Tolu Ogunlesi: Where I now stand on the fuel subsidy removal debate

By Tolu Ogunlesi

I was a fervent believer and participant in the Occupy Nigeria protests of January 2012. The issue I had with the removal was less with the subsidy itself than with a number of important issues surrounding it, which I shall outline in the paragraphs below.

The main anti-subsidy argument was that Nigeria could not afford a $6 to $8 billion annual expenditure on its appetite for petrol – an appetite that, as the argument went, owed a lot more to the car-owning middle class than the country’s Bottom Millions. 

As the premise for a fuel subsidy debate, I found that $6bn figure deeply dishonest and unacceptable. I felt-and still do-that the fuel subsidy conversation in Nigeria was actually a $2bn issue, not a $6bn to $8bn one. Before former President Goodluck Jonathan entered the picture, it was a $2bn issue. That it swelled three- to four-fold under him was Jonathan’s problem, not that of the subsidy. It should never in the first place have been a $6bn or $8bn conversation – that price tag was simply the adulterated product of a government that was bent on conferring a “GCFR” on government impunity.

I also felt that the corruption-is-so-bad-we-need-to-abolish-fuel-subsidies argument didn’t make much sense. When did the primary response to corruption become “scrap”, not “probe-punish-and-reform”? If it is to be considered a sensible line, then we must also consider scrapping the civil service because of the “ghost workers” and contract inflation scams that make it significant more for what it consumes than it produces. If all we did was abolish the subsidy and divert the spending elsewhere more “productive”, would the unchecked criminal impulses not simply have taken on a new identity, followed the money, and dragged us back to square one?

The Jonathan government did not only look the other way when the madness was going on, it actively created a conducive environment for all those subsidy fraud criminals, with a topping of incentives to boot. 

First, there was the scaling-down, under Jonathan’s watch, of the conditions that needed to be met to qualify as a fuel importer. This allowed the number of fuel importers to swell from 36 in 2009 to a whopping 140 in 2011, within the first year of the Jonathan administration. One hundred and sixteen of these 140 got fuel importation licences predating their application for such.

In January 2012, I considered all these issues at length and became totally convinced that President Jonathan lacked the moral authority to preside over a removal of fuel subsidies. With no apparent remorse for the madness that had just taken place under his watch, he deserved every bit of the flak he got for the cowardly, kick-the-problem-down-the-road decision he took, or allowed to be taken in his name, in January 2012.

Now, more than three years on, the fuel subsidy debate is back on the table. This time round, the clamour for its removal is much more insistent than it was back then. So where do I, an unrepentant Occupy Nigeria protester, now stand? 

I am proud to declare that I am now very much in support of the removal – on account of the fact that there’s a new order; one that, on account of the messaging of change, it rode into office on, and of the pedigree of the man on whose table the buck stops, has the moral authority to make that all-important decision.

But I will insist that we must realise and never fail to emphasise that the challenge ahead of us is about a lot more than merely stopping a subsidy regime. It is also about the following issues:

One, accountability and the punishment of impunity.

Two. The domestic refining debate. According to a former Petroleum Minister, Tam David-West, Nigeria once produced enough petroleum products to feed the export market. Alongside the “Why is Africa’s leading economy producing only 3,000MW of electricity” question, “Why has Africa’s largest oil producer not been able to get its refineries running at optimal capacity” – is perhaps the most persistently disturbing conundrum to be tackled by the new government. The House of Representatives report on the subsidy fraud highlighted that the 445,000 barrels allocated daily to our four existing refineries would, if fully processed, be enough to meet Nigeria’s daily petrol and kerosene consumption, and 75 per cent of our diesel needs.

Three. The application of the proceeds to be derived from the subsidy removal. There’s no point going through the pain of transferring billions of dollars from #Transformation thieves only to hand them over to #Change bandits. So, what can/will President Muhammadu Buhari do? He could put it back into the federal spending system, through a Supplementary Budget, and use it to boost the meagre 10 per cent of the 2015 federal budget allocated to capital spending. Or he can create his own special intervention fund (like Gen. Sani Abacha’s Petroleum Trust Fund – which he, Buhari, ran, between 1994 and 1998; and President Jonathan’s Subsidy Reinvestment and Empowerment Programme), to be used for a specific set of projects. Going with the argument that Nigeria’s poorest citizens – more than 100 million currently live below the poverty line, according to official data – deserve the billions spent on subsidising petrol, it would make sense to prioritise the savings for funding the Conditional Cash Transfer promised by the All Progressives Congress in its manifesto. The eventual goal is to cover 25 million of the poorest Nigerians in this scheme, but the party has hinted at a phased approach. The new government could roll out, as soon as is practicable, a CCT granting N5,000 per month to five million poor Nigerians. Bolsa Familia, Brazil’s version of this programme helped it lift tens of millions of people out of poverty in the last two decades.

The obstacles to this would be the documentation; in the absence of a comprehensive national database, how do you manage a large-scale welfare scheme for citizens? Without individual income / earnings data, how do you determine those who are most eligible for a cash transfer? How do you safeguard it from the spirit of “ghost workers” and of subsidy theft? How do you make sure that two years down the line, you do not have a fraud on your hands that makes the fuel subsidy crisis look like a piggy bank accounting error? All these questions will need to be answered for a CCT to work successfully.

Let me close by restating my stance: Today, more than three years after I joined the tens of thousands of Nigerians who took to the streets to protest the Jonathan’s government handling of the fuel subsidy, I think this change of government offers us the best opportunity in decades to end the subsidy. And it should be one of the first actions to be taken by the new government. The President himself should announce the removal, and should on the back of this publicly commit his government to a series of far-reaching reforms focusing on the Nigerian National Petroleum Corporation, Petroleum Industry Bill, Domestic Refining, and prosecution of the 2010 – 2012 class of subsidy thieves. Anything less and it’d be easy to doubt that he means business.

It is sad and exasperating to find social media laden with simplistic narratives of the opposition to the removal of fuel subsidies in 2012. I find arguments that “You people fought Jonathan when he wanted to remove this subsidy” not only shallow but totally missing the point. Jonathan did not care about real reform; he was simply a man panicked by the noise being made about vanishing billions and looking for a short cut out. Real reform is a completely different concept, requiring not just political will but also the moral authority, or at the very least the absence of a moral burden. It is that “real” reform that Nigerians will be counting on President Buhari to spearhead in the weeks and months ahead.

– This Piece was written by Tolu Ogunlesi/Punch. Follow this writer on Twitter: @toluogunlesi