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SUBSIDY REMOVAL: AN AVOIDABLE WASTE … STILL COUNTING THE LOSSES

By NBF News

By Clara Nwachukwu
A lot of figures are being brandished about by various groups with regard to the quantum of losses being suffered by Nigerians and the economy on account of the anti-fuel subsidy removal strikes and protests nationwide.

But whatever the figures - N1trillion, N2trillion or whatever is being lost daily, one thing that is given our poor book keeping practice, is that Nigeria can never quantify the actual losses it suffered during this fuel subsidy impasse.

At best we can hazard a guess on the value lost from the formal sector, but the larger proportion of the Nigerians operate in the informal sector, and only a fraction of their economic contributions are captured.

Since January 1, every Nigerian has become an economic analyst of sort and a litany of arguments has been postulated both for and against the subsidy removal. But as yet, there is no consensus among the parties on the wisdom of the policy because of the innate distrust in the social contract between government and the people.

The realities
Nobody believes anything government says because of the high level of corruption in high places and government's inability to tackle the issue headlong.

As a result, there is a crisis of confidence, as majority of Nigerians do not believe that government spent more than N1.34trillion on subsidy alone in 2011, as long as it cannot explain how the figure rose that level, and how it was appropriated, and how much of our daily fuel need came from the local refineries at what cost per litre, and how much was imported.

Latest calculations on subsidy show that the figures do not tally with government's claims even if all the 34million litres daily national consumption estimates were imported throughout the year. The disparities in the figures give further room for mistrust.

Besides, a former Minister of Petroleum Resources, Prof. Tam David West, has continued to maintain that 'there is no subsidy', adding that 'All the money used for importing fuel can build 50 refineries.'

In view of the foregoing, some members of the House of Representatives have called for the invitation of foreign auditors to examine not just the subsidy payments, but also, the books of the Nigerian National Petroleum Corporation, NNPC, which officials hold fast to their chests

Even the Subsidy Reinvestment Programme does not elicit the anticipated excitement among the people because experience has shown that government never keeps its promises.

Last week, protesters argued that 'the SUREP is a sure programme they are unsure of', just as some analysts have argued that the programme cannot pass donor agencies feasibility tests because 'It has no cost implications and there is no time frame for any of the projects to be executed.'

Indeed, a former Minister of Finance, Dr. Kalu Idika Kalu, also argued that 'the subsidy money cannot take on even 10 percent of SUREP.'

Labour on its part is concerned about the management of the funds that will accrue to SUREP, as 'There is no system to check disbursement'.

The President of the Trade Union Congress, TUC, Mr. Peter Esele, made several observations, first, is the legality of the constitution of the Dr. Christopher Kolade-led Board, as it has no Act of Parliament backing it.

Furthermore, since the Board will only oversee the 38 percent Federal Government's share of the fund, who will have oversight function of the lion share of 62 percent accruable to states and local governments, in view of the recklessness exhibited by some of them.

But the Coordinator of the Economy/Minister of Finance, Dr. Ngozi Okonjo-Iweala, in one of the television programmes, explained that SUREP will be based on cash flow and will be appropriated through an additional budget derived from the subsidy removal money.

She added that the programme would be scaled up with access to credit and partnership with state governments and on her Facebook page included project costs based on credit from the budget and the subsidy money.

However, all the economic arguments in favour of the subsidy removal is lost in the reality of the sufferings of Nigerians who are being forced to pay as much as 300 percent more for goods and services in the hope of a future reprieve they cannot see.

Comparative petrol costs
To justify the need for the subsidy removal, which everyone has come to acknowledge as a pump price hike as opposed to the deregulation claimed by government, the latest slogan by officials is a comparative petrol cost analysis in some West African countries accordingly:

Morocco - N198
Chad - N210
Benin - N167
Ghana - N175
Niger - N141
The irony of government's comparison is the fact that it failed to take cognizance of the minimum wage of the people in the respective countries and their ability to pay.

Secondly, none of the above listed countries is a major producer or exporter of crude oil. Ghana's production has only recently been ramped up to 25,000 barrels per day, compared with Nigeria's 2.6million bpd.

Besides, none of these countries have four refineries; at best they have one functioning each.

However, compared with other big producers within the Organisation of the Petroleum Exporting Countries, OPEC and non-OPEC countries around the world, as provided in the table below, Nigerians are being forced to live above their income.

It is feared that if petrol price remained at N141 per litre, as proposed by government, there will certainly be a corresponding increase in criminal activities, which government said it wanted to battle.