Dr. Abdulkareem Onakoya, Foresight Institute of Research and Translation, Ibadan, Oyo state.
The recent move by the federal government to remove the subsidy purportedly meant to put the Nigerian populace on the ‘smiling side’ was an ‘over-delayed’ step to push the economy from the doldrums.
An average Nigerian was only blindsided by the timing and its effects which were hitherto greeted by the unending numbers of protest from the public. Even the bench and civil liberty groups were not left out. Majority of us failed to ask the question ‘why’.
In my own usual way, I went through the woods to dig out some facts and basics about it.
In case we don’t know, this issue has been lingering since the cry on our ‘wasteful spendings’ on oil sector began with little or no gain.
In 1971, Nigeria joined OPEC which was founded in 1960 becoming the 11th country in the series. Since then, production levels have been dangling between 2.2 million barrels per day in 2007 and 2.1 million barrels per day in 2019. Though, the nation has been suffering losses in the balance sheets due to the instability of the currency and the international market prices. This same nation can’t feed its citizenry well enough because of the corrupt nature of those at the helms of affairs. But the recent move by the president is expected to be a panacea.
Have we all forgotten the numbers of oils blocs fraudulently allocated by the former President to his allies even his family members without an iota of supply of the refined products to the final consumers. The scenarios of diverting refined oil to neighboring countries only to come up with mere paper claims should still be fresh in our memories. How do you and I want this country to survive with the ‘salary economy’ we run. Where 1/3 of the budgetary provisions goes for subsidy which in the ‘true sense’ does not exist. 65% of the remaining 2/3 goes for salaries and concurrent budgetary formulas.
In case we don’t know, in 2013/2014, Nigeria was paying about 8.2billion naira for oil-subsidy and using almost the same amount to import same product making a total of 16.2billion with JUST 200million as revenue. What a HUGE loss !!!
According to the then CBN Governor, Sanusi Lamido Sanusi, the government only survived recession that time with the 62billion naira reserves which could not have lasted beyond 2015, hence, the HEAVY RELIANCE on loans and aids to push the economy.
In 2019, out of the 8.8 trillion naira budgetary power, 1.13 trillion went for subsidy. The efforts put forth by the government made a huge sum of 4.62 trillion naira from oil revenue exceeding the target of 93 billion naira. In January 2019 alone, about 479.5 billion naira was generated which was later increased to 516.4 billion in the preceding months. What a great revenue drive and achievement !!!
Now we have the removal of the subsidy and the deregulation of the sector.
The simple sense in this is that the government won’t be loosing trillions of naira to ‘non-existing’ businesses and/or deals. No one will be using ‘mere paper’ to collect ‘free-money’ from government as a national cake or my ‘share syndrome’.
For your information, this deregulation as it happens in the telecommunication industry will give room for competitive market. The simple economic analysis is the ‘fall in price of the commodity’. To further the analysis, different players in the sector will determine their prices ‘as it suits them’.
This competition will not only strengthen the sector but will allow effectiveness and efficiency in the mainstream.
Lest we forget, oil and gas remain the Nigerian mainstay. Revenue from the industry makes up about 88% of our total foreign exchange earnings. This should be good enough. For instance, in 2019, the federal government planned to earn about 6.7 trillion naira from the sector but later settled for less due to the failure to review the Production Sharing Contract (PSC) and some other factors.
However, let me quickly point it out that the analysis put forth would only be expedient and realistic if there is sincerity on the part of the government.
Where the blame game of some of us lies is the way this is done. A better advocacy should have been stepped up by the government to enlighten the public about this move.
My dear readers, the time should not be further delayed than now. Yes during this lockdown. By the time the economy settles back, the interplays would have started manifesting.
KNOWLEDGE IS POWER !!!
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