Fuel Subsidy: The Secret Payment, Corruption and the Solution

A subsidy is a price paid by the government to reduce the cost of some essential commodities to the citizen in the country.

One of the common subsidies that are paid by the Nigerian government is the Fuel or petroleum product subsidy.

Nigeria is a top producer of crude oil but since our refineries are not functioning at full capacity we have to export crude oil and import petroleum product. These products are bought at a very high price so the government has to subsidies the price for Nigerians.

Paying of fuel subsidy has been a major issue in Nigeria for over a decade. It all started to be a very popular topic of discussion during the regime of former President, Chief Olusegun Obasanjo between 1999 to 2003 when there was a continuous increase in the price of all the petroleum product.

The discussion got even louder in 2012 when the then president, Goodluck Jonathan increased the price of petroleum from N65 to N145 citing the removal of subsidy as the reason for the increase.

There was a major shut down of government after the increase in the pump price of PMS, the increase triggered a historic protest in some major part of the country, the Occupy Nigeria protest which was held all over Nigeria and even in London and New York in January 2012.

Since then the narratives of the subsidy payment changed. The main opposition of the then government, APC, campaigned against the payment vigorously. Some of the prominent voice against the payment is President Buhari, he was a leader of the main opposition back then and he was quoted saying: “If anyone tell you they are paying subsidy then it is a scam”.

After the election in 2015, APC, won the election and the subsidy narratives changed, the APC-led administration claimed they stopped paying for fuel subsidy increased the price of PMS to N141 but a huge sum of money is still been paid by NNPC for the importation of fuel by the government.

During the Vice Presidential debate that was held on Friday 14th, December 2018, the fuel subsidy question came up and all candidate were to talk about what they plan to do about the enormous sum of money the government spend on fuel subsidy.

All the candidate tried answering the question but one of the points to note is the fact that the current Vice President, Professor Yemi Osinbajo said this present government’s plan is to keep paying for subsidy now but will stop in the nearest future. This answer by the VP  answered a major question the citizens have been asking concerning the secrecy behind the payment of fuel subsidy by the present administration. They were paying it despite condemning the act and keeping it a secret. Why?

The lack of transparency in the payment of fuel subsidy in this present administration can only mean there is an hidden corruption involved in the payment. The cabals are still very much active in this sector and this is part of their corruption scheme.

The budget for fuel subsidy been paid now is higher than the budget for health, education and some other vital sector in the country.

The VP in his comment during the debate said subsidy can only be removed if Nigerians are willing to pay extra N40 per liter of PMS. It should be noted that subsidy has been removed totally on Kerosene by this administration. Diesel subsidy was removed by the former president, Olusegun Obasanjo.

The question now is, is there no better alternative or solution to fuel subsidy?

The only alternative to the payment of fuel subsidy is to refine our crude locally and as simple as this solution is why is it taking long for it to be implemented, why are there no concerns about the refining of our crude locally instead of exporting and importing?

Another scheme that pays some very powerful people in the country.

Nigeria has four refineries, 2 in Port Harcourt, Rivers state, 1  in Kaduna state and the other 1 is in Warri, Delta state but none is functioning at full capacity.

The solution to the fuel subsidy crisis is to get these refineries working at full capacity. At full capacity, the refineries can produce 445,000 bpd combined. Dangote refinery which is under construction is expected to produce 650,000 bpd although it won’t be ready for production till 2024.

Nigeria petrol consumption is 635,000 bpd so with the country’s refineries in full capacity we will be refining and producing more than half of the daily consumption which will reduce the payment of subsidy for the start and with the introduction of Dangote’s refinery in the nearest future we can stop the exporting of crude and importing of petroleum product.

The question now is why are we not talking this step?