It was in 1997, somewhat during a remarkable ascendancy, that Robbie Williams, the British born singer and songwriter released the single titled “Let me entertain you”. The starting lyrics of this high tempo song is as follows:
“Hell is gone and heaven’s here
There’s nothing left for you to fear”
It is remarkable how the title of this song captures the comedy, bothering on jest, of the explanation cum approach to solving Nigeria’s fuel crisis. But the title is where the similarities end, as I am sure no Nigerian will agree with Robbie Williams that “hell is gone and heaven’s here”. And of course, only the comedians and jesters in government have “nothing left to fear”.
Nigerians are not only scared, they are bewildered. For months, we have consistently been in and out of fuel queues. And there are at least five agencies attempting to regulate a failed subsidy regime. As the noise turns to shout and shout becomes screams, they gathered at the town hall to say “it was not created by them”, “we live among the people in Gwarinpa”, and I started to wonder when did such stunts become a substitute for rigorous economic thinking.
But only the gullible will dance to such musical entertainment. It is a forty-year old problem, and attempting to solve it with a variant of previously tried and failed approaches is simply comedy. It may be a different doctor, but the prescriptions are the same – “the Port-Harcourt and Warri Refineries are working now, and the Kaduna refinery will soon commence production”. Shior! The Minister for Petroleum Resources, Ibe Kachikwu, in his previous incarnation when he could say it as it is already said the once and for all solution was to remove the subsidies and sell off the refineries.
The same first class petroleum minister that is supposed to lead the strategic and innovative approaches to attract investment, improve output, and help Nigeria leverage on the oil and gas industry for its growth and development now wakes up every morning to the supposedly mundane task of ensuring Nigerians have petroleum products. What a shame!
I seriously wish I could be entertained, as intended by Robbie Williams, but for this:
Five years after the attempted removal of subsidies by the last administration, subsidy payments made by the government is in excess of N6 trillion, including the highly unexpected N513 billion paid by President Muhammadu Buhari led government in November 2015. During the same period, the federal government combined budgeted expenditure on health and education was N3.3 trillion, just about 50 percent of the amount expended on subsidies during the same period.
The fiscal costs are immense: increasing debt and squeezing public expenditure on critical sectors like education, health and infrastructure. But the opportunity costs are even greater. In 2015 alone and since the start of this year, the lengthening queues at the pumps averaged over a week every month, the greatest symbol of an unworkable and folly subsidy programme. Over the years, the opportunity costs of subsidies have successively weakened the potential for the expansion of the economy and created widespread economic distortions that grossly limits private investment in the oil and gas industry on the one hand and other integrated sectors on the other.
The expectation now is that once the refineries start to work, the fuel crisis will cease, because it is erroneously believed that petroleum subsidy arrangement started in in Nigeria following the collapse of the refineries. However, only the methods have changed overtime. Nigeria, since 1970s, has relied on fuel subsidies to keep the price of fuel lower than international prices.
Between the 1970s and 1990s, Nigeria built refineries and used these facilities to refine the petroleum products required in the country. The subsidy arrangements at this time were in two ways. In the first instance, the crude oil supplied to Nigerian National Petroleum Corporation (NNPC) was subsidized, in the sense that this supply was at prices below the international crude oil price, or not paid for at all. Overtime, the subsidy arrangement degenerated to a combination of lower than international crude oil price supply to NNPC refineries and the maintenance of refinery facilities. Many will remember in the 1980s, under President Ibrahim Babaginda the recurrent feature of Turn Around Maintenance (TAM).
Why go through all this? To my mind, there are two motivations for subsidies in Nigeria. First, as an oil producer, Nigerians should pay less than the international price for fuel. Second, fuel subsidies will help lower the cost of energy for the poor.
But these goals have never been met. Even in the absence of scarcity, except for Lagos, Abuja, and perhaps PortHarcourt, Nigerians do not buy fuel at the subsidized price. And if it is to help the poor, the only poor I see benefit are the uneducated, illiterate and the unemployable that stand on the road to sell fuel in jerry cans to those that have failed in many respects to lift their burden in the right manner.
Looking at these young men on our roads leveraging on a failed policy, I see the irony of Nigeria in full circle. These are the generations that have suffered so terribly from a failed and backward policy because their education has been sacrificed at the altar of cheap fuel. They laugh, they smile, as the money they make guarantees another day’s meal, whereas the primary beneficiaries at NNPC and their cronies are dancing all the way. But I know better, the lives of these young men are not entertaining, and for as long as we travel on this perverted road, this is not entertaining anymore. I thank you.
Ogho Okiti
