Government must end subsidy on petrol now!

The 2019 presidential election, barring contrary pronouncement from the courts, have been won and lost. For the winner, he has another four years to set Nigeria on the part of sustainable growth and development. The last four years have not been the best for the country – and now he has an opportunity to re-write history.

In setting an agenda for the next four years, one key area the presidency may consider is the issue of fuel subsidy. Last year, the federal government bandied several figures as expenditure on fuel subsidy or under recovery as it prefers to call it, since it officially denies that it still pays subsidy on petrol. The most current figure, according to Ibe Kachikwu, minister of state for petroleum is over N1.4 trillion ($3.9 billion). Going by the figures, it means about N3.76 billion is spent daily on subsidising petrol. This was a staggering 386 percent higher than the earlier figure of N774 million daily given on March 5, 2018 by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, for the importation and distribution of petroleum products in the country. Since the price of crude oil and imported petrol are not static, the figures would have since changed and we suspect they may now be higher.

This expenditure would have been understandable were Nigeria a developed economy with massive and adequate investments in education, healthcare, and infrastructure and the economy is booming.

But no; this is a country adjudged to be the poverty capital of the world, with the highest number of people – over 90 million people – living in extreme poverty in the country. Worse is that the situation is getting worse with approximately six Nigerians sliding into the extreme poverty gap every minute and about 8,000 daily.

This is a country where the health, education and social infrastructure are almost broken and with little or no investments in these sectors. This is a country with record high unemployment rate, high dependency rate, security challenges and the absence of right economic policies and programmes that will be a catalyst to lifting people out of poverty.

Pray, what rational and sensible government could afford to leave millions of its citizens in poor health, ravaged by avoidable diseases such as malaria, yellow and Lassa fever, cholera, typhoid etc while it continues to spend billions of dollars and trillions of naira yearly to subsidise consumption of petrol by the rich and the middle class? Despite Nigeria being a signatory to the World Health Organisation recommendation for every government to spend at least 13 percent its annual budget to health, Nigeria has not allocated more than 6.57 percent of its budget to the health sector. A good example is the 2018 budget where only N340.45 billion, representing 3.9 percent of the N8.8 trillion expenditure plan, was allocated to the health sector.

We believe there can no longer be any rational or sensible explanation for the humongous amount of money spent daily on subsidising the consumption of petrol to the detriment of other critical sectors and needs in society. Petrol is a commodity like any other that is best left to market forces of demand and supply. The little political capital derived from maintaining the huge and extremely corrupt fuel subsidy regime is not commensurate with the long-term damage that is being done to the economy, growth and development of the country by that wasteful expenditure. What is more, now that the elections have been won and lost, the government no longer has any rational explanation for keeping the policy. Nigeria cannot afford to be travelling down an escalator that is clearly going up.