Editor’s note: Jasper Azuatalam, an activist, chairman of the Buhari Vanguard initiative, says President Buhari-led government is forced to deal with what this author calls former president, Goodluck Jonathan’s, poorly thought-out moves regarding the ill-fated fuel subsidy.
It is a well-known fact that fuel subsidy has become a keg in Nigeria’s wheel of success.
Just few days to the 2015 presidential election, when it dawned on Goodluck Jonathan that he will lose, he reduced the pump price of fuel from N97 to N87. This action left many wondering as to why he did that, as no one solicitated for it.
It is clear that there can only be two reasons for this action: to gather public sympathy towards the 2015 presidential election, and to create a difficult situation for the incoming administration if he loses the 2015 general election.
The first aim was not reached, but the second was. If fuel had remained at N97 per litter, there would not be anything like fuel subsidy today since the Buhari government announced that subsidy on each liter of fuel has gone down below N15.
The price of crude oil has fallen to as low as $37, but the government is still paying over 100 billion monthly to marketers as fuel subsidy. If the government continues to pay subsidy, fuel price will remain constant even if the price of crude oil falls to $10.
One thing you also need to keep in mind is that the price of processing crude has remained constant even as the price of crude dwindles. It is also true that the service charges foreign companies like Chevron and other multinational companies collect from the export of crude as the cost of exploration also remain constant.
The government must stop this carnage and waste called subsidy. The market should be allowed to compete freely as this will definitely bring down the pump price of fuel in a short while without paying subsidy. If subsidy is removed today, the pump price of fuel will remain below #100 and will subsequently reduce in a short time when competition sets in in the market.
What the government should do it to make sure that our refineries are working at optimum performance. By this, government will begin to make profit by the sell of fuel instead of paying subsidy and the price of fuel will naturally fall as competition sets in.
The government should also provide enabling environment for oil marketers by giving licences to intending marketers and providing soft loans for them. If this is done, fuel will be like gari, fuel scarcity will become a thing of the past, and the pump price of fuel will fall while government will use the funds meant for subsidy to build roads, schools, hospitals, and develop our infrastructures. A stitch in time saves nine.
Jasper Azuatalam tweets @Azuatalam. He is an activist, chairman of the Buhari Vanguard initiative.
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