The Fuel Subsidy Palaver (2)

There is a socio-political, economic and global context to the fuel subsidy removal crisis. When President Jonathan overwhelmingly won the April 2011 general elections, his major opponents vehemently rejected the outcome. Their contrived angst couldn’t really be the actual polls conduct, but a carry-over of the sense of entitlement and anger felt by Northern politicians, traditional rulers and elites after the region’s perceived loss of power due to late President Umaru Yar’adua’s death. The promise to make Nigeria “ungovernable” was soon to manifest in escalation of religious tensions and “Boko Haram” terrorism leading to heightened insecurity across the country, especially the North East and North Central. Government’s confused and confounding response to the bombings, shootings and killings carried out in the name of “Boko Haram” angered most Nigerians. Meanwhile a more insidious de-legitimisation of Jonathan commenced in the media and hearts of citizens, especially in “core” North and South-West. The media onslaught was on two fronts-social media and mainstream press. Most “civil society activists” and vocal youth, the type that inhabits and dominates internet and social media tended to support either Nuhu Ribadu or Muhammadu Buhari, candidates of Action Congress of Nigeria (ACN) and Congress for Progressive Change (CPC) respectively in last year’s elections. Typically idealistic and highly passionate (though sometimes lacking commensurate insight), they favoured change from the PDP status quo. While the South-East, South-South and North-Central had made up their minds long before the voting to back Jonathan, the battle was really over South-West votes. When ordinary South-Westerners turned to Jonathan, the activists became an often-angry minority determined to prove the majority had made a grievous error! They were joined by a large number of Northern facebook activists whose pro-Buhari posture was unequivocal, though nicely expressed in nationalistic terms. The mainstream media, particularly three strategic ones (a trusted medium that projects Northern intelligent opinion; a relatively new but powerful national newspaper reflecting dominant thinking in the South-West; a very influential daily which acquired very strategic anti-Jonathan columnists!) also turned against Jonathan. Jonathan’s public image steadily became “clueless”, weak, indecisive and floundering and his wife portrayed as a laughing stock! Meanwhile Jonathan’s communication machinery went to sleep, with key Jonathan supporters pre-occupied with the spoils of office!!! Jonathan who had brought Facebook into Nigerian politics and governance, became its most savage victim, and fared little better in mainstream press, where editors surprisingly found access to Jonathan’s media managers difficult. In governance, signs were mixed as Jonathan assembled a fair cabinet and an initial policy vacuum around the inchoate “transformation agenda” began to be filled. But government appointed prominent businessmen into an otherwise sound economic management team, an error that signalled prospects of crony capitalism. Disturbing rumours began to emerge about import duty waivers, and in the petroleum sector about management of the subsidy regime, which almost certainly contributed to ballooning subsidy figures. It was soon apparent that oil marketers were quite enamoured of petroleum minister, Dieziani Allison-Maduekwe as they flooded newspapers with congratulatory adverts every time she collected a honourary doctorate, national award or celebrated a birthday! The regime crowned these with a badly-managed jumbo national honours ceremony in which up to 350 persons-the bad, ugly, good and not-so-good received high honours. Meanwhile corruption, poverty and unemployment remained high; and middle-class Nigerians and youths having seen people power demonstrated in the so-called Arab Spring and “Occupy” protests were anxious to stage a Nigerian version, irrespective of history and context! In six short months, Jonathan well-meaning, simple but naïve, and lacking a vibrant political, strategy and communications backbone had lost so much goodwill that his sensible policy of downstream petroleum sector deregulation erroneously sold as subsidy removal, was going to be badly-received by the populace! There were also reasons to believe that Jonathan’s government and security services contained not a few persons whose loyalty to the regime was probably questionable! Ironically deregulation of downstream petroleum is the first real bold and transformational action taken by the Jonathan administration! The initiation of a Nigerian Sovereign Wealth Fund was positive and the 2012 budget proposals made the right calls on the big issues-deficit reduction, structural reform, fiscal consolidation, changing the ratio of recurrent to capital expenditure, social sector investments in education, health and employment generation, and agricultural policy and incentives, but all these positives were lost in social media bluster and anger. Deregulation of downstream petroleum is one of the most important and critical actions government can take in helping fulfil our economic potentials. We have finest grade crude oil, but we import refined petroleum products because we prefer the short term and short-sighted benefits of a wasteful and corrupt subsidy scam. Deregulation would promote huge private sector investments in refineries, petrochemicals and the value chain. It would create jobs and resolve permanently and sustainably petroleum product supply issues and is the structural solution (like import licensing and foreign exchange trading earlier) to the huge arbitrage opportunities that provide incentive for corruption. It is unlikely that the inflationary impact of N141 petrol would be fully reversed even if today the price was returned to N65. It is wiser to reach agreements on palliatives, anti-corruption, reduction in government waste and profligacy, and monitoring of the SURE (Subsidy Re-Investment and Empowerment) Programme and let Nigerians reap the benefits of a deregulated downstream petroleum sector.