By Prince Tonye

‘RED HERRING” is a variety of smoked fish (“kipper”) that is eaten for breakfast or as a snack, in Britain and parts of the United States. But in public discourse, the term carries negative connotations. It refers to a diversionary argument or issue that distracts attention from matters of much greater substance.

The on-going uproar over fuel subsidy seems to be taking on this unsavoury character—that of a political red herring. Much to my regret, the current theme in the outcry of the opposition obscures the social, strategic and economic realities, underlying the Federal Government’s intention to abolish the subsidy.

The most obvious, and easily documented, reason is the financial burden-which has simply become too heavy for the Federal Government to bear while meeting its many obligations.

President Goodluck Jonathan

Ironically, the less privileged are the primary constituency of those who oppose the Federal Government’s subsidy reform. They claim to be fighting to keep the subsidy because of the effect its abolition would have on the “average person”.

So why the disconnect? What is wrong with both arguments? The “average person” in this country is a Nigerian. Whatever may be one’s views on specific policies, the Federal Government should be acting on behalf of everyone- not favouring one at the expense of the other.

It cannot sacrifice Nigeria’s long term fiscal future in return for perceived short term gain. Retaining the subsidy, to achieve cheap popularity or to appease the various vested interests would be doing just that. No, it’s too late. Nigeria has gone beyond that.

Let me attempt to educate you on the reality. First the cost of petroleum products without subsidy is not more than the current pump price, so there is no reason why a removal of subsidy should equate to an increase in pump price. What is the landing cost and what percentage of the products we use in Nigeria are imported? Can anybody answer this question? It is this confusion that reflects the red herring ideology.

While some are arguing on the merits or demerits of petroleum subsidy others are arguing on the level to which fuel price should increase to. The latter group should be careful. Nigerians are not fools and they are tired of pretending they are.

My preliminary research has revealed the following facts. First, is that the total cost of importing petroleum products currently is not more than the pump price. That means the pump price we pay now produces a profit and is not the product of subsidy.

Second, the vessels that carry products do not have ability to dock, so are left to park on the high sea where smaller vessels gradually offload their cargo. This incurs ridiculous demurrage and trans-shipment costs sometimes even more expensive than the products they carry.

Surely a committed dredging operation will prevent this exercise in futility. Why has it not happened? Third, what happens to the products we produce here? We can see already why the refineries are designed not to work optimally but for that which we eventually produce. Where does it go and what price does it go for? It is no secret that if our refineries operated at full capacity, shipments would be reduced. Make the connection if you can.

By October 2011, we had already spent N1.3 trillion on subsidising petroleum products; so only God knows what the end of the year will bring to our calculator screens. Nevertheless, take a journey with me and begin to appreciate what this amount of money will do in the lives of Nigerians if utilised properly. This is where I believe the debate should be going because fuel subsidy must go. I for one will be coming to that in my subsequent articles. I almost can’t wait.

The experiences of other countries, such as Indonesia and India, which have populations larger than Nigeria, and many more “less privileged” persons, indicate very clearly that our situation is not unique: That the government has taken a crucially important decision which other countries are also having to make is commendable and necessary but it is the government and not the people that will absorb the pain. Cut your coats according to your sizes we are pleading. Nigerians have been doing it for years! The situation where recurrent expenditure constitutes a majority of our budget is, to put it simply, unsustainable.

The truth is, the struggle over the fuel subsidy is not entirely about efforts to protect the interests of the “common man”. A great deal of the discord also emanates from powerful vested interests, which have been benefiting immensely from the status quo.

I don’t mean to imply that opponents of abolition are acting irresponsibly or that their case is without merit. Quite to the contrary, concerns about the likely social impact of fuel subsidy reform are not only legitimate but also conscionable.

I share those concerns. After all, one of the purposes of the fuel subsidy was to provide energy for ordinary people at affordable costs. As a progressive politician, I cannot possibly take issue with that.

Nevertheless, we ought to remember the Finance Minister and her team that have publicly and unequivocally committed the Federal Government to creating a “safety net” to cushion the effect of subsidy reform on the ordinary citizens are the same team that promised us in 2006 that the impact of debt relief will be “ploughed back” into social amenities and healthcare services. What happened?

All of us learn and grow. This applies to nations, as well as individuals. We learn through experience—either our own or those of others.

We grow by synthesizing those experiences into ideas, notions and concepts that guide us in adjusting our behaviour to meet the challenges of our social and material environment. Neither our social nor our material environment is stagnant. We live in a dynamic and ever-changing universe, in which reality today may be markedly different from that which we experience in the distant past or which we will experience tomorrow.

So it is with the formulation of social and economic policy. Yesterday’s perceived “panacea” may very well turn out to be today’s political liability–which, precisely, is the predicament of the Federal Government. The Government is right about the need for the removal of subsidy but so are the people.

To be continued.