For over three months unending fuel queues were part of everyday life in Nigeria. As if things weren’t difficult enough, thousands of Nigerians were forced to spend both spare time and working hours waiting for eternity to buy petrol. Heaven only knows the damage it inflicted on the economy, not to talk of our health and well-being.
Our anger towards the government was justified. For it was a simple matter of an administration’s refusal to be practical. As I explained in my ‘Open Letter to My President’, we need US Dollars to buy PMS. There are two main ways in which to obtain the necessary dollars we need – 1. Via exports, and 2. Via foreign investments. Bearing in mind Nigeria’s inability to export anything of any significant value at present, it means we are more or less reliant on foreign investments. But who in their right mind would invest in an economy wherein they can’t be sure of the value of the currency when he or she wants to cash out?
Add the fact that crude oil is currently trading at US$40 per barrel and the critical conundrum in which we find ourselves is fairly obvious.
Some would even say it isn’t so much the lack of foreign investments but the price of crude oil that has decimated our dollar reserves. I for one am eager to know what percentage of our foreign exchange income comes from foreign investments as against the percentage that comes from crude oil revenue. But whatever the answer, the same problem persists; the simple fact is there is much less foreign exchange to import petrol.
When the nation went on strike in 2012 the price of crude was well over US$100 per barrel; hence the availability of FX wasn’t an issue. As a result of President Obasanjo’s administration’s discipline with regards to saving, our US Dollar reserves were in a fairly healthy state. However as we all know, Jonathan’s administration wasn’t so disciplined; and despite an even higher price of crude oil that particular administration somehow managed to empty the nation’s dollar reserves. But this isn’t about who is or isn’t to blame. The plain reality is that our dollar reserves are severely depleted, our foreign exchange income is more or less non-existent, the naira has free fallen, foreign investors have scarpered, and as a result for much of the first five months of this year oil marketers have been forced to buy FX at an average of over NGN300 to US$1.
First Question – how sustainable is it to buy FX at NGN300 to US1 to purchase PMS in order to sell it at NGN87 per litre???
Second Question – bearing in mind the above how sustainable is it for the government to maintain fuel subsidy?
Third Question – where exactly is the money going to come from?
It’s been an extremely difficult year. So difficult in-fact that I’ve often wondered whether or not I was wise to get up at 6am in order to walk 5 kilometres to vote for Buhari on polling day. Surely this administration couldn’t have picked a worse time to remove fuel subsidy?! But in truth will there ever be a perfect time?
By removing subsidy our difficult year has just become a whole lot more difficult. However as painful as it is to swallow, this was the right decision to make. We simply cannot afford subsidy right now. It isn’t practicable, and it most certainly is not sustainable.
With regards to the NLC’s threat, let’s remember the last time we supported their actions. We not only backed them but together walked the streets in protest; because we vehemently believed their decision was in line with our thinking – to bring the government to its knees in order to ensure more transparency and accountability. I still believe just one more week of that strike would have resulted in a very different Goodluck Jonathan administration. But after two weeks of positive momentum we woke up one morning to find the NLC had brokered a deal; had compromised in order to get a slice of the pie. I told myself I would never support an NLC strike again. Why? Because they cannot be trusted. They strike only to serve their own interests.
Be rest assured this intended strike is not for the sake of honest, hard working Nigerians. The NLC leadership as always has its own self centred agenda.
We fell for this four years ago. Let’s not do so again.
The NLC knows the reality on ground; and although it’s devilishly painful so do you and I.
This nation can no longer afford fuel subsidy. The money simply isn’t there.
As the Emir of Kano pointed out, subsidising consumption makes no economic sense. It is akin to walking in quicksand – slowly but steadily sapping the nation of its much needed resources. Not only does the money never come back but it encourages widespread corruption.
Cancelling fuel subsidy will enable the government to generate additional revenue that can be ploughed into infrastructure, education, healthcare, and so much more. Bearing in mind this administration’s anti corruption drive it could quite possibly be a better time than most to effect this measure.
Trust me, I know things are tough. I can honestly say that it’s purely by the grace of God that I have survived the first five months of this year. But for the first time I sense Buhari’s administration is being practical.
This is the right time to say ‘No to Fuel Subsidy’.
Segun Akande
