By Sonny Atumah

Renowned Nigerian poets’ Wole Soyinka and John Pepper Clark have written works that systematically and extensively dealt with the Yoruba spirit child called Abiku. Clark in his poem said Abiku is coming and going these several seasons. The child Abiku dies even when the family thinks that he is to stay; and repeatedly reborn again. Soyinka’s version of Abiku is about a wandering child which scholars say is characterized by the use of symbols to reflect unresolved conflicts in Nigeria; the reason why we are unable to move beyond infancy.

The matter of the petroleum products pricing is akin to the symbolic poetry in the spirit child Abiku that is a wanderer who dies and  returns again and again to plague the people. The groundswell of public opinion has again started in Nigeria on pricing of imported petroleum products. It has a steady drumbeat of accusations that would never go away because it appears to be resident in a realm that may not be understood.

Interpretations are given to the existence or disappearance of subsidy by as many as would think up a story that is imaginative. Call it the subsidy circus you may not be wrong as the beat goes on ad infinitum. Some will tell you subsidy was done away with on May 11, 2016 while others will tell you the petrol price oscillates like a frequency that was modulated since December 2015.

Many have tried to understudy the subsidy concept without a clear-cut understanding in the pricing content, but by and large subsidy is deeply entrenched in our lexicon.  Many that seemed confused would advance the subsidy policy to mimic deregulation in an extremely and rustic manner and yell: subsidy must go! This support group believes that as long as fuel is available it can be purchased even at the marketers’ price. They act on momentary impulses of artificial scarcity to pull the wool over people’s eyes to withdraw subsidy. Petroleum products subsidies are global phenomena. Subsidy is the money paid by a government or an organization to reduce the cost of services of producing goods so that their prices can be kept low. It can be either consumption or production.

Petroleum experts report that global oil market price differences are based on national and local taxes. Richer countries tend to tax fuels more than poorer ones.  But the United States has lower energy taxes than many developing countries. The US government foregoes significant tax revenues. In 2015, the US consumed 529 billion litres of gasoline according to the US Energy Information Administration. The IMF estimated that the US under-taxed energy use by US$699 billion in 2015. The average price of gasoline in the US on December 5 was US$0.65 per litre at the pump. While consumers benefit from low fuel taxes, oil production and exploration is subsidised by government.

According to them, production subsidies reduce the cost of finding and producing oil and can make the difference between whether production and exploration is economically viable or not. The US oil and gas subsidies do not involve direct cash payments to producers. They take the form of wide ranging tax breaks for energy companies, interest-free loans, free or low cost access to resources like water and land, and governments assuming the legal risks of exploration and development. The first US subsidies were put in place about a century ago to meet the energy needs of the nation and they are still in place today.

In Nigeria the privileged minority say subsidy must go have virtually everything paid for by the many others that are in the dangerous and delicate echelon of absolute poverty. Indeed the elite enjoy the public good including security, housing and electricity, potable water, mosquito spraying programme, transportation, and education for children, adequate health care, and other social infrastructure. To them getting everything virtually free is the price they pay for public service.

So they campaign for subsidy withdrawal for the downtrodden. Many of them do not know that a 12.5 kg of LPG now costs about N7000. How many know that one litre of household kerosene, HHK is now N500 and one litre of automotive gas oil, AGO or diesel is over N250. The belief system now is that the price of premium motor spirit, PMS would soon go beyond the 2016 foisted price of N145 a litre at the pump because crude oil is going up in the international market which affects products imports.

In one of my television conversations on petroleum products subsidy, my colleague on the programme raised the issue of products scarcity as justification for subsidy withdrawal. My thought was that there may be many new or used cars in dealers’ garages but affordability determines the demand. So effective demand is what our unfortunate circumstance has taken us; imported petroleum products are available but not affordable.

Would there be price increase? The popular saying is asking no questions and you would be told no lies. The Nigeria Labour Congress has warned against increase in pump price of petrol. There have been serial denials from the barrel operators. The NNPC in a statement by its spokesman Ndu Ughamadu last Wednesday debunked the allegation but it is widely believed that it was a matter of time. There are fillers that it was no longer feasible to import products at the current exchange rate and sell at N145 a litre. The CBN on its own put the interbank rate at N305 to the dollar which makes the current PPPRA template still relevant. The truth has not been told why NNPC sells Nigeria’s crude and imports products.

The Minister of State for Petroleum Dr. Ibe Kachikwu in November 2016 denied knowing that the retail arm of NNPC increased the price of PMS from N141 to N145 per litre, the maximum price allowed by government under the price modulation mechanism. “I am not aware that the NNPC has increased price. I need to look into that, it is a bit of surprise to me, because there are processes in doing this. If they have done that, it means they are doing it wrongly. Let me find out what the facts are,” he noted.

The subsidy management that was import oriented was dogged with fraudulent practices which the government shied away from by withdrawing it on May 11, 2016. Withdrawal never solved the problem if recent report from the Vice President Prof. Yemi Osinbajo that the Federal Government saved N184.8 billion in 2016 is anything to go by. One thought it would have been in the neighbourhood of N1 trillion reportedly spent on subsidies in 2015. The point is that Nigeria spent about US$12 billion importing petrol in 2016. Through local refining that colossal amount would have been saved or injected into the economy and that would have prevented the present recession.