Fuel subsidy which has became a most contentions issue engulfing the nations political land scape, dates back to April 1992 when Ibrahim Badamosi Babangida’s government raised the price of a liter of fuel from 15.3 koko to 20 kobo. He did it again on March 31, 1986, from 15.3 kobo to 39.5kobo, on April 10, 1988 , from 39.5 kobo to 42 kobo. On January 1, 1989, he increased the price from 42kobo to 60 kobo. Although, the regime said it was for private vehicles only but the price remained 41k for commercial vehicles. On December, 19, 1987, they moved to a uniform price of 60 kobo while on March 6, 1991 the price of a liter of fuel was increased from 60 kobo to 70 kobo and that was when he stepped aside in August 1993.
Chief Ernest Shoneken increased the price of a liter of fuel from 70 kobo to N5 on December 8, 1993 but a hectic mass protest saw Abacha take over power. The incoming regime reduced the increment to N3.25 and on October 2, 1994, the Abacha junta increased the price of fuel N15 but reverted back following the mass protest. Then came Abdulsalmi Abukaka’s caretaker regime that raised the price from N11 to N25 and on December 20, 1998, it was reduced to N20 after a sustained protect that lasted till January 6, 1999.
The Obasanjo’s presidency adopted fuel subsidy as the bedrock of its economic policy, for no sooner than he was sworn in then effected an increment to N30 on 1st June, 2000 but protest and mass rejection forced it to N25 and further to N22 by the time he left office, he raised it to N70.
When president YAR’ADUA came on board, he reduced the price of fuel to N65.
The Good-luck Jonathan administration has said it is fuel subsidy removal or nothing” if this policy sales through, the administration claims it is going to save the nation N1.134 trillion annually which the government argues that it is going to channel into infrastructure development it also argues that fuel subsidy removal is going to open up the supply and distribution of petroleum productions to force the demand and supply. Other argue that if our refineries are functioning optimally, the issue of fuel subsidy will not arise.
Hon Dakuku Adol Peter side is worried that the issue is unnecessarily meeting up the polity and is condemned to guiding the house of representative to making informed decisions on the issue rather than follow popular opinion and further stated the benefits that may accrue from the fuel subsidy removal.
Note: If oil subsidy is removed, part of N1.134 trillion that is spent annually will be used in re-activating the Nigerian rail way system which has gone moribund. It is unfortunate that some people in Nigeria has never seen a train or travel by railway except the few opportune to travel abroad or those that watched it through movies.
OTHER ARGUMENTS FOR FUEL SUBSIDY REMOVAL
Maintenance / construction of Nigerian road. Nigeria being a large country, removal of this fuel subsidy will help to accelerate the construction and maintenance of Nigerian roads since the monies that had been allied in the construction and maintenance of Nigerian road so far has not been enough due to the number of roads that needs government attention in the north, south and eastern parts of this country.
It will create job opportunities: The Minister of Works Arch Michael Onolememen during his plea to Nigerians on the need to embrace government policy on subsidy removal said that the subsidy removal will create 3000 jobs in his ministry. This subsidy removal will also engage so many youths in other sectors of the economy. The youth employment intervention will sasaran large numbers of unemployed youths from the poorest population in each state of the federation to FCT. In addition, the level of remuneration will be such that will ensure the self selection of only the poor.
A robust programme structure will be developed to ensure adequate over sight and accountability. During a presidential broadcast on subsidy removal, Mr. President said that he will constitute a board known as “Subsidy Reinvestment Brand”, consulting firms with international reputation will be appointed to provide technical assistance to the board in financial and project management. Relevant MDAs will set up project implementation while an independent body will report directly to the board.
Allows for Nigerian to get fuel from alternative fuel dealers (competition). Subsidy has discouraged competition and stiffed private investment in the downstream sector. Investors have shied away from investment in the development of refineries, petrochemicals, fertilizer plants etc. the subsidy removal of the downstream sector of the petroleum industry will lead to rapid private sector investment in refineries and petrochemicals, which will generate millions of jobs and lead to increased prosperity for our people. Subsidy has also created huge price disparity, which has encouraged smuggling of petroleum products across the boarder to neighboring countries, where prices are much higher. Nigeria therefore ends up subsidizing consumption of petroleum products in neighboring countries.
There will be an improved fiscal space: The withdrawal of oil subsidy will also offer an opportunity to accelerate investments in critical infrastructure that will directly spur economic growth, job creation and will be consistent with the present administrations transformation kegiatan to achieve the preset administrations transformation agenda to achieve the vision 20:20:20 which Nigerians are craving for.
