Fuel Subsidy: Before Its Too Late By Muhammad Karamba

I have forgotten the last time Nigerians suffered a fuel scarcity that lasted for 2 months (and still counting). PMS now sells at around N180/Ltr with most independent marketers. The main issue is not even the price at which it sells. Besides NNPC mega stations, most of the filling stations owned by the Majors are not selling and this puts too much pressure on NNPC stations. Even when you are ready to buy at a high price, it is hardly available. Transport fares have hiked. It is comforting that Mr President has finally apologized to Nigerians for the scarcity. But the most comforting thing I expected to hear was the removal of subsidy. Should President Buhari really allow subsidy to last till 2016?


Since 2012, the then CBN governor Sanusi Lamido has been a strong advocate of subsidy removal. I was against him and couldn’t get why he wants subsidy removed then. But this current scarcity has showed me what this wizard has been calling for. May God have mercy on the soul of late President Musa Yaradua. He had the perfect blueprint for subsidy removal. I couldn’t get the reason why he introduced these NNPC mega stations initially. If Nigeria paid over a trillion Naira for subsidy in the same year Nigerians suffered 2 solid months of fuel scarcity, I really doubt if this subsidy is paid for the benefit of the masses.

Just when the masses are crying and suffering because of the scarcity, vultures are rejoicing in their offices and business places. These oil marketers are making a lot of money from this. They are happy. They have held the federal government and the masses hostage. As long as subsidy remains, they would always make gain. They have the power to sabotage governments and this makes governments treat them softly. With subsidy, these guys are invincible.

One thing that I don’t doubt about President Buhari is his integrity. Imagine what a trillion Naira would do if used judiciously. It will repair our refineries and even build new ones if invested the downstream sector of the oil industry. What about Health care, Education or Security? These are areas that need a lot of investment and 1 trillion would make a big difference.

How comes PMS was sold at N97/ltr when crude oil was at $120/barrel and for sells N87/ltr (officially) when crude oil is at $32/barrel? Subsidy of course. It has removed market dynamics from the downstream sector. I see that Hon Kachikwu is trying to bring back a bit of that dynamics but I don’t think that is the best idea. The Federal Government should not be the only one to dictate the price of petroleum products. It should be a very open market where NNPC mega stations are used to control the prices. If we hadn’t stopped subsidy removal in 2012, we would probably have been buying PMS at around N97/ltr with the fall of the crude to $32/barrel. Unfortunately, we all played the card of those vultures.

Until subsidy is removed, refineries will continue to be “a want” not “a need” in Nigeria. The government might say that it needs refineries. But it knows that as long as subsidy is there, it can manage without refineries. Subsidy removal will increase pressure on the government to build more refineries and repair the old ones. It will open a new market in the downstream sector where private companies build more refineries which is good for the economy and will create jobs.

Removal of subsidy is not an easy decision. Just like a rotten hand will have to be amputated. I believe that is why we brought Buhari. He shouldn’t play politics with this subsidy issue. The truth is subsidy will have to be removed someday. I don’t know what made him decide not to remove it. But from where I am standing, I think it is high time subsidy goes. Every single hour that passes, Buhari losses the love Nigerians have for him. That is one reality of being in power. You lose popularity. This is the best time. Crude oil price is at its lowest and there is fuel scarcity. These two factors will reduce the impact that will be felt should subsidy be removed. I trust and pray for my President to make the right call. God bless Nigeria.

Muhammad Karamba

Twitter: @Mukib_Almisauwi