Petrol Subsidy: Where's the subsidy?

Since this debilitating petroleum crisis began, the sing song on virtually everyone's lips has been: “remove the subsidy”. People including friends who protested with me like many other Nigerians in January, 2012 have suddenly jumped ship. All we did in 2012 was to protest and reject what we saw as an evil policy of the government towards removal of what they called “subsidy” on petroleum products in our country. It was simply an agitation to get the government at the time to listen; by the time it listened a lot of water had passed under the bridge as they say. Between then and now, a lot of things have also changed in our country's socio-economic and political system. Perhaps, are these changes that have necessitated the present calls?

Then, the major reasons I trekked long hours to join other compatriots were: lack of transparency on the part of government on how Nigeria's oil industry is managed; there was also the issue of unbelievable lies told by the minister of finance to justify the price increment on petrol; there was the complete disregard for the feeling the people who were supposed to be reasonably canvassed instead of the arrogance exhibited at the time and of course I was not convinced that the N140-150 petrol began to sell when the deregulation was announced was a fair price. There was yet another reason: while it was indisputable as to the corruption inherent in the subsidy regime, I was appalled that even if we accepted the removal of subsidy, did it not matter to government that those that perpetuated corruption in the system needed to be punished? I have argued elsewhere that the current scarcity appears to me to be contrived. As a matter of fact, some of the key players including former president Goodluck Jonathan were later to acknowledge the devious nature of the scarcity. And I now wonder why should people blindly support a process fraught with evil? Because if you base your decision on what does not exist does it not support my claim that something is amiss? If the scarcity is about subsidy how come diesel and kerosene which are not subsidized scarce? So, if we agree that something is wrong why are my folks in such a hurry to expel “subsidy”? For clarity sake, I repeat, I do not buy the phantom scarcity story. It's a bogey, it's a mirage and we must stop them before they stop us. Instead we should engage wisely, we will realize that the government owes us a lot of explanations and refund. Before this government removes the so called subsidy there are a few points to ponder on: first we need to find out why the people we refer to as “marketers” are the same people that held the entire nation to ransom a week or more ago? These marketers are not more than six companies or individuals. Also we need to find out why these same individuals talk so gleefully about deregulation? That deregulation is deregulation for massive importation of petroleum products and not refining and proper oil industry company practices? How can we as a country be working towards stoppage of importation of rice, wheat, millet, cassava, even cars but turn around to encourage importation of petroleum products while we have crude oil? How come since diesel was deregulated over five years ago, a refinery has not been built by Femi Otedola that refines diesel yet they all want deregulation? Remember to build a standard refinery takes between six months to two years. Before we begin to beg this new government to remove subsidy, there are salient questions that need answers. So that we do not end up like the electricity sector which has forced consumers all over the country to pay a tax/fee of N750 before paying your consumption bill even if they did not supply any voltage throughout the month. That is a rip off and that's what removal of subsidy will entail if we do not take time. Is it not shameful that we import refined petroleum products into a country that is battling unemployment? From the oil sector alone if properly managed 1, 000, 000 jobs can be created within a space of two and a half years! So we should wonder why we prefer to import for emergency billionaires to go set up thank farms instead of investing in real oil and ancillary products businesses. Apart form the likelihood of a gang up among the marketers to fix prices that are high; we must realize that petrol subsidy if there is anything like that is a good economic policy. This is so because pricing the product out of the reach of small scale businesses will kill entrepreneurship and that will worsen an already parlous economy and drive the nation into more poverty. Petrol consumption is now a factor of production. So subsidizing it subsidizes production. We need to fix electricity supply first. We need to stop importation second, then and only them shall we be sure of exactly how much it costs to land petrol at the stations around the country. Doing otherwise will be a severe punishment. When crude oil sold for $100-120, government claimed to have removed subsidy and petrol was sold for N140-150. At that time there was taxes, transportation cost, duties, storage and trucking costs embedded into the pump price cost. So with crude selling less than half of the high prices at the time, how come the only story we hear about petrol has to do with increment from the N87 it is to only God knows what. To start with labour is cheaper here than wherever we buy petrol in the world, no transportation cost, no storage cost or demurrage, no custom duty, etc and I believe petrol, gas, aviation fuel, diesel will be cheaper if they are produced at home. We should be circumspect when petrol marketers encourage or blackmail us to accept deregulation powered by importation. If we must deregulate, it should start with domestic refining after all, even if you can't sell at home just like we buy abroad you can sell your refined products abroad too. Nothing lost!, except more jobs for the people!