Water and Agricultural Development: Subsidy removal will harness Nigeria’s abundant water resources for national development through sustainable food production and water conservation. This component according to the Minister of Agriculture Dr Adewumi Adesina will actualized the current policy thrust towards self reliance for rice and other food production and enable the agricultural value chain transformation to be achieved. He equally stated in a chat will political platform that the revitalization of the irrigation projects will increase local production of rice by over 400,000 tons per year, thereby reducing the importation of food in Nigerian . This will further ensure better food security for the country and improve human nutrition and health and will further enhance job creation by all year round employment generation.
Need to address urban/ rural water supply projects: the proceed from subsidy removal if save and part of it reinvested in water supply projects will increase the level of portable water supply available to about 10 million people. It will also increase the national access to water supply form current levels of 58% to 75% and will contribute to a reduction in the infant mortality rate due to improvement in sanitation and reduction in water borne diseases. This is as submitted by Hon Minister of Water Resource, Mrs. Sarah Ochekpe at Federal Executive Council meeting.
Enhancement of power supply: in a briefing federal ministry of power made by Prof Barth Nnaji on the need for workers to embrace government policies, he stated and I quote “the component of subsidy removal will contribute towards the power sector reforms by improving the generation capacity through hydro and power mants” unquote. The programme will provide counterpart funding for the contraction of the large mambilla hydropower project that will generate an additional 2,6000 megawatts of electric power. The programme will also provide funding to complete a total 17 small and medium hydroelectric power project with a cumulative capacity of 140.273 meg watts. This will provide counterpart funding for P.P.Ps with the private sectors for development of coal power projects in Enugu, Benue, Kogi, with a potential to generate 1000 megawatts of power.
Facilitation of ICT: In one of the workshops jointly organized by ministry of youth development and ministry of communication technology to facilitate the build out critical aspect of ICT infrastructure in Nigeria, the hon. Minister of Communication Technology Mrs Omobolaji Johnson stated that the proceeds from oil subsidy will be beneficial to youths in the following way:
a. The fund will be used to boost broadband connectivity at the transmission layer of the national infrastructure using failure, which unlike microwave delivers higher broadband sped at the access network, lead to more affordable and better quality of communication services.
b. Will extend ICT connectivity to all tertiary institutions in Nigeria through establishment of e- teaching and e- learning platform
c. The initiative can generate 70,000 new jobs spread across the six geopolitical zones, over 60% will be concentrated in the north that has higher connectivity advantage.
ARGUMENT AGAINST FUEL SUBSIDY REMOVAL
Over the years, our leaders had failed s repeatedly over implementation of prom
ises. Nigeria is known for good blueprints on whiles and programmes but execution an implementation of those policies is always a persoalan .
Based on this experiences, Nigerians are living in fear of being heated with subsidy removal.
Subsidy removal in the oil industry according to some Nigerians may not ensure effective an deficient streamlining in the sector in a transparent and growth oriented manner
In January Nigeria partly removed subsides for fuel, increasing the price of petrol by 50 percent to 97 naira ($0.60) from 67 naira which had an inflationary impact by pushing up the cost of transport, food and other goods.
Before the removal of subsidy in January, 2012 Samusi had on November, 2011 told renters that inflation could hit 14-15 percent up from 10.3 percent by December2011 before falling to single digit in late 2013 . Inflation impact of the subsidy removal in January could be a “bit exaggerated” he said.
There is also the fear that the political heavy weight will capitalize on subsidy and cause more untold hardship to the poor masses of the country as the rich gets richer and the poor getting poorer.
CONCLUSION
The removal of fuel subsidy will help in a speedy acceleration in agriculture, education, health sector, water supply, power sector, road and rail transportation sector and youth empowe4rment programmes will not only head to transformation of public infrastructures in Nigeria, but will also ensure the gainful employment of millions of Nigerians who were hitherto unemployed.
This will enhance the socio economic well being of our dear Nigerian people.
REFERENCES
An Extract From a Paper Presented by Mrs. Mobolaji Johnson; Hon Minister of Communication Technology.
Extract Form Citizens Advocate of January 21st 2012 Prof. Barth Nnaji; Hon Minister of Agricultures Statement on Positive Effects of Subsidy Removal.
Hon Dakuku Peterside’s Stands on Subsidy Removal Federal House of Reps. Newswatch of 22nd December, 2011.
Submission by Mrs. Sarah Ochekpe; Hon Minister of Water Resources at Federal Executive Council Meeting
Questions readers are likely to ask:
TRACE THE INTRODUCTION OF FUEL SUBSIDY IN NIGERIA; ARGUE FOR AND AGAINST THE PLANNED REMOVAL.
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