On May 29, 2023, President Bola Ahmed Tinubu was sworn into office. During his inaugural speech, President Tinubu announced the removal of the fuel subsidy which increased the pump price of petrol from N194 to over N550 with variations in most states. Those who commended the president on the removal of subsidy said the government has done the right thing. President Tinubu said the 2023 budget does not have provision for fuel subsidy regime.
After removing subsidy, there must be savings accruing to the federation account. President Tinubu said the education sector must be improved as part of effort to reduce poverty. In an almost poetic fashion, the president stood before Nigerians at Eagle Square and said on fuel subsidy, “unfortunately, the budget before I assumed office is that no provision is there for fuel subsidy.” Minutes after the declaration, fuel queues resurfaced nationwide, leaving millions of Nigerians terrified above the knock on effect that it will have on their daily lives.
In order to successfully drive the subsidy removal policy through, more than anything, the Tinubu government needs to gain the people’s trust. When millions of Nigerians trooped out in January 2012 to protest fuel subsidy removal by the Goodluck Jonathan Administration, a few analysts opened at the time that the missing link in the conversation was trust and knowledge. At the time many Nigerians didn’t really understood the issue and sleaze surrounding the subsidy arrangement itself. Those who did not understand it didn’t trust the government to do the right thing. There are many who do not oppose the policy not on the basis of any concern but due to crude policy.
Over these years, I have seen many Nigerians change their position on subsidy in the light of new development and insights. The only thing the events of the years between January 2012 and June 2023 has shown is that the social contract between government and citizens is weak and this suspicion has weaken government ability to gain the people’s trust on such a sensitive policy issues. In 2012, a report in the Brookings Institution, a non-profit public policy organization based in Washington, in 2011 alone, Nigeria’s fuel subsidy cost the country an estimated $8 billion. Principally, because of the opacity in the industry, it was a messy affair at the time as there were contradictory figure from different agencies of government. More worrisome is the fact that between then and now, the subsidy payments have ballooned. A newspaper report recently puts Nigeria’s spending on its fuel subsidy regime in the last 18 years at about N21.7 trillion, based on figures sourced from NEITI.
For instance, in 2023 budget the Nigerian government budgeted N3.36 trillion on petrol subsidy for six month ending in June, which is roughly N560 billion every month. Earlier in 2022, the Federal Government appropriated N4 trillion for petrol subsidy. On the same flipside N826.9 billion was allocated to the health sector within the same year. Today, the subsidy regime is even more threatening because in the past, the government can barely effect payment as at when due. As far as we know today there is not really any savings to realize from subsidy removal in the real sense of the word, as we are simply borrowing to consume subsidized fuel. The negative implication is that many Nigerians will feel and are indeed feeling the shock and pains of the removal at inflation of 22.2%, unemployment at 33.3%, food inflation at 24%, and there is hunger and anger in the land already. Already, the cost of transport has Jumped 150% and 200% in many cities across Nigeria in the past few month.
Okpako is a student of the Department of English and Literary Studies of Delta State University, Abraka