OPINION: Fuel subsidy removal; key success factor for Tinubu administration, by Kola Amzat
Contained in the 2023 Medium Term Expenditure Framework (MTEF) of the immediate past administration of President Buhari is N3.3 trillion proposed to be committed on petroleum subsidy between January and June 2023.
Meanwhile, it’s already in the public domain that the immediate past regime expended a whopping N11 trillion on subsidy from 2015 to May 2023 when it exited. Instructively, subsidy regime has been originally scheduled to come to a close by the end of June.
Sometimes in April, Nigerians vividly recall that the ex-President, Muhammud Buhari was indeed poised to declare that, from the beginning of the 1st quarter of 2023, curtains would be drawn on subsidy era before he suddenly changed his mind, and announced that he would prefer the new government to take absolute charge of the crucial decision.
Remarkably, it’s that historic decision that President Bola Tinubu has taken that has attracted condemnations from those few Nigerians who have over the years been holding the nation by the jugular. In decades, this people have amassed great fortunes from the several trillions of Naira doled out as petrol subsidy by government, while the populace have been wallowing in frustrations, poverty and despondence.
It’s therefore safe and germane to conclude that, this people are the architects of the uproar and propaganda reverberating across the country following the president’s declaration.
But with the declaration of the subsidy removal, there exists no doubt that it’s a new dawn in the country and the agents of darkness must endeavor to reconcile themselves with the present reality of purposeful governance, resolve of new government to institute probity & accountability in the affairs of the nation oil & gas sector, as well as new order by government at ensuring that Nigerian citizenry are also beneficiaries of good fortunes of the nation.
The Nigerian oil and gas sector is unarguably the mainstay of the economy, contributing over 85% of the country’s revenue generation. However, the extremely disorganized setting in the industry has continually making it impossible for the nation and its teeming population to benefit optimally from the sector.
For more than three years, the country has not been meeting its production quota given by OPEC. Oil theft and vandalization of pipelines have been a huge problem militating against the operational activities in the sector.
To compound the cycle of challenges, Nigerians four refineries have not been operational over the past years leading to absolute dependence on fuel importation for domestic consumption. This is the bedrock of the problem.
It’s curious that successive Nigerian government revel in fuel importation at cut-throat prices despite the fact that we have four refineries that could conveniently and profitably refine our crude oil for domestic consumption, as well as for exports, if they’re allowed to function.
But, the Nigerian privileged few who are optimally benefiting from the regime of oil & gas sector maladministration, culminating in continual fuel importation might have resolved that, the 4 refineries in Onne, Port Harcourt, Warri and Kaduna would never work.
It’s also crystal clear that all past presidents also collaborated with these few individuals who have been at the heart of the non-functionality of our refineries, thus truncating Nigerian from achieving its optimal revenue potentials for developmental purposes.
It’s against this backdrop that citizenry must rise and congratulate the new president for his courage, bravery, decisiveness and importantly, his patriotic zeal. Someone has to take a decision capable of turning the tide. Provident saddled him with the responsibility and he has remarkably and patriotically embrace it.
While submitting that drawing the curtains on the regime of subsidy is extremely difficult, President Tinubu has no other choice than to implement the removal since it’s already provided for, in the Petroleum Income Act (PIA).
Meanwhile, there exists tremendous benefits for the nation and its long-suffering citizenry in the decision of the president.
The new regime of zero subsidy has the capacity of unlocking about N7 trillion directly into the Federation Account annually. This development would significantly reduce the continual regime of fiscal deficits, as well as provides relief for the nation in persistently contracting debts and its galloping servicing obligations.
It’s also important to acknowledge that, the long-run era of subsidy has inflicted serious and huge distortions in the petroleum sector. A deregulated oil & gas sector is bound to attract huge private investments into downstream segments. In the years ahead, the nation is bound to experience private investments in refineries, petrochemicals, as well as investment in fertilizer plants.
Of course, zero subsidy regime would bring investments in storage facilities, transportation, complete rehabilitation of vandalized pipelines and building new ones.
Ultimately, the new regime in the oil & gas sector would continually boost the nation’s foreign reserves, as there would be progressive decline in petroleum products importation with resultant effect in conserving the hard-earned nation’s foreign exchange.
With subsidy regime coming to a close, the president is also advised to implement to the letter the PIA signed into law by ex-President, Muhammud Buhari. The Act particularly vested the property and ownership of petroleum within Nigeria and its territorial waters, including continental shelf, but exclusive economic zone on the Government of Nigeria.
The PIA provisions has given Nigerian Petroleum Industry a new order with the improved fiscal framework, transparent governance, enhanced regulation and the creation of a commercially-centric and independent National Oil Company that would operate independently and enjoys unfettered freedom from institutional regulations like Treasury Single Account (TSA) and other regulations that could constitute bottlenecks in its operational activities.
Thankfully, Buhari implemented the creation of NNPC PLC before he vacated. The new president is therefore advised to take the implementation to the new level, especially by swiftly rehabilitating the nation’s refineries, as well as the pipelines across the nation, some of which have been significantly vandalized.
Finally, it won’t be out of place to advise the government to roll out palliatives to cushion the effect of temporary pains and agony that the astronomical increase in prices of petroleum products would be inflicting on the citizenry and corporate organizations.
Such palliatives could be in form of strategy that would ensure that agricultural products flood the markets in all the nooks & crannies of the country and at affordable prices. May be government need to immediately acquire fleet of trucks from China, Brazil, Japan or wherever for the purpose of moving the produce from wherever they’re been harvested to markets for the citizenry.
Government could also move immediately to increase the workers wage at all level of governments, while also mandating the Central Bank to stem tide of inflation that would normally associate with such policy initiatives.
In furtherance of the move to ameliorate the pains on the citizenry, government could initiate a novel idea to reach out to downtrodden members of society, through cash transfers of various amounts enough to provide them succor for the period the hardship would last.
On a related note, the federal government should also move to radically and immediately ensuring that power is made available to households and corporate organizations and at reasonable price. This initiative, if implemented would significantly lessen the pains and tribulations being inflicted by the fuel scarcity.
Finally, through this medium, this writer passionately appeals to Nigerians to cooperate, collaborate and support the new government in its drive to refocus, reset and reposition the oil & gas sector, and other related activities that would ensure prosperity, as well as launch Nigeria into the comity of great nation.
We don’t have any other country. Let’s join hands with President Tinubu in his drive to harness the potentials of the nation for the benefit of all and coming generations.
Kola AMZAT (FCA, FCIB)
LAGOS BASED FINANCIAL CONSULTANT,
09077509348
Kola AMZAT (FCA, FCIB, CTP, MBA) Lagos Based Financial Consultant
09077509348.
