TIME TO RETHINK SUBSIDY.

President Muhammadu Buhari has hinted that his government may not remove the petroleum subsidy, saying that the reasons so far canvassed for its removal did not sound plausible.

He added that it will have adverse effect on the poor and jobless Nigerians. Speaking after receiving a briefing from the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and other agencies in the oil sector, President Buhari said he would review all the submissions he had received before making a final decision.

While the President needs to carry every segment of the society along, he must reflect deeply on the cost and benefit of retaining subsidy. It is a known fact that petrol price increase has far-reaching effects on  food items, transport fares and other areas that affect the ordinary Nigerian.

In the last few years, the administration of fuel subsidy has not impacted positively on the economy and the masses it was meant to help. Subsidy removal has cost the nation hugely both in material and human resources. Many have died in subsidy removal protests and several man hours lost in strikes. Every government, civilian or military, has made attempt at removing subsidy but dropped the idea due to social backlashes.

In the twilight of the last administration, several billions of dollars were uncovered as subsidy fraud. In fact, a $6.8 billion fuel subsidy fraud scandal heaped pressure on former President Goodluck Jonathan to prosecute those involved. A string of investigations, audit panels and committees were set-up to investigate the issues. The subsidy regime between 2009 and 2014 was fraught with endemic corruption and entrenched inefficiency.

We share in the President’s concern for the citizenry but subsidy  can no longer be sustained. The oil prices are down; government ability to generate revenue through taxation is limited. We believe that subsidy can better be administered through the production process. The government should consider attracting investors to set up refineries in the country by granting them subsidy to produce and sell to the consumers at reasonable prices.

Instead of entering into swap agreement with oil traders, government could offer crude at lower than international market price for refining here in Nigeria. This will ensure enhanced local refining capacity, regular fuel supply and creation of employment for Nigerians. It will equally encourage other ancillary firms that make use of crude oil by- products to come on stream. This certainly will grow the economy.

The time has come for us to take the bull by the proverbial horn and permanently resolve the contradiction of being the sixth largest export of oil in the world and yet unable to refine and manage local production for the benefit of our people.

Vanguard