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Home >> Politics
On Fuel Subsidy Removal: Facts And Falsehood

Leonard Karshima Shilgba, PhD

The recent revelation of the avowed intention of the Nigerian federal government to remove fuel subsidy and devalue the national currency (the naira) in 2012 should not surprise Nigerians who have observed the conduct of government in Nigeria in the past twelve years. Rather, Nigerians should be concerned about the capacity of the social power zones in Nigeria to resist the policy intent until certain minimal conditions are satisfied. Is the organized labour capable of resisting the Nigerian government? Has the Nigerian student body lately demonstrated adequate understanding of the implications of government decisions and responded appropriately? Has the formal news media shown through unassailable intellectual dexterity that it is able to puncture disingenuous arguments of government officials and guide the Nigerian people through the web of deceit spun endlessly in the corridors of power? Has the organized civil society in Nigeria earned for itself the capital of trust of the Nigerian people for selfless advocacy on their behalf without betrayal, and the capital of honour from the Nigerian rulers for its uncompromising dispositions during mutual engagements? I can bet that majority of readers would answer in the contrary.
My purpose here is to separate facts from falsehood, and to remind Nigerians of the past—the relevant past—that we have hurriedly forgotten.
SAVINGS FROM SOVEREIGN DEBTS: Towards the end of the Obasanjo government, Nigeria earned—yes, earned—“debt forgiveness” from the Paris and London clubs of creditors. Nigerians were told, as it was equally made a condition for the “forgiveness”, that the resulting savings from sovereign debt servicing would be invested in critical sectors such as education, health, and public infrastructural development. In November 2006 (the same year Nigeria formally exited indebtedness to those clubs) President Obasanjo flagged off the construction of a modern dual-track rail network that would cover more than 1,300 km from Lagos to Kano. The completion date for the project was in 2010! The cost of the project was about 8.3 billion US dollars. Trains running on those tracks were to move at about 160 km per hour; that means a trip from Abuja to Lagos would take less than 5 hours, while less than 9 hours would be travel time from Lagos to Kano.

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Nigerian rulers and politicians, some of whom are still in government as I write, made sure the contract was cancelled after the exit of President Obasanjo. In fact, the national assembly during the days of President Yar’Adua, under the leadership of Senate President David Mark, who still occupies the position, claimed that the project was inflated by as much as 700 US dollars. Later, it was reported that the same national assembly promised to “probe” the cancellation of the project (They never did). In 2009 when the issue of removal of fuel subsidy arose, the chairman of the senate committee on petroleum (downstream sector) at the time, Senator Emmanuel Paulker said this on Yar’Adua’s plans to deregulate the downstream oil sector:
"On removal of subsidy, we believe that the government would have been compelled by the unsustainable fiscal burden involved in subsidizing petroleum products to the tune of N640 billion in a single year. We have always believed that subsidy should be removed, although not in the abrupt way in which it has been done, but through a gradual phasing-out process. And while that exercise is in progress, the government should adopt immediate measures to tackle those foregoing elements that add to cost. For example, if the refineries were functioning optimally, freight and port charges would be eliminated. Also, if pipelines that make up our distribution network were in order and new ones were built, the enormous cost incurred through haulage by trucks would fall, thereby contributing to reduction in the pump prices of petroleum products. All these will simply result in a less prohibitive and more affordable pump price when the phased deregulation exercise is concluded."

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View Comments
Date:May 07, 2012
Heck of a job there it absotluley helps me out.

Date:May 07, 2012
Gee williekrs that's such a great post!

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