By Adekunle Adekoya

A few weeks ago, on April 7, I discussed issues around petrol subsidy in a piece titled The Magic of Scamsidy. I took the position that the subsidy policy has been a scam perpetrated by the power elite at the expense of ignorant, non-discerning Nigerians. This is because subsidy was meant to help the poor meet the cost of a particular commodity or service, and in this case, petrol.

But over the years, what we have seen is that an okada rider paid the same price per litre as the man who drives a Mercedes-Benz G-63 Brabus, just as the driver of a tricycle, which we call keke, and a danfo driver also buy the same petrol at the same price as the owner of a Toyota Prado Land Cruiser. Meanwhile, the difference in economic power of these classes of vehicle owners remain clear to all, except people in government.

Now that those who run government feel threatened by continued payment of subsidy, it must go, and it has gone, as announced by President Bola Ahmed Tinubu in his inaugural address last Monday.

The announcement triggered instant reactions as loading of petrol in the various tank farms and fuel depots stopped immediately. As a result, petrol station operators shut their gates, while those that did not sold the product at any price they deemed fit, with queues and traffic jams attending the enterprise since Tuesday.

Later, government, through the NNPC Ltd as the sole importer released a template of prices for which the product could be sold. The price guide, which has already been implemented by petrol stations indicated a whopping N488 for Lagos State, while fellow Nigerians in Borno and Yobe states will pay N557 per litre of petrol.

In my book, the next thing government should do is to allow freer rein and let market forces intervene in the interest of Nigerians. By this, I mean anybody with the wherewithal to import the product should be allowed to do so, without the need for licensing. This is because licensing fuel importers will create another business window with corrupt inclinations.

It goes without saying that palms will be greased before the licenses are issued, and once that happens, the odious manifestations of the import license regime will attend and taint the business in such a way that the common man who will buy the petrol will be made to pay the costs at the end of the day. Let there be no licensing of fuel importers, just registration for regulatory purposes.

The other thing many people may not be thinking of is that the Buhari administration budgeted for subsidy till the end of June. It was in acknowledgement of this that the Tinubu Presidency, responding to the reaction of his announcement of subsidy removal said that it was not an immediate thing. Since subsidy removal took effect at the end of May, this implies that the government has saved one month of subsidy payments. Former Finance Minister, Hajiya Zainab Ahmed, in August 2022 said that the Federal Government spends N18.397 billion on petrol subsidy daily.

She spoke before a House of Representatives Ad Hoc Committee on payments of subsidy on petrol, adding that government spends N238 per litre of petrol or N18.397 billion daily as subsidy.

She gave a breakdown of the amount of money subsidised daily by the FG on petrol.

Explaining further, she said: “For 2023, the projection is that the average daily truck-out will be N64.96 million litres per day; that is about N65 million per day, using an average rate at the open market rate of N448.20k and then a regulator pump price of N165 per litre.

“This gives us an average under-recovery, which is the difference between N165 and N448, as N283.2k.”

Ahmed added: “Multiply the amount of litre per day, the open market exchange rate of naira to the dollar and then, the gap between the pump price and open market price, the total amount of subsidy per day is N18.397 billion.

“So, if you are projecting for the full year, from January to December, it will be N6.715tn. By Ahmed’s calculations, no less than N551.91 billion, already budgeted for as subsidy payments for the month of June would have been immediately saved by the Tinubu administration since he moved earlier than the envisaged time. That is quite a handsome sum, and I hope it will not become the object of some magicians’ attention. It is money we can use to deliver great value in any sector, especially education and health care.

Further, now that the subsidy bubble has been burst, we need to track our borders very well and see if it has really been one of the major drivers of cross-border petrol smuggling. This is because I recall that the Customs boss once suggested higher prices of petrol to discourage smuggling but did not speak of how a border agency like his had failed at curbing smuggling, which is one of its primary mandates. The ripple effects of subsidy removal is here for us all to see and endure; the foreseeable days ahead will clearly be a hard grind as we all struggle to cope with the cascade effects. As we say on the street: “e go choke.” Happy weekend.