Fuel Subsidy: From the pit of Niger Delta to the federal purse

One popular Yoruba adage says “ The person who excrete might not forget,  but he who packed the  excreter won’t forget.” Mr. Tinubu might have forgotten, but history never forgets. As in the case of Nigeria, “crude oil has always been the sweet anatomy of the devil’s excreta,” Professor Samuel Ovuete Aghalino said during his inaugural lecture. From the pit of the Niger Delta to the top of the federal level, it has always been a thing of political jingoism. It will be safe to assert that the discovery of crude oil in the Niger Delta was a moment of catalamistic change in the history of Nigeria, following its historical discovery to becoming the major catalyst of the nations domestic and foreign revenue. However, shouldn’t we start worrying about how much longer crude oil will sustain us? as it has been estimated that Gas will soon come to take over crude oil in about 3 decades from now.

Whenever the topic of crude oil is brought up, what follows is fuel subsidy. Crude oil and fuel subsidies in Nigeria are like the story of a hunter and his dog, both moving in a close space with interconnected history. The idea of fuel subsidy began after the discovery of crude oil. But how far have we benefited from both crude oil and fuel subsidy? I’ll later come back to explain its history to you.

Earlier this month, President Tinubu when addressing Nigerians on the early morning of August 4, 2024 said as I quote 

“For decades, our economy has remained anemic and taken a dip because of many misalignments that have stunted our growth. Just over a year ago, our dear country, Nigeria, reached a point where we couldn’t afford to continue the use of temporary solutions to solve long-term problems for the sake of now and our unborn generations. I therefore took the painful yet necessary decision to remove fuel subsidies and abolish multiple foreign exchange systems which had constituted a noose around the economic jugular of our Nation and impeded our economic development and progress.”  

However, as far as I am concerned, this wasn’t the idea behind the introduction and the implementation of Fuel Subsidy when it was initially introduced in the country. Fast backward to 1970s, a decade after our country Nigeria gained her independence, even though we were operating under a military regime, Fuel subsidies began in the 1970s and became institutionalized in 1977, after the establishment of the Price Control Act which made it illegal and unlawful for petrol to be sold above the regulated price. When obasanjo introduced Fuel subsidy, it was mainly to alleviate economic hardship by making petroleum products affordable. Also to reduce transportation costs, control inflation, and support low-income citizens. I think we can all agree this was a good thing for the country, especially for the have not.

But in subsequent years and administrations, we’ve seen several attempt to remove the subsidy which has failed not until recently during the current administration of Present Tinubu that woke up one day to announce the removal of fuel subsidy, though they claimed doing so was to block the greed and the profits that smugglers and rent-seekers made. Well, the question is- who are the smugglers and who are the greedy?.

Need I remind you all of 2012, when the then-president Goodluck Jonathan announced the subsidy removal, increasing fuel prices from 65 naira ($0.14) to 140 naira ($0.30) per liter. There were widespread protests for two weeks by the civil society and opposition party leaders, particularly from Mr. Tinubu himself who was the spotlight. We all saw how Asiwaju Bola Tinubu accused the Jonathan presidency of betraying the people of Nigeria by suddenly removing fuel subsidy. It seems like as of then Mr. Tinubu has a window solution in mind which he proposed to the then president.  According to PM News Nigeria, He said as I quote 

“Government must modify the sudden and complete removal of the subsidy. Either we restore the subsidy or use the funds for other social purposes. The Removal of oil subsidy – President Jonathan breaks social contract with the people. If we are to use the funds for other programmes, these programmes shall be placed on parallel track with the subsidy. As more of these programmes are ready to go on line, then the subsidy can be lifted in phases. In this way, the public is assured the government will not lower its total expenditure on their behalf, thus maintaining the spirit central to the social contract.”

Fast forward to May 2023, his (Mr. Tinubu) inauguration on 29 May, he announced the total removal of “fuel subsidy,” saying that fuel subsidy has “increasingly favored the rich more than the poor. We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions,” Mr Tinubu said.

That being said, let’s take an evaluation of the country’s situation since the removal of fuel subsidies. The question is- Are we actually progressing forward or regressing backward?. Since the last 14 months of Mr. Tinubu’s presidency, where has the fuel subsidy removal taken us? The president during his speech address to Nigerians, highlighted some of the  major achievement his administration have been able to record since the removal of fuel subsidy:

ALSO READ: Oil-producing states share N341.59bn in H1 2024 amid debt, Infrastructure challenges

Fiscal Revenue: 

• On the fiscal side, aggregate government revenues have more than doubled, hitting over 9.1 trillion Naira in the first half of 2024 compared to the first half of 2023 due to our efforts at blocking leakages, introducing automation and mobilising funding creatively without additional burden on the people.
• Coming from a place where our country spent 97% of all our revenue on debt service; we have been able to reduce that to 68% in the last 13 months. We have also cleared legitimate outstanding foreign exchange obligations of about $5billion without any adverse impact on our programmes.

