Fuel Subsidy: My Layman Alternatives to the Removal of Fuel Subsidy

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This is day 2 of the nationwide strike embarked on by the Labor of our country against the removal of fuel subsidy which resulted in a more than 100 percent hike in the price of fuel. Most of what I have observed in the protests is an obvious anger at the government of GEJ for imposing what is seen as an anti-people and anti-welfare tax on the people by raising the price of fuel and as a result increasing the price of almost everything in the country. Overnight, price of transportation increased, food prices equally increased. But I am not here to discuss that. If you live in Nigeria you already know this. What I have failed to hear are alternatives, people are arguing haphazardly without providing suitable alternatives.

Our house of representatives called for the suspension of the removal of subsidy, the debate in the house was for the most part puerile. People were not allowed to properly articulate their views, they were shouted down by people of opposing views. I am personally against the removal of fuel subsidy, however I am objective enough to listen to the other side of the argument and really do not see why we should keep paying for subsidies when the money paid to the importers and marketers are going to provide jobs outside the country and the effects of which are hardly seen in our economy. I also think it is tragic for our government to keep on borrowing to pay for subsidy if indeed what they claim is true.

It is also instructive to note that even when there was fuel subsidy, many places outside the major cities and maybe state capitals in Nigeria were never paying for fuel at N65 per liter. I was recently in my hometown and fuel was almost N100 while it was N65 in Abuja. It is the same in many places in the country, outside state capitals people generally pay more for fuel.

I think many of us know that there is some merit to the argument for removal of subsidy but we also know that all of us will suffer from the inflation that follows this rise in price of fuel. The president on his part has announced “palliative” measures to help with the removal of fuel subsidies. Buying buses, building rail lines and reducing the basic salary of executive political office holders by 25%. Keep in mind that in most cases their allowances outpace their basic salary. We are also consistently told that the money from the removal subsidy will be used for development. I have seen the commercial on NTA about this, they kept playing last night over and over again. Again, I think many Nigerians are educated enough to know more money could mean more development but the problem is that Nigerians do not trust the government.

I do not trust the government, I see the money from the removal of subsidy somehow ending up in someone’s pocket. I cannot say how but I am confident about the evolving nature of corruption in this country. For every new system developed, people evolve new means to beat the system. What can I say? We are brilliant at the wrong things.

I have spoken way too much grammar or turenci much like my compatriots without providing alternatives, Here are some alternatives I thought of,

An improved tax regime

Maybe I am talking from a yankee point of view but many countries are run on tax. Nigeria of course has improved its tax collection a lot since I was a kid but much more can be done. There are still plenty people that do not pay tax in this country. I think a system where the richer people pay more tax and the poorer people less will help generate revenue for the government. Also a more thorough enforcement of tax not just on public servants but private individuals as well. A sales tax would not hurt as well. In a country of 160 million, I believe tax will be a considerable source of income to government at all levels.

Austerity Measures

This alternative has already been canvassed by many people and even the president to a certain extent. The president already hinted at the reduction in basic salaries of executive political office holders. I believe he should go a step further and also reduce the allowances the accrue to the executive. A similar reduction should be applied to the legislature and judiciary if need be. The same should be applied at the state level to all political office holders. It is time that political office should be made less attractive to Nigerians in order to attract altruistic individuals. A general reduction of overheads, travel expenses, entourages and delegation for government trips should be applied all across the board. This will considerably reduce the cost of governance. Austerity measures are being applied all over the world in countries undergoing the effect of a world recession, Nigeria should be no exception.

A Comprehensive Audit of Government

A comprehensive audit of government;s books should be done. All ghost workers should be removed. Funds from contracts that have been collected and have not been done should be reclaimed by the government. A complete opening of the books of NNPC and all parastatals should be done to look for ways to cut down cost and reclaim funds wasted by corruption. Why NNPC specifically? NNPC over the years has been the cash cow upon which corruption has been perpetrated. NNPC has a 60% stake in all oil produced in Nigeria and for the most part does little of the work of production. The get an enormous amount of funds and do not open up their books for people to know how much they make. It is from NNPC that money is siphoned by the executive for campaigns and other things. So it is imperative that some of the funds accrued by the NNPC are audited. Also it should be noted that some agencies of government are redundant are are duplicating functions. They should all be audited.

These are three major things that I think need to be done before subsidy removal. Other things that could be done are

A gradual removal of fuel subsidy
Repairing our refineries (this will cost money)
Engage in public private partnership for refining crude oil in Nigeria.
Allow smaller companies to refine crude oil in Nigeria instead of arresting them, you should regulate small scale refineries.

These are my layman alternatives to fuel subsidy, Of course, I am not an economist. Are there other ways around the removal of fuel subsidy or is removal of fuel subsidy the only way to go?

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6 thoughts on “Fuel Subsidy: My Layman Alternatives to the Removal of Fuel Subsidy

    Ayo Sagoe said:
    January 10, 2012 at 10:08 am

    I must say this is an excellent piece.

      Sir Fariku responded:
      January 12, 2012 at 4:54 am

      Thanks bro

    taiofierce said:
    January 10, 2012 at 12:48 pm

    You have spoken wisely as always! But again we are laymen but I believe this is a sensible especially for a government we do not trust. I’m in support of Subsidy Removal but I don’t think it should be done just suddenly, they should remove it gradually over the rest of the time left in GEJ’s tenure like for a period of 36months which is the time it would take to build refineries and invest each gradual removal into the development of new refineries not claiming to maintain outdated equipments, why would we maintain outdated machines….*smh*…. Also corruption would be reduced in the government if Godfatherism can die but that’s a long term ish! So for now, when releasing funds for projects it should be specific and not for ‘Miscellaneous activites’ considering we have a very corrupt government….
    But then again what do I know, I am just laymen *RME*

      taiofierce said:
      January 10, 2012 at 2:38 pm

      A layman*
      See subsidy making man shell

      Sir Fariku responded:
      January 12, 2012 at 4:56 am

      Perhaps you are laywomen, lol. I think the problem is that they shocked the whole economy by doubling the price of everything. The government should try and listen to us lay men and women sometimes sha

    onike olawale esq said:
    September 11, 2012 at 2:38 am

    This is an excellent piece…. Very good for a friend’s research project…. Just stumbled on it when trying to help her out on her project…. And its really nice…. THUMBS UP

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