Eight years ago, Mark James (not real name) was one of the people who lined the streets of Lagos carrying placards in protest against Federal Government announcement on January 1, 2012, that it was quashing a 30-year-old petroleum subsidy that was both expensive as it was wasteful.
James, a middle-aged civil servant, and a hoard of other protesters succeeded in giving the wasteful subsidy a new lease of life, and they are raring to go again this year.
That is following the government’s latest resolve to end the practice that has culminated in the pump price of petrol rising to a record high of N162 per litre.
According to James, the hike will crush the poor and jerk up the price of everything from food to transportation.
What is worse is the timing, according to James, as this was a time when Nigerians have taken big hits to their incomes and are increasingly being laid off work as they reel from the harsh economic impact of the COVID-19 pandemic.
“This government wants to strip away the only thing that the poor count on as dividend from the government,” James said, saying, “We cannot accept such madness.”
The extent of James’ ignorance is deep.
He does not understand that the rich, who consume far more fuel than the poor were actually the biggest beneficiaries of the practice and that the government was essentially subsidising the rich and not the poor whose biggest expenditure is on food.
That is evidenced by results of surveys combining annual subsidy estimates with households’ expenditure data, which show that petrol subsidy is concentrated to high income groups as the top 20 percent households enjoy three times as much the benefit of fuel subsidies as the bottom 20 percent households.
He does not understand that by consuming less fuel than the rich, the government was essentially taking from him and other taxpayers, through taxes, to subsidise the rich by reducing the amount they paid to fuel their cars and power their generators.
He also does not understand that the government spent four times more money last year, N730.9 billion, subsidising fuel than building new schools, health centres and equipping new science labs.
He does not know that each time he fights against subsidy removal he denies his children and family access to more affordable education and healthcare.
He is perhaps also unaware that artificially low petrol prices in Nigeria have also led to large-scale smuggling of the product to neighbouring countries where it is twice more expensive, which means the Nigerian government was also subsidising nationals of other countries at the detriment of its citizens.
All of these somehow never matter when protests erupt over the controversial subsidy as another round of protests begins.
The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) already said they were in talks with civil society allies and relevant organs of Labour towards embarking on strike over the petrol price hike.
“Clearly, the action of the Federal Government is most insensitive and an affront to the Nigerian people who are bearing heavy burden of the COVID-19 pandemic,” the president of NLC, Ayuba Wabba, said.
“We will resist this latest move to impoverish the mass of the working people,” he said.
Despite the unrest, the decision to abolish Nigeria’s fuel subsidy is the right one. While deregulating the downstream petroleum sector could hurt working Nigerians initially, it would bring relief in the long term.
This is because it would pave way for new investors in the sector and that would ultimately drive down the price of fuel and reduce Nigeria’s dependence on petrol imports. Stopping petrol imports also helps the CBN conserve scarce dollars.
Keeping the domestic price of oil artificially low with the fuel subsidy has discouraged additional investment in Nigeria’s oil sector, according to a Brookings Institution report that was done as far back as 2012.
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