National Issues
Fuel Subsidy: Realities that matter will not change
Eliminating fuel and electricity-based subsidies have been one of the greatest challenges confronting every successive governments since 2000 when the Olusegun Obasanjo – led administration first attempted it. Fuel subsidy was introduced in 1970 to ensure Nigerians buy petroleum products at optimal prices below the international market price.
Like every government, this present administration has attempted to remove fuel subsidies right from when it came on board, however, due to politics that often surrounds its removal, to this day it has remained with us. However, this time it seems the Buhari government has weighed the available options before her and decided to part away with the subsidies. The government has announced that from February 2022, it is ready to throw the bathwater of the ‘abiku’ call subsidy away without throwing the child along with it. What this means is that Nigerians will have to either pay N340 per liter before they can access a liter of petrol or troop out in their masses to stage another protest at Ojota once again to resist any form of attempt to remove the little sugar in their mouth.
Fuel, unlike electricity where Nigerians often pay for light in exchange for darkness, its subsidy has been the only government intervention that the poor citizens had benefited from the largesse of national cake, and that’s why anytime the government tries to do away with fuel subsidy, It always sparked an explosive situation that flares up brick-wall of protest by the citizens who have had a taste of the spoils of the dividends of democracy that came their way since 1970.
In 2014, when former President Goodluck Johnathan attempted to remove fuel subsidies which he said cost the government billions of naira monthly as of then it was thawed with stiffer opposition by the then opposition party, trade union, and the activists. But beyond this glaring issue is a government that couldn’t provide the necessities of life such as clean water, light, affordable healthcare facilities, decent intra commuters means of transportation, affordable housing, security, and a cheap and affordable food supply chain. This highlighted in part why people are often quick to stage protests, the other part is the economy that has deteriorated to the point that people couldn’t afford everything that adds up to life, especially the most basic need of life: food and shelter. In the last six years or so the prices of foodstuff have skyrocketed to the point that bread, rice, egg, among others have turned to luxuryy on the table only eating occasionally, all thanks to the government’s uncircumcised economic policy that has further driven common people below the accepted poverty line.
More so, beyond this pervasive disillusionment is something far disturbing which has completely alter the metabolism of the people: the years of bullying, bruising, and battering of the people by government unfriendly policy has created a fearful apprehension which the politicians often exploit to the full during the election. Thus, the people had lost the ability to trust the government; that’s why each time a good decision is being taken on behalf of the people, it often thwart with a brimmed wall of opposition. Should we blame the citizens? Hell no, for years of government bullying has make life unpleasant for the masses.
If my brain will not betray me, this departure from the current pump price of N162 is more than a 100% increase of the new pump price. Many have justified this new price change that it reflect the average price of gasoline across different countries of the world but fail to consider the stringent conditions of living here compared to those countries they often compared us with. The populace be it citizens or immigrants, often benefited from wages far above ours, stronger price purchasing parity, life and disaster insurance policy, per capita income, quality education, affordable housing, healthcare facilities, the standard of living, and social welfare that allow them to have a good quality of life. And also, the argument that the rich benefited more from the fuel subsidy doesn’t add up. Yes, in their evil strategy to make more money, sometimes, a certain percentage of the fuel volume imported into the country is often smuggled across the borders for sales. This is because our neighbors beat Nigeria on cost rivals yet Nigeria pays the fools price on non-existing fuel. In any case, is this enough reason to remove fuel subsidies? Why can’t the government clean up the corruption? Why should the poor citizens always be the ones at the receiving ends of the government inefficiency? Why should the citizens be punished while the political class continues to live in denial of the existence of the crisis we are currently in, yet earned bogus and underserved salaries and live an opulent lifestyle.