Infrastructural development and Employment opportunities: 

• We are working to complete inherited projects critical to our economic prosperity, including roads, bridges, railways, power, and oil and gas developments. Notably, the Lagos-Calabar Coastal Highway and Sokoto-Badagry Highway projects will open up 16 connecting states, creating thousands of jobs and boosting economic output through trade, tourism and cultural integration.

Oil and Gas: 

• Our once-declining oil and gas industry is experiencing a resurgence on the back of the reforms. Last month, we increased our oil production to 1.61million barrels per day, and our gas assets are receiving the attention they deserve.
• We immediately launched our Compressed Natural Gas Initiative (CNG) to power our transportation economy and bring costs down. This will save over two trillion Naira a month, being used to import PMS and AGO and free up our resources for more investment in healthcare and education.

Youth Development: 

• Our administration has shown its commitment to the youth by setting up the student loan scheme. To date, 45.6billion Naira has already been processed for payment to students and their respective institutions.
• We established the Consumer Credit Corporation with over N200billion to help Nigerians to acquire essential products without the need for immediate cash payments, making life easier for millions of households.

Financial Grants: 

• More than N570 billion has been released to the 36 states to expand livelihood support to their citizens, while 600,000 nano-businesses have benefitted from our nano-grants. An additional 400,000 more nano-businesses are expected to benefit.
• 75,000 beneficiaries have been processed to receive our N1million Micro and Small Business single-digit interest loans,  starting this month. We have also built 10 MSME hubs within the past year, created 240,000 jobs through them and 5 more hubs are in progress which will be ready by October this year.
• I signed the National Minimum Wage into law last week, and the lowest-earning workers will now earn at least N70,000 a month.
• We are also launching the Renewed Hope Estates in every state, each comprising 500 housing units. Our goal is to complete a total of 100,000 housing units over the next three years.

To my fellow Nigerians, I beg to ask you how has all this been effected in your personal life. How much do you still buy a Kongo of rice? When last do you soak Garri? Garri is not even common man food anymore. 

A month ago, I remember asking a few of my friends; Alabeni and Ojo,  to narrate their thoughts on the theme: Nigeria Has Fallen Apart. Both did really have a lot to say about their fathers land.

Alabeni Omowunmi Temilowa…

I remember the Nigeria I knew as a child, under one of the previous governments. It was a time when, despite many challenges, there was a sense of optimism. My family wasn’t wealthy, but we got by. The bustling markets were filled with vibrant colors and energetic traders, the streets echoing with the sounds of children playing and vendors calling out their wares. Life was far from perfect, but there was hope. The economy, while not booming, allowed families like mine to dream of a better future. We could afford basic necessities, and there was a certain confidence in the air that hard work would pay off.

Today, as an undergraduate under the current government, I look around and barely recognize my country. The markets, once teeming with life, now resemble ghost towns, with empty stalls and despondent faces. Prices have soared to astronomical heights, turning everyday items into unattainable luxuries. My favorite local restaurant now serves hope on the menu, because that’s all they can afford to offer. Insecurity has become our daily companion, and fear is written in the eyes of everyone I meet. Public services have crumbled into unintentional comedy sketches, where getting healthcare or a quality education feels like a plot twist in a tragic play. The frustration is palpable, and I can’t help but feel a mix of anger and despair as I watch my country, once brimming with potential, fall apart piece by piece.

Yet, amid this bleak reality, I cling to a vision of a better Nigeria. I dream of a nation where the economy is strong and inclusive, providing opportunities for all. I imagine a Nigeria where corruption is a museum exhibit rather than a way of life, and leaders are accountable to the people. I see a future where students like myself attend good schools and receive quality healthcare without having to stage protests. I envision a country united, moving forward together, where every Nigerian can walk the streets with pride instead of potholes. This dream fuels my resolve, keeping the flame of hope alive. I believe that with determination and collective effort, we can rebuild our nation and create a future where Nigeria truly shines.

Ojo Victoria Ilemobayo…

As a little girl growing up in Nigeria. I remember seeing the grass green and lush. Nigerians had an accommodating spirit and we could confide in one other. Nigeria was rich in diversity and harmony. Even the animals around me were glad.  But one night we all went to bed and woke up differently.

Being a Nigerian is like having leprosy. Everyday, I wake up boiling with annoyance. No adequate food and water to keep us alive. I’m sad to say that the dead are better than us. I go to market only to end up adding and subtracting for hours with nothing to show for it. The Nigeria I used to know before isn’t the Nigeria I currently live in. There’s no light, the cost of living is threatening to kill us all. We are like skeletons.

Yes, Nigeria is undergoing a tough phase and we all are feeling the heat. I know deep down this phase shall pass because no condition is permanent. I have strong convictions that Nigeria will be great and beautiful once again. I will smile again and we will be proud to call Nigeria our Home. Till then I will endure and you should too.