Tonye Princewill

October 21, 2011

Fuel subsidy: The Red Herring effect (2)

Fuel subsidy: The Red Herring effect (2)

•An Oando Filling Station that was also raided by the robbers.

By Tonye Princewill
WE will return to the government’s need to remove the subsidy later and the alternate ways it can spend the funds so people will see results rather than pepper. But first, let’s consider the issue from the vantage point of “the people”-or at least from the perspective of those who purport to speak for them.

That’s not easy because almost every antagonist claims to have the people’s interest at heart. No one will admit to playing to the gallery or to vying for public favour to advance a political agenda. Yet we know this happens. Well, look where subsidy-warrior Adams Oshiomhole is today! For the record, I like him. We don’t have enough ‘hims’.

Be that as it may though, the main arguments against removing the fuel subsidy fall into three broad units. One of them is what you might call, DENIAL United: “There is no subsidy”.

I touched the edge of this argument earlier, when I said the cost of petroleum products was not up to the present pump price (of N65 per litre), even without subsidy.

Controversial, maybe, but in doing so, I was making a different point than the anti-removal partisans. I was raising the possibility, the prospect that the ‘true’ cost of petrol may not really exceed the pump price after all when subsidy is terminated despite the alarm bells which the anti-subsidy removal lobby is setting off.

This position, I wish to confess, is designed to provoke. Some might even consider it “wishful thinking”. If so, let it be. I claim it. Until you prove to me that an efficient organisation cannot pull it off, I remain a faithful member of this team.

The truth is, nobody can say with any degree of certainty what will happen, should the government keep to its plan of action. Whatever occurs, the outcome cannot be as bleak as the picture some people like to paint-that of starving masses faced with a 50 per cent hike in product pricing.

Perhaps though, it is best, at this juncture, to let the some of my team mates speak for themselves, starting with the Vanguard’s own columnist, Adisa Adeleye. If there is any subsidy, he contends, in My Layman’s View, it is for imported petroleum, rather than for domestically produced Premium Motor Spirits, PMS.

Concerning the latter, he writes that: “Some believe, and justifiably so, that the present pump price of N65 per litre does not allow for any subsidy”.

Professor Tam David-West, a former Petroleum Minister, speaking with Yemi Ogunsola and Laolu Adeyemi of The Guardian, was even more direct: “Nonsense,” he scoffed. “There is no subsidy”.

This perspective, of course, is not new. As far back as 2006, a group called the “Strategic Union of Professionals for The Advancement of Nigeria”, under the leadership of Chief Martin Onovo, conducted extensive research and concluded that “the claim of subsidies on petroleum is clearly incorrect”.

Generally speaking, the second group, SUBSIDY United, takes the subsidy as a right and insists that it should be retained. Members of this unit, tend to share the outlook of The Pilot’s Emma Alozie, who recently accused the Jonathan administration of giving to workers with one hand and taking from them with the other.

“What is the need,” he complained, “of paying N18,000 minimum wage and collecting same through subsidy removal? This is because the moment the pump price of fuel increases, every salary earner loses at least 50 percent of his income through the resultant inflation”.

Alozie’s serialised article is scholarly and well reasoned but utterly scathing. He urges policy makers to consider other types of subsidies, such as those proffered on Christian and Muslim pilgrims to Holy lands which, he asserts, cost the Federal Government N14.93 billion in 2010.

“In fact,” he writes, “the budget on hajj subsidies during Shekarau’s tenure as Governor of Kano State was more than the combined budget of the Scholarship Board, the State University, Board of the Disabled [and] Small and Medium Enterprise promotion”.

Raw market forces cannot be allowed to run freely, Alozie argues, in a country that imports fuel and whose power and rail infrastructure is undeveloped. We use, for example, 10 million litres of PMS each day, he notes, to power generators-which will prevent demand/supply equilibrium from developing.

If not for the time and place I am in as a person, I might have been tempted to join this unit as well but alas, I have seen government close up enough to know its limitations and my new reality tells me that if it was left to this team alone, Nigeria will never win anything. Either because we would be too broke to even compete or because the “animals would have taken over the farm”. In a manner of speaking of course.

Ironically, hidden quietly amongst this ‘people focused’ lot are the culprits themselves, the beneficiaries of this so-called subsidy. I call them the SUBSIME faction sitting on the bench. They don’t want the subsidy to stop either, so would love this team to win for their own selfish reasons.

Like most big money football players (to use a footballing analogy), they are in it for what they can get and to the surprise of their team mates, when they eventually get it or not, their true colours will show. It is amazing that the people and the elite can ever belong to the same team. But this is Nigeria, so what can I say? Miracles happen. The common phrase: “No permanent enemies, just permanent interests”, comes to mind.

The third group CONSPIRACY United is essentially conspiracy-based and government ridden. It postulates a hidden cartel of “big Nigerians”, to use David-Mark’s characterization, who are benefiting immensely from the status quo. Its adherents, which include a large number of legislators, believe that this cartel and the mis-management of the subsidy are the real issue.

They take the view that unless Nigerians are prepared to take the pain of subsidy removal, that is, increased fuel price, this cartel will not be broken. Just like the DENIAL and SUBSIDY United before, their case is not without merit either. In fact apart from the SUBSIME faction of SUBSIDY United, all sides have a case.

That is why the red herring effect remains alive and well. Popularly used to divert attention, a political red herring has been fed to Nigerians. Subsidy like zoning is being read its final rites. Rather than focus the mind on how best to use the money this will save, so many are still discussing if subsidy should go or stay.

In Old England, the smarter blood hounds eventually learnt not to follow the red herring but to keep their focus on the real objective which was always the fox. Like the Paris Club debt we paid off, the benefits never came back to the common man. I hear we now owe more than we even did then. Nigerians shine your eye! Think outside the box. Focus on the fox.