Meanwhile, to cushion the effect of fuel subsidy removal, the government has announced its plans to pay N5,000 to 40 million from the bulk of the country’s poorest of the poor. To me, this is a lazy man’s approach and it seems we are moving in a vicious circle that will lead us nowhere. First, the options before us are not fit for our situation given our propensity to corruption, no doubt, only a little fraction of the money will reach the targeted group. As history doesn’t lie, the two hundred billion this money amounted to rather than reaching the poorest of the poor, will end up in the pocket of the elite subcontracted for the job. History, as we have seen, is littered with examples of this kind of intervention that failed. We all know what happened to covid-19 palliatives. It’s very unsustainable and bound to fail even before starting. More so, as we have seen, dispersing money in the name of social intervention doesn’t guarantee that it will end up in the hands of those it targeted. Is it not better to invest it in something that will outlive this government?
Besides, there are several issues that one would have expected this government to tackle before embarking on fuel subsidy removal; which is not outrightly bad given the situation at hand but the first thing one would have expected the government to do is to privatize all the moribund refineries to make way for an improvement, efficiency, optimization, and commercialization.
Interestingly , this country has four refineries, the first refinery bult in Port Harcourt has a capacity of 60, 000 barrels per day while the other one still in Port Harcourt has a capacity of 150, 000 barrels per day, the Warri Refinery has a capacity of 125, 000 barrels per day, and the Kaduna Refinery has a capacity of 110, 000 barrels per day making the nation’s total refining capacity amount to 445, 000 barrels per day if they are operated at ideal capacity but today, all the four refineries are in comatose despite the billions this government has spent on turnaround maintenance.
Moreover, one would have thought the government would prioritize privatizing these moribund refineries to increase their capacity optimally to fill the gap created by the lack of having a functioning one to remove the multi-dimensional upshots of fuel subsidy on the country’s lean resources. Sometimes I wonder about the kind of discussion taking place in the national executive meetings where policy and actions of government are often debated to make an informed conclusion.
Similarly, the other option becomes clear that the second option would have been that the government partner with the state government to establish a decent fleet of comfortable and safe means of intra carrier across the country for all Nigerians instead of paying subsidies that will reach a few people or certain parts of the country than the other. One, It will save the country more money and at the same time provide employment opportunities to the teeming population. Secondly, it would allow the government to dis-congested our much populated and polluted cities when we all put our cars on the road day and night. Meanwhile, if the government invests in an efficient and affordable public transportation system, It will relieve the poor from the impact of high transportation in commuting from one part of the country to another, and within cities.
If the subsidy is removed, it means one thing, the price of goods and service in the market across the country would skyrocket by the new price of petroleum, the burden will squarely be on the low-income earners in terms of transportation cost and quality of life. Therefore what the poor need at this time program that will ease that burdens of the high cost of transportation that would come along with the new price regime given that our transportation industry is still fossilized with fossil fuel and not miserable 5000 naira.
Finally, without any attempt to water down the infrastructural achievement of this government, one would have expected this government to conclude its train revolution across the country to ease the burden of transportation costs on the low-income earners. Investing in infrastructures such as good roads, affordable health care facilities, housing units for the poorest of the poor without having to pay through their nose, then If the government take away the fuel subsidy, no one would blinked an eyelid, but without any of these things in place that would make life easy for the citizen given the current harsh economic realitiess where in there more people have been push below the poverty line than in 2015 when this government came on board , giving cash to poor people instead of creating an economy that would create things that create wealth and make their purchasing price parity to be stronger,that would amount to wastage of resources.
In my honest view, what I consider to be an effective form of intervention to cushion the effect of subsidy by a government that cares to improve the social welfare of its citizens is improves in the public service delivery like social welfare directed to the poorest of the poor without the middlemen such as the provision of the affordable health care system, wages, well structure education and empowerment without any political leanings, this will remove a certain proportion of citizens from poverty and diseases and not the sharing of trader moni, market moni that will end up in the pocket of the elite. To me, that’s what it means to cushion the impact of fuel subsidy if at all we all decide to let it go and not one miserable N5,000 that can’t cook a pot of soup. And to me, that’s like scratching the corn at the back of a basing and what the yorubas would call ‘ai ni kan se’.
Adediji Wasiu, sent this piece from Lagos State, Nigeria
National Issues
Nigeria’s Foreign Debt Servicing Hits $3.58bn in Nine Months, Pressuring Budgets
The Nigerian government spent a staggering $3.58 billion on servicing foreign debt within the first nine months of 2024, marking a significant 39.77% increase compared to the $2.56 billion expended over the same period in 2023.
