Amid a global race to beat the COVID-19 pandemic, the Nigerian government is placing priority on funding a wasteful petrol subsidy scheme worth about $315 million monthly, an amount capable of vaccinating at least half of its adult population (53 million people).
After a year of dillydallying on the removal of petrol subsidy, it’s now official that the burden which has shortchanged Nigerians the most is real and active as the state oil firm has confirmed spending up to $315 million (N120 billion/exchange rate N380) a month on fuel subsidies.
This spendthrift is coming at a time when other countries are toiling night and day to provide funding for vaccination of as many of their citizens as possible. The message has yet to hit Africa’s biggest oil-producing country which relies on the goodwill of wealthier countries to pool donations of vaccines for its frontline workers.
Most Nigerians are bewildered that a government that couldn’t fund the purchase of roughly 289 million doses of vaccine required for herd immunity among its COVID-19-threatened populace can somehow muster the strength to carry $315 million fuel subsidy expenditure monthly.
At the European cap price of $3 per dose of AstraZeneca vaccine, a rate used by Gavi, the Vaccine Alliance, Nigeria’s $315 million monthly spend on subsidy can fund a two-dose regimen for about 53 million people, half of Nigeria’s adult population.
“For context, one month’s subsidy bill could purchase COVID vaccines for more than half of the entire adult population,” said a director at the Turgot Centre for Economics and Policy Research.
And even if the entire population were to be vaccinated, BusinessDay analysis shows it would only gulp $1.3 million, which is four times the amount Nigeria spends on petrol subsidy in one month.
“It’s wrong application of whatever little money we have. The government should be bold enough to get out of this mess and allow deregulation take its course,” Joe Nwakwue, chairman, Society of Petroleum Engineers (SPE), told BusinessDay.
The expenditure on subsidy for PMS also dwarfs the government’s proposed 2021 spending of N45.19 billion allocated for immunisation against measles, whooping cough, and tetanus to the most vulnerable and disadvantaged children, despite a UNCIEF report showing 4.3 million children in Nigeria still miss out on regular vaccinations every year.
“Petrol subsidy is a gorilla that has swallowed Nigeria’s economy and shortchanged unborn generation in terms of quality infrastructure,” said Wummi Iledare, a professor of economics and former president, Nigerian Association for Energy Economics (NAEE).
In a period Nigeria has one of the world’s highest numbers of out-of-school children, 13.2 million, according to the United Nations Children’s Fund (UNICEF), the amount spent on subsidy in one month is also larger than the entire 2021 budget of N94.4 billion meant for the provision of Universal Basic Education (UBEC).
By implication, less money will go into providing basic education or building classrooms, whereas more funds flow into the petrol subsidy that experts have severally described “as economic waste amid scarce resources”.
“With the country’s population expected to grow to 450 million by 2050, non-amendment of subsidy laws means a potentially significant growth in subsidy spending which risks pushing the government into a fiscal crisis,” BudgIT, a civic organisation that applies technology to intersect citizen engagement, said.
Beyond fiscal crisis, wasteful petrol subsidy means less opportunities in making life better for Nigerians, most especially generation Z, the generation born between 1997 and 2012/15. They are currently between 8-23 years old and are a generation impatient with failed leadership structure, a development which could lead to loss of skilled manpower to countries that prioritise them better.
For instance, healthcare workers at the University College Hospital (UCH), Ibadan, are currently using a strike that has cost a patient’s life to trumpet their needs to the Federal Government. In a year that has barely begun, over 370 doctors including all house officers, over 230 resident doctors and medical officers are owed salaries.
There are currently 3,767 Nigeria-trained nurses and 8,088 medical doctors as of January 2021, a trend that reveals the fleeing rate out of the country.
“You have to pay doctors and nurses well. You provide the equipment they can use to care if you don’t want talent loss and the onus lies on the government,” said Kemi Ogunyemi, former lead nurse, Haematology/Oncology Outpatients Department, Royal Free Hospital, London.
Other experts have raised concerns about how unsustainable Nigeria’s opaque subsidy system is, considering NNPC Group’s entire surplus from January to December 2020 was $236 million, which is 33 percent lower compared to NNPC’s subsidy of $315 million.
“NNPC can’t sustain this indefinitely,” Seun Smith, an industry research analyst, tweeted on Friday. “If they try to, expect to hear grumbling from Department of Petroleum Resources (DPR), Federal Inland Revenue Service (FIRS) and one Nigerian Petroleum Development Company Ltd (NPDC) as payments are withheld.”
Over the years, Nigeria, Africa’s top oil exporter, has made producing its own fuel a priority but efforts to revamp its refineries have failed, leaving it almost entirely reliant on imports.
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