energized the labour. What was the result; the strike went on and it was successful nationwide. Added to this lives were lost due to the excesses of the armed forces.
In conclusion, I came to the realization that government failed itself by not finding and presenting a credible rationale for the implementation of the removal of fuel subsidy and how it will improve our economic well being. For a government that was already percied as not upbeat about governance, the quick implementation of the announcement was suspect.  For a government that was suspect to the listening to the dictates of World Bank and IMF through its cronies in government, it needed to do more to convince Nigerians it has their interest at heart. For a government that claims to be consulting when perceived to be slow, why is this exception for that engagement strategy. You can’t cut off a head to cure a headache. 

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