The Logic that Hurts
The argument supporting the recent increment in the price of petrol, electricity tariff, Value Added Tax (VAT), Bank’s stamp duty Charges, etc., etc., is like an old song that has lost its lyrics. It has ceased to make sense, even though it is still being hummed. In fact, the song has long become noise when we remember that this same government had vowed to lift 100 million Nigerians out of poverty. How can a government truly determined to assuage the pain of a people slam them with harsh and hurting policies from all sides, in the name of economic reforms?
It had sounded sweet and good to hear those flowery promises. But here we are, not only are more people being thrown into the cesspit of poverty and lack, many are indeed slipping into depression and frustration.
What are the arguments? Government posits that the price of petrol can no longer be regulated. The regulation of the price of petroleum products is one of the major functions of Petroleum Products Pricing Regulatory Authority (PPRA) . With the prices of diesel, kerosene and Jet A1 long deregulated, the eventual deregulation of the price of petrol has now completed the circle. So, will the PPPRA now cease to exist?
The Federal Government says that it has spent N10.413 trillion subsidising petrol in 13 years.
That this volume of expenditure is no longer sustainable. Accordingly, there is no provision for petroleum subsidy in the revised 2020 fiscal budget. What that means is that consumers of the product will have to pay full value, and this includes the cost of importation, otherwise called landing cost. Indeed, the cost of the product will now be determined by market forces. In other words, it will be governed by the principles of demand and supply. That government would no longer intervene.
But why does this same principle not also apply to the fate of the Naira? Why does the CBN keep subsidizing the value of the Naira in the market? Why does the CBN not allow the Naira to fall or rise according to market forces as well?
This is a convenient argument by government. Yes, N10.413 trillion on subsidy in 13 years is huge. Very huge! But first, how much of that sum is stolen by those who manipulate the arithmetic of the subsidy? Government claims the final removal of the subsidy will forestall the fraud associated with the policy. Really? Since government knows that it is fraught with fraud, how many people has it arrested, prosecuted and jailed for stealing our commonwealth?
Ignoring the Fundamental
But more importantly, why is nobody talking about fixing our refineries so we can stop the greater bazaar involved in fuel importation? Why is the Buhari administration which we thought would be corrective of the malaises of the PDP-led administrations, continuing in the same ways we had all condemned?
They preach that we should endure the pain so we can have the gain eventually and smile ever after. We hardly ever see the latter. We are the only ones who bear the pains. The presidency still maintains a large fleet of jets idling away on the tarmacs, at huge cost.
The convoy of government officials—governors, senators, even Local Government chairmen is yet very long? What is one man doing with 10 or more vehicles in one convoy? They are all fuelled freely from our commonwealth. We bear the pain, they splurge the gain.
Nigeria has refineries in Warri, Port Harcourt, Onne and Kaduna. If they are running at full installed capacity, we should not have any business importing finished products; thus subjecting us to the vagaries of the so-called market forces, further complicated by the unstable foreign exchange (FOREX) market. If the refineries are working well enough, why would Nigerians have to pay “landing cost” for crude sourced from our backyard?
If the argument is that the existing refineries are too old and maintaining them is costing us too much, why has government not considered either selling off the refineries and building new ones or sufficiently encourage the private sector to build new refineries?
We are not unaware of the huge sums spent on Turn Around Maintenance (TAM) of these refineries that are either often going up in flames, or incurring huge losses.
If the government can spend over N10 trillion subsidizing the cost of petrol, why not build new refineries? What is the cost of building medium-sized refineries?
Thus far, only Dangote and recently, Bua group are working on building private refineries.
47 Years after, Where are the Infrastructure?
The other argument by government is that monies saved from subsidies can now be applied in building infrastructure and making life better for the common man. They talk about using such saved monies to build roads, provide stable electricity, equip our schools and hospitals, ensure steady supply of pipe-borne water, bla bla bla…This is Bunkum with a capital B.
It is a tired rhetoric that has never been proven right. Not once! Ever since the talk about fuel price hike began, has the argument been that the proceeds thereof would be used to make life easier ultimately. It has always turned out a huge deceit. Not only do the masses bear the brunt, life never really gets easier or better.
In the first place, the political elite do not pay for these hikes. Their cars—private or official– are fuelled by public fund.
Yet, the society does not get better. If it was otherwise, imagine all the many times the price of petrol have been raised, if there’s been commensurate infrastructural improvement in Nigeria, our streets and highways would have been something close to those of Europe or America.
When in 1973 Gen Yakubu Gowon raised the price of petrol from 6k to 8.45k, the argument was that the differential will be applied in growing the economy. From that time till today, the same argument, without tweak, has been pushed by emerging leaders. But not a whiff has really changed in the real sense of it.
Economists and financial experts have applauded the courage of the present government to finally take the hard decision of removing the subsidy. They say continuing the subsidy regime not only profits a few, it will indeed ultimately strangle the economy.
What they do not tell us is concrete evidences of what saved subsidies in the past have been used for. The only exception is the short-lived Petroleum Trust Fund (PTF) which intervened mainly in the education and health sectors of the early 90’s.
