The Subsidy Conundrum (Part 1) By Chido Onumah

If you are confused about the assurance by President Jonathan during his recent media chat that “Subsidy stays in 2013”, you are not alone. A few days before the presidential media chat, the frightening headline had been “Total fuel subsidy removal is a must”. That headline was attributed to President Jonathan.
The story is that on Thursday, November 15, 2012, while receiving the report of the graduating participants of the Senior Executive Course 34, 2012, of the National Institute of Policy and Strategic Studies, Kuru, Jos, President Jonathan told his audience: “only the total removal of subsidy on petroleum products would attract investors to the oil sector and put an end to the importation of petroleum products as it is currently being done”.
Waxing rhetorical, the president asked, “Why is it that people are not building refineries in Nigeria despite that it is a big business?” His answer: “It is because of the policy of subsidy, and that is why we want to get out of it.”
Just as the president and his team did last year before the increase (from N65 to N141 and later to N97) in the price of petrol on January 1, 2012, an action that precipitated days of massive nation-wide protests under the aegis of Occupy Nigeria, the president sought to allay our fears by “rubbing metholatum” on our severely frayed nerves, noting “while the total removal of subsidy could be painful to Nigerians, they would be happier at the end if they could bear the initial pains”.
Assuming the position of surgeon-in-chief, the president went a step further to clarify his position for the benefit of millions of unintelligent Nigerians. “To change a nation is like surgery”, he averred. “If you have a young daughter of five years who has a boil at a very strategic part of the face, you either as a parent leave that boil because the young girl will cry or you take the girl to the surgeon. So you have the option of just rubbing metholatum on the face until the boil will burst and disfigure her face or you take that child to the surgeon. On the sighting of a scalpel of the surgeon alone, the child will start crying. But if she bears the pain and does the incision and treats it, after some days or weeks, the child will grow up to be a beautiful lady. There are certain decisions that government must take that may be painful at the beginning and people must be properly informed so that they will be ready to bear the pain.”
For good measure, the president added that Canada has 16 functional refineries and Nigeria has four that are struggling to refine at 30 per cent of installed capacity because all the refineries in Canada are privately-owned.
Some people have joked about the president being a quack; that before a doctor performs surgery, the patient would have to be given anesthetics to ease the pain. With Doctor Jonathan, all the patient requires is to be “properly informed so that they will be ready to bear the pain”. This joke would have been amusing if not that our situation is really tragic. First, there is something troubling about the president’s “young girl with boil analogy”. The problem with the oil and gas sector, and indeed the country, can’t be likened to a boil. It is more like cancer that has metastasized.
A few days later, when the president had the chance to make a categorical statement, including what concrete steps he had taken to deal with those involved in the subsidy scam, he decided to obfuscate. “If we are going to remove subsidy from January, as you are afraid we will do in January, we couldn’t have made provisions for it in the 2013 budget. We have made provisions from January till December,” the president said during his media chat.
There is really nothing reassuring by the president’s doublespeak. You could read more from what he didn’t say than from what he said. The president’s assurance that subsidy stays in 2013 and his silence on a possible increase in the pump price of petrol says a lot. And it is this obfuscation that has led to speculation and the long queues at petrol stations across the country. The artificial shortage has led to increases in price of petrol ranging from N100 to N150 per litre. And the president’s response? “This situation can manifest in different areas, some people may have the product and decide to manipulate the system so that they can get more money. I am asking Nigerians to bear with us.”
Expectedly, Nigerians are heeding the president’s advice. We are gradually getting used to the situation. The government’s strategy this time, it appears, is to increase the price of petrol without linking it to subsidy, which in the president’s reasoning makes his argument about keeping subsidy 2013 valid. What the president fails to realize is that there can’t be any justification for an increase in the price of petrol. Certainly not with the insight Nigerians have about the rot in the oil and gas sector and those responsible.
Going by his antecedents, President Jonathan’s attempt to repudiate his earlier comments about the removal of so-called oil subsidy leaves a bad taste in our mouths. Clearly, the price of petrol will go up and it is just a matter of time. It’s almost a year since that insensate action that saw the price of petrol rise from N65 to N97 per litre with its attendant mass suffering.

We all know that the president had vowed during the last discussion on subsidy that he would consult widely and would not take a decision without the input of Nigerians. Even though Nigerians vehemently opposed the planned increase, the president still went ahead to effect the increase on New Year’s Day. That coldhearted decision caught Nigerians unawares, and left millions who had gone on holiday stranded. The president also promised then that Nigerians would benefit from the proceeds accruing from the increase; that our refineries would start working again; and that he would rein in those involved in the subsidy scam.
None of these has happened. Rather, the president confirmed last week that his friends in the oil industry are holding the rest of the country hostage and that he is helpless. “I got the report from the (Aig) Imokhuede committee on Friday, an advance copy of the report. The arguments by the marketers is that it is government that is owing them. (But) the preliminary report we have indicates that they owe the government,” the president told a not-too-surprised nation.
“They (oil marketers) are businessmen; they could decide to manipulate the system to get more money. I got a copy of the report. We will look into it. Experts are being brought in to do forensic audit. The human element is there, and we have our own challenges. I believe that by the time we finish sanitizing the oil sector, the issue of fuel queue will be put behind us for good.”
How reassuring! On whose side really is President Jonathan? Certainly, not on the side of the working and toiling people of Nigeria.
To be continued
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