Oil Subsidy and Foolishness

One of the few writers that inspire me almost daily, Paul of Tarsus tried his best to preach Christ to the Greeks. His infectious zeal was matched with crass foolishness in Athens.  Now when I ponder on the continuous lamentations of my heart on this nation and itching to tell our leaders, they could count it
as arrant folly of first time alcoholic. We have a country with over 160 million people with more than half of the working population out of sustainable
jobs.  You have a mono product that the economy is founded upon –oil. The oil price is not determined by Nigeria but naked market forces. Yet one country decides not allow any benefit accrue to its people but rather treat this common resource as an external product.

We are living on the assumptionsthat oil subsidies which costs us almost a trillion naira yearly as to stop. Oil markets will swing to the whistle of markets and ushered into full deregulation.  I wonder who schools our leaders or shapes our thoughts that the markets get the best price. Is it the historic Austrian school of Economics, Washington Consensus of IMF and World Bank or exactly which country are we learning from? America is always the template of capitalism, rational choice and price efficiency theory. America with its capitalist towers gives food stamps to 42m of its citizens from 19 million households. America’s oil industry is highly subsidized with tax breaks given to oil companies to protect 9.2m jobs. In the 2012 US Budget, 57% of the Budget goes on safety nets Programs such and Medicare, Medicaid, Social Security, Food Stamps, Child Nutrition and Credits and Student Loans.  The question is who are we copying from if the oil subsidy that serves as a social safety net and the masses cut of the nation’s patrimony is severed? Who is teaching us?

We are reading the IMF script again especially when an economy is in a hole and the script says lean government, increase taxes, devalue currency, privatization and shred safety nets into the garbage. Itis estimated that, about US$910mn, on a monthly basis, was expended to import refined petroleum product in 2010. In the same year, the country earned an estimated average monthly income of US$3.5b, translating that about 26% of total oil earnings for the year goes out of the economy to settle the purchases of refined petroleum product! The oil subsidies have become unsustainable especially when state expenditure has ballooned up to the recent increase in wages; the cost of governance such (Isa Yuguda and 710 assistants) and corruption.  Oil subsidy is an element of corruption. Those who see the facts and figures know that beyond the benefits scattered across 160m people, those who feed fat on the lump sum of the oil subsidy are oil importers.

Why that is after giving refineries licenses to investors, the proposed sites are still full of weeds.  A country extracts oil and government takesfull taxes on the oil its people would use.  Then you pay a foreign shipping line to take it to Ivory Coast or anywhere and then the Quattara government takes all the taxes and duties for the import. The refineries get the oil refined but will surely do it with aprofit. Rather than we profit from the residue of oil needed by plastics,
petrochemical and other allied industries, we pay the shipping company back to bring only petrol, kerosene and diesel separately back to us.  Then our customs and others take full import duties charges at our ports.  When oil fluctuates possibly due to the madness of Ghaddafi, the costs of subsidies rise
as well for Nigerians. Rather than us build lasting structures for refining, we create a short circuit founded on patronage and about N785bn was estimated to
have been spent on petroleum subsidy in 2010. At very export of the crude oil, we have also exported direct and indirect jobs. We sold the job of the fresh
engineering graduate, the nimble accountant, the recharge card seller, the canteen woman, the technician with three kids in school. We export jobs when we
export our natural resources or leave them to waste like gas and import them back as finished products. Oil subsidy is the cost for refusing to build refining
structures that bridge our primary and final stages of production

Now that Jonathan rises like a Pharaoh ready to take out oil subsides, he is looking at the part not the sum of the equation.  If we have few refineriesdue to myopic sight of the leaders and investors that don’t have guarantees of their investments, is it morally right that the common man bear the brunt? Can’t we hasten up plans to build refineries and get a cut-off date in the medium for oil subsidies?  Do we understand the multiplier effect of this decision on households, individuals and its factor to social stability? Will the full price of the pump not be the final output of a pseudo-cartel privileged to import fuel? The oil subsidies will free more money for governance is a popular assumption, has the Nigerian government been faithfully in the
much that has been shared that it should still get much more?

That the sweeping decision of the President and its allies on oil subsides will be felt by the common man is a timeless fact.  The investment banker gets
millions of fees in the global recession while thousands put out of work are presently occupying Wall Street. The Greeks are protesting daily on how government is cutting their benefits after using $6b to host an Olympic jamboree and cooking the books to join the Euro. Congrats to the oil sheiks but the oil subsidy buck stops at the table of the common man. Did I hear the President’s siren and long entourage driving on a breakneck speed? Wake up, its 1984.

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