If I put the above question the other way, asking when we shall see the effects of oil sector deregulation, the question would turn rhetorical. And the reason is quite obvious. The effects of fuel subsidy removal, an offshoot of the deregulation policy, had hypodermic needle effects on the polity. As President Bola Tinubu pronounced ‘subsidy is gone’ at Eagle Square on May 29, 2023, oil marketers took up the rest. That evening, I bought a litre of fuel above N300 in one backwater filling station you ordinarily won’t dare as most stations were shut. I was wondering whether it was a dream or a nightmare. Subsequently, we have all seen the prices of fuel jump to unprecedented heights with goods and services following it like the snail and its shell. Now, with a litre selling above N1,000, the effects of that policy are undoubtable. Inflation rose to the heights never seen in this country or associated with countries seeking communal prosperity, while the purchasing power of the individual is either reduced or wiped out.
But I’ve seen that the effects of the subsidy removal are not just unidirectional. Even though some people out there would think the fuel marketers are swimming in naira as a result of the huge percentage hike in the price of petroleum products, compared to pre-May 29, 2023, the situation out there is quietly affirming that the rich also cry. Recently, I drove round the city of Ibadan and got the feeling that many of the two-pump filling stations were already packing up. It is either they are under lock and key, or they hang a banner at their gate-attendants needed. The fact that not many people could branch a petrol station and ask for a full tank means less sales. Aside from that, the attendants, who used to smile home with ‘change’ from customers, no longer have such freebies and luxury. The general reliance on card payments has also wiped out their access to raw cash, which means that the ‘No change’ syndrome has been obliterated. At the end of the day, the attendant is forced to live on the peanuts he or she is paid as salary. These days of escalating transport costs, not many would take up that job. Even the station owners are crying. The other day, their association complained about the huge amount now needed to buy a 33,000- litre truck.
While the sector and its operators are busy sorting themselves out, the focus here, however, remains the man on the streets. Those who have been at the shorter end of the hard effects of the subsidy policy.
The government of President Bola Tinubu had said that the policies introduced at the start of the administration were imperative while liking them to the pains of childbirth. Government operatives have said that without the implementation of those policies, maybe the country’s economy would have crashed. I usually don’t believe those doomsday prophecies. Those who introduced the Structural Adjustment Programme (SAP) to the economy claimed there were no alternatives. They even dared to arrest anyone who set up a forum to discuss such alternatives. At the end of the unwinding implementation of SAP, later christened SFEM, there were no visible improvements in the economy. We were to realise that the IMF and World Bank, proponents of the policies, were merely using our country for laboratory experiments.
Anyway, since we landed the subsidy removal train 18 months and counting, the people are desirous of the benefits, and it is getting to the time to ask that question. The Yoruba would say ati okeere ni Oloju jinjin tii mu ekun sun, if you are hard to come to tears, you start crying early enough, so, rather than wait the entire 48 months assigned to the president, Nigerians could as well start asking for the benefits now that we are almost midway into the tenure.
On November 30, 2024, celebrated columnist in the Saturday Tribune, Farooq Kperogi, wrote in his column Notes from Atlanta, “Petrol is cheaper in Atlanta than Nigeria.” In the article, the US-based professor compared the amount of petrol in the United States with that of Nigeria, taking a look at the minimum wage in the two climes. He also harped on the issue of fuel subsidy and firmly submitted that the United States spent $757 billion to subsidise fossil fuels in 2022 alone!
Kperogi wrote in November: “In Metro Atlanta, fuel prices hover at $2.70 per gallon, which is equivalent to around 67 cents per liter. (Four liters make up a gallon.) Translating this into naira reveals a stark discrepancy. At the current exchange rate of 1,647 naira to the dollar, a gallon of petrol in Atlanta equates to approximately 5,200 naira or 1,102 naira per liter. That’s astonishingly cheaper than Nigeria’s prevailing rate of around 1,300 naira per liter.
“This disparity grows even more troubling in light of the wildly differential minimum wage standards between Nigeria and the United States. In the United States, the federal minimum wage is $7.25 per hour, which amounts to roughly $1,200 a month. Converted into naira, this comes to nearly 1,974,000 (one million, nine hundred and seventy-four thousand) naira.”
He also quoted data from the Center for Investigative Reporting, which he said, found that “the true cost of petrol in the United States is $15 per gallon, that is, $3.75 per liter. Converted into naira, that would amount to 24,648.90 naira per gallon or 6,162.23 naira per liter. But the average pump price of petrol in the United States is $3.16 per gallon.”
Nearly a month after his submissions, neither the government nor the Nigeria National Petroleum Company Limited (NNPCL) had issued a rebuttal to the Professor’s submissions. In any case, there is nothing to deny as facts in this case are constant.
First, it is clear that the IMF and World Bank have a dual-purpose policy initiative when handling the issue of subsidy in the West and the developing world. Third-world countries are made to believe that subsidy is evil and that it must be done away with, whether it is in the area of education, human capital development, or social welfare. But while dealing with Western countries, they realise that governance is all about ensuring happiness for the greatest number of people. They come to the realisation that governments must procure shock absorbers to withstand subsidies and give their people a good life. They look the other way when governments of debtor nations embark on luxuries that defy their country’s economic status.
Last week, Dangote Refineries announced it was cutting the prices of petrol to N899.50 per litre. The communication from the refinery said that the reduction was an end-of-year gift to the people. I was surprised that not many callers to the different stations I monitored the following morning expressed joy at the news. First, many callers think that once the price of fuel is above N500 per litre, it would be deemed too high for the average salary earner in an economy of N70,000 minimum wage. They also submitted that the reduction by Dangote would not affect transport fares significantly. They were equally afraid that the subsidy by Dangote would be withdrawn after the New Year.
The outcome of what I would call a snap survey I embarked upon, using some FM radio stations as avenues of the public sphere thus showcased to me that the ordinary people are far more aware of economic indices than many in the air-conditioned offices would agree to, and that only when the government finds an alignment between the minimum wage and the general cost of living, especially by getting an acceptable cost for petrol, which determines the cost of most other items in the economy, would the people appreciate it has started working for them. If America is spending close to a trillion dollars to defend its citizens, it won’t be wise to keep exposing Nigerians to the vagaries of market forces. Those days, they said teachers’ rewards were in heaven. Today, the teachers, like other operators in the economy, want to receive their rewards here on earth. Over to you, President Bola Tinubu.
(Published in the Sunday Tribune, December 22, 2024)
