advantages and disadvantages.

– Zayyad I. Muhammad, Abuja

UNDERSTANDING THE SUBSIDY DEBATE

The subsidy debate has continued after the government rescinded its decision to remove subsidy. Prior to this time petrol was heavily subsidized but the subsidy bill keeps increasing. The Minister of Finance recently requested N3 trillion for subsidy in 2022. That comes down to N270 billion monthly. Last year it was N1.15 trillion. The argument is on Nigeria’s consumption of over 100 million litres monthly. About five years ago, it was 50 million litres monthly. Nigerians are asking: why the sudden jump in consumption without a corresponding rise in GDP?

A lot of watchers say we are subsidizing theft as most of the petrol lifted is sold in neighboring countries to get arbitrage. While the border closure was on Nigerians petrol consumption was greatly reduced. This is to show that corruption goes on across the borders. In Nigeria we have 11.8 million cars. Let’s assume each car buys 100 litres monthly. That would give a daily consumption of 40 million litres and add another 10 million litres for domestic consumption – like generators and the likes.

The argument of labour is always about building refineries and keeping the subsidy to prevent hardship but some argue: how long can we continue?

With the N3 trillion subsidy cost, our budget has increased to N20 trillion with a deficit of N10 trillion and a targeted revenue of N10 trillion. Some say the subsidy decision is political and the incumbent government is continuing the subsidy just to keep them in a good stead with the people as election approaches.

As time goes on the logical reasoning is that subsidy must go, and we must have a holistic conversation on the energy mix of Nigeria.

– Rufai Oseni, rufaioseni@gmail.com