A lot has been and will be said about the fuel subsidy removal before the day, even the month is over. While I do not necessarily reject the idea out of hand, I think it is a premature step. Pretty much like throwing away the threadbare rag a homeless person who sleeps under the bridge uses to cover himself without providing alternate means of warmth.
Perhaps in another society where things worked, this shouldn’t be a biggie but here in Nigeria where everyone is a local government – providing electricity, security, water and so on, PMS is the lifeblood of our economy. An average home runs on a generator fueled by PMS. This same generator runs a pump for the borehole – dug by the same home owner. We do not have well structured and safe transportation so most people would prefer to drive their own cars. And so on. For a business, it’s a similar story.
Anyway, I write this just for a record to myself and I guess, my blog, that I said something about the subsidy removal even though it might not do much. 😐
Here are a two reasons why I think this move is premature;
What Else Do We get?
For all those people comparing us to Ghana, the UK, the US and so on, here’s my answer. Removing the subsidy ordinarily shouldn’t be a biggie. But it is and here’s why. Electricity is ususally generated from LPG which for a long time has had a fixed arrangement which everyone is happy with. No problem there. But the fact remains that many homes, businesses and factories do not run on electricity provided by PHCN. For the most part, electricity used is provided by small generating sets and plants. Therefore aising the prices of PMS is bound to affect the lives and purchasing power for people more directly than in other places.
The transportation sector here is very fragmented and run mostly by individuals who are given to emotional reactions as evidenced by the spike in transport prices reported yesterday evening. If this sector were well structured, we wouldn’t have the situation where there is so sudden an increase that people now pay double the prices even though it is quite possibly an excess. This brings me to the second point.
Greed and Mass Panic
The reaction to the PPPRA’s announcement yesterday was typical – major hoarding, arbitrary price hikes, fear leading to panic buying. We’ve gone through this song and dance before with the other price hikes so why did no one think it would be different this time especially with the news that this price increment was going to more than double the current price? Usually, price changes are usually well thought out policies with steps listed out to counteract panic and shore up confidence. I guess this fact slipped by them. How else do we explain that the filling stations are selling PMS from the old subsidized stock at the new price with some refusing to sell and long queues snaking around other places? Or that prices at the shop two houses down from my own have risen sharply? Or that bus fares have doubled as well? We are a people given to excess profit where we can take it. This fact has been made evident time and again.
I can only shake my head and wonder how things will play out. Will we sit back and settle into the new price regime as we have before? Or will this mark the beginning of a new revolution? All that is left is for me to wish you a happy New Year. I hope your dreams and goals come to pass. Subsidy removal be damned
- Oil-rich Nigeria ending fuel subsidies (ctv.ca)
- Fuel subsidy removal: Prepare for a showdown, NLC, TUC tell Nigerians (vanguardngr.com)
- FG annouces immediate removal of Fuel Subsidy (ogala.wordpress.com)
- Economic operators differ on subsidy removal (vanguardngr.com)