The recent abrupt and poorly executed increase in fuel prices in Nigeria has left many citizens devastated. The government has justified this hike by linking it to the removal of fuel subsidies. While I have previously supported the idea of removing subsidies, I find it hard to believe that the recent price increase is genuinely related to subsidy removal, as some have claimed.
President Buhari’s administration employed a similar tactic during his tenure, increasing fuel prices in 2016 under the pretext of subsidy removal. However, it was later revealed that the government had actually spent over N11 trillion on fuel subsidies during those eight years. This history raises concerns about the recent development and its resemblance to previous fuel price increases.
True subsidy removal would entail full deregulation of the downstream sector, according to widely accepted definitions. Yet, the recent price hike does not align with the principles of market forces. The Nigerian National Petroleum Corporation (NNPC), as the sole importer of fuel, sets the pricing template that affects all filling stations nationwide. This centralized control contradicts the notion of market-driven fuel prices.
Therefore, it is crucial for the new administration to provide clarity on the subsidy issue. Nigerian citizens should not be subjected to the pains caused by the recent price hike, only to later discover that subsidies are still being paid, as was the case under the previous administration. If the current government is genuinely committed to subsidy removal, it must take the necessary steps to open up the sector, promote competition, and allow market forces to determine fuel prices, rather than relying on a single importer like the NNPC.
Additionally, the government must outline its plans for investing the funds that will be saved from the subsidy regime. This should include implementing measures to mitigate the impact on the people, similar to what the Goodluck Jonathan administration did in 2012 when subsidy removal was considered. Furthermore, it is essential for the government to be transparent about where the funds that were supposed to go into fuel subsidies will be allocated. It would be unacceptable for Nigerian citizens to endure the hardships of subsidy removal only to have the saved funds end up in private pockets.
Over the years, subsidies have consumed more than N20 trillion, a staggering amount that could have been used to improve healthcare, education, infrastructure, and other critical areas. While it is clear that subsidies have outlived their usefulness, they should not be used as a tool to deceive Nigerian citizens, as has happened in the past.
In conclusion, the government needs to act transparently and responsibly regarding fuel subsidies. The removal of subsidies should be accompanied by true deregulation, promoting market forces and competition. The saved funds must be invested wisely and not fall into the wrong hands. Nigerian citizens deserve a fair and accountable approach that brings tangible benefits to their lives, rather than continuing the mistakes of the past.
Oke Umurhohwo writes from Ughelli, Delta State.