Megawatts of Darkness
So, if the argument for increased petroleum price is because of landing cost, what is the argument for increase in electricity tariff? Is it take-off cost?
This is one sector that has, over the years, held Nigeria down. It is one major factor why many industries have packed up, just as our technological prowess have been stifled. This is the same sector that has been wholly privatized when the Power Holding Company of Nigeria (PHCN) was unbundled.
Yet, 15 years after the Electric Power Sector Reform (ESPR) was signed into law, we have not made any progress. We have merely increased the megawatts of darkness and misery to the Nigerian people. This is even when the Federal Government had secretly paid the DISCOs and the GENCOs some form of subsidy so there can be regular electricity. These operators have since gone mercantile to the extent that they do hold government to ransom through blackmail in their operations. And government appears helpless! We are all Casualties, says J.P Clarke’s poem
Not even when there is an arm of rural electrification project have we had more rural people accessing electricity. Urban dwellers have continued to spend big in providing own electricity supply. There is hardly five hour electricity supply per day in many Nigerian towns and cities.
As I write this, my generator has been running ten hours each night (8pm till 6.00am each day). But they say they want to lift half of the population out of poverty! Just how?
With an increase of over 100 per cent, and a threat for even more in the nearest future, most Nigerians who were knocked down by the stripes of the economy are more likely to just get crushed.
Yes, some have argued that even at the increased tariff, it is still cheaper than generating our own electricity. True! But the question is: what is the guaranty that even with the increase, supply will be steady and reliable?
The terrible thing about the Nigerian system is how we so easily complicate otherwise simple matters. Imagine the crucial issue of providing prepaid meters to consumers. For many years now, it has remained elusive for most consumers. Many of the DISCOs seem to prefer the imaginary and estimated billing system to a more equitable and scientific pay-as-you-consume mechanism. Why do they prefer the former?
More Holes in the Pocket
Okay, aside the hiked petrol and electricity prices, what is the justification of the increase in the Value Added Tax (VAT), from 5 percent to 7.5 per cent? This was further followed with the annoying Stamp Duty Charges on bank transactions exceeding N10,000. Sometimes they even apply the charge to transactions of lesser value.
Yet, in the face of all these, the percentage of interest paid on savings and Treasury Bills have crashed down to a measly 1.3 per cent.
Obtaining bank loans are not only tough, servicing them, with the cut-throat interest rates, only betrays the malevolence of the system.
It is annoyingly obvious that the government is so determined to keep getting more and more and even more from the people without minding how they cope. This is a government that had a huge and prolonged fight agreeing to pay minimum wage of N30,000. Many states have even reneged on the payment. Little wonder the reports and cases of suicide are on the increase.
These are the same banks that have been in a frenzy of declaring jumbo gains out of the misery of their customers. What a country!
Mute and Blank Placards
Away from banks and their squeeze on the ordinary folks, what also explains the increase in such services like DSTV, GOtv? Sometimes one wonders where the regulators are hibernating. Where are they?
Their acquiescence is needling Nigerians. Why is everybody quiet in the face of all these crushing blows? Where are the Civil Society Organisations (CSOs)? Where is NLC? Where is TUC? Where are the market women? Where is the Our Mumu Don Do crew? Indeed where are the intemperate “radicals” who in 2012 encamped in Ojota (in Lagos) to protest the increase in the price of petrol from N65 to N141 per litre by the Jonathan administration? It was eventually reduced to N97 per litre after 12 days of protest with about ten deaths.
But in 2016, a year after President Buhari assumed office, he raised the price from N97 to N145. And the whole country was quiet! There was no protest. There was a general belief that it was for the good of the country. Nigerians then trusted him. The matrix of his good will was yet high. Not anymore.
Now, there is an increase from N145 to N160 per litre and everywhere is back to calm. Perhaps bemused and benumbed. It may hit N200 per litre or more before the year runs out, depending on the fate of the product in the international market.
Would this make Nigerians now pray and wish that the price of crude should keep dropping in the international market so they can buy the product cheaply at home? Why would the rise in the price which should make Nigerians happy now a source of misery and regret?
By last Wednesday, Oshogbo, Ibadan and eventually Lagos (all in the South West) have organized some protests against the hikes, even as government insists there is no going back to subsidy regime.
Maybe, President Buhari would have gotten away with the spate of recent increases. But they are coming in the wake of the devastating blow the COVID-19 pandemic dealt on society. Many lost their jobs. Those who could retain their jobs, suffered salary cuts. Businesses are gasping. Thus, the income capacity of the people shrank. And rather than devise ways of cushioning the hard hit on the people, the government is choosing this ill time to slam steely reforms on the populace. Yes, the overall idea may be ideal, but certainly not the timing.
We are sweating
The load the administration is heaping on Nigerians is too heavy. It appears unconscionably done in a way that suggests take-it-or-leave-it. Those in government will however always choose to explain it away as if it does not matter how the people feel.
They sell the impression that those not in synch with the government’s policies are either un-informed or are saboteurs.
President Buhari has braced up with the economic reality, taken tough decisions. But would it grow the economy ultimately? Perhaps even more germane is the worry whether or not this would hurt the chances of the All Progressives Congress (APC) in 2023. We wait. We watch!