Have you heard? The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has thrown its weight behind the removal of subsidy on petroleum products, saying such funds should be channelled to the rehabilitation of refineries and infrastructural development in the country. The union’s president, Comrade Igwe Achese, said the action was the only way to end the perennial fuel crisis in the country.
Interestingly, the Nigeria Labour Congress last May 1 during the Workers’ Day celebration warned against any move by the Federal Government to remove fuel subsidy, saying such action was capable of plunging the country into “unnecessary crisis.” Given that NUPENG is a strategic members of the NLC, its rejection of fuel subsidy should be seen as an ideological suicide on the issue.
Ideologically, labour has always been pro subsidy, since such economic intervention by government creates humane conditions that make life interesting for the workers, the creators of the wealth of a nation. The NUPENG’s position is a repudiation of that traditional position. I have asked some radical leftist friends what they made of NUPENG’s stance. The consensus is that such repudiation is an ideological somersault.
Personally, I see the stance of NUPENG as arising from a proper articulation of the political economy of oil subsidy in Nigeria borne by prevailing socio-economic and political reality. I have been a disciple of pro subsidy. The reason is more ideological than economic. I have always found it socially non-permissible and indeed indefensible that a section of the society should be denied access to certain public goods like education and healthcare. Education because it liberates the mind from ignorance and superstition; and also because it is the most effective weapon against social inequality.
And healthcare because lack of it shortens life and impedes productivity of the mind and body. I added petroleum products to my list because I have always found it offensive that a product so freely given to the country by Nature should be priced out of the reach of all Nigerians. The socialization of access to petroleum products in caring and concerned countries like Venezuela under Hugo Chavez, Libya under Muammer Gaddafi and Saudi Arabia under her successive kings, is a model worthy of emulation.
I must admit that the implementation of subsidy regime in Nigeria is rudimentary, fraudulent and self serving. In the public sector education, the Nigerian state has been overburdened by the weight of subsidy implementation. There is one form of subsidy or another in public sector education, the greatest burden being in the tertiary subsector. For confirmation, compare the bills payable in private schools, (primary, secondary and university) to those of public schools. The attempt to sustain government’s fidelity to the equalization of access to education even why economically disadvantageous is why the palpable decline in the quality of education in the country has set in.
Subsidy in the public health sector is generally kept low. You get a feel of its existence when you compare the bills payable in public health institutions to private ones. Such comparison will have to be extended to services on offer in the two sectors to make meaning! Since 2008 a community-based Social Health Insurance Programme of the National Health Insurance Scheme (NHIS) for all registered pregnant women and children under five years of age has been on; some states in the country equally subsidize treatment for some select classes of people, particularly children and the aged.
However, the big subsidy issue in Nigeria and the most contentious is the fuel subsidy. Its awesome size, philosophical underpinning and management template have combined to create an eerie atmosphere of esotericism around it.
The first puzzle in the fuel subsidy bogey in Nigeria is the determination of its weight. If it is taken that subsidy is an amount of money given directly to firms by the government to encourage production and consumption of goods and services, the first task is to determine the economic cost of such a product and what percentage the government will pay to the producer to enable him/ her sell to the final consumers at cheaper and affordable prices. In Nigeria’s voodoo economics of subsidy, the weight of subsidy is politically determined, which is why we are still looking for the realistic economic cost of a litre of PMS. In the absence of this, the mandarins in the Nigerian National Petroleum Corporation (NNPC), Petroleum Products Pricing Regulatory Agency (PPPRA) and Federal Ministry of Finance, have been having a field day, more often than not working for the oil marketers to rip off the nation.
Between 2006, when the Petroleum Support Fund (PSF) Scheme kicked off and the end of 2014, Nigeria spent about N11 trillion on subsidy payments. In this year’s budget prepared by the former administration of Dr. Goodluck Jonathan, N460 billion was appropriated as subsidy for Premium Motor Spirit (PMS) and N160 billion as subsidy for kerosene. This adds up to about N11.6 trillion as subsidy since 2006. The social opportunity cost of this is enormous.
Yet, another form of oil subsidy exists: It arises from the enthronement of a regime of uniform prices of petroleum products across the length and breadth of Nigeria since 1973. This compounds the mystifying subsidy bogey in the country.
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