Kamis, 10 Oktober 2019

Fuel Subsidy In Nigeria - Argument For And Against The Planned Removal

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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