This data, drawn from a recent report on international payment statistics by the Central Bank of Nigeria (CBN), reflects a concerning rise in the country’s foreign debt obligations amid depreciating currency values.
According to the report, the most substantial monthly debt servicing payment occurred in May 2024, totaling $854.37 million. This is a substantial 286.52% increase from May 2023’s $221.05 million.
Meanwhile, the highest monthly payment for 2023 was $641.7 million in July, underscoring the trend of Nigeria’s escalating debt costs.
Detailed analysis of monthly payments further illuminates the trend.
In January 2024, debt servicing costs surged by 398.89%, reaching $560.52 million, a significant rise from $112.35 million in January 2023. However, February saw a modest reduction of 1.84%, with costs decreasing from $288.54 million in 2023 to $283.22 million in 2024. March also recorded a decline of 31.04%, down to $276.17 million from $400.47 million the previous year.
Additional fluctuations in debt payments continued throughout the year, with June witnessing a slight decrease of 6.51% to $50.82 million from $54.36 million in 2023. July 2024 payments dropped by 15.48%, while August showed a 9.69% decline compared to 2023. September, however, reversed the trend with a 17.49% increase, highlighting persistent pressure on foreign debt obligations.
With the rise in exchange rates exacerbating these financial strains, Nigeria’s foreign debt servicing costs are projected to remain elevated.
The central bank’s data highlights how these obligations are stretching national resources as the naira’s devaluation continues to impact debt repayment in dollar terms.
Rising State Debt Levels Add Pressure
The federal government’s debt challenges are mirrored by state governments, whose collective debt rose to N11.47 trillion by June 30, 2024.
Despite allocations from the Federal Accounts Allocation Committee (FAAC) and internally generated revenue (IGR), states remain heavily reliant on federal transfers to meet budgetary demands.
According to the Debt Management Office (DMO), the debt burden for Nigeria’s 36 states and the Federal Capital Territory (FCT) rose by 14.57% from N10.01 trillion in December 2023.
In naira terms, debt rose by 73.46%, from N4.15 trillion to N7.2 trillion, primarily due to the naira’s depreciation from N899.39 to N1,470.19 per dollar within six months. External debt for states and the FCT also increased from $4.61 billion to $4.89 billion during this period.
Further data from BudgIT’s 2024 State of States report illustrates how reliant states are on federal support. The report revealed that 32 states depended on FAAC allocations for at least 55% of their revenue in 2023.
In fact, 14 states relied on FAAC for 70% or more of their revenue. This heavy dependence on federal transfers underscores the vulnerability of states to fluctuations in federal revenue, particularly those tied to oil prices.
The economic challenges facing both the federal and state governments are stark. The combination of mounting foreign debt, fluctuating exchange rates, and high reliance on federally distributed revenue suggests a need for fiscal reforms to bolster revenue generation and reduce vulnerability to external shocks.
With foreign debt obligations continuing to grow, the report emphasizes the urgency for Nigeria to address its debt sustainability to foster long-term economic stability.
National Issues
Rep. Oseni Urges Urgent Action on Rising Building Collapses in Nigeria
Engr. Aderemi Oseni, representing Ibarapa East/Ido Federal Constituency of Oyo State in the House of Representatives, has called for a prompt investigation into the increasing occurrences of building collapses in major cities across Nigeria.
In a motion presented to the House on Wednesday, Oseni expressed deep concern over the alarming frequency of building collapses, emphasising the threat they pose to the lives and property of Nigerians.
The APC lawmaker, through a statement by his media aide, Idowu Ayodele, cited the recent collapse of a two-storey school building at Saint Academy in Busa Buji, Jos, Plateau State, on July 12, 2024. The tragic incident, which trapped 154 people and claimed 22 lives, is the latest in a series of similar disasters, raising serious concerns nationwide.
Oseni also referenced a report from The Punch newspaper, which revealed that Nigeria had recorded 135 building collapse incidents between 2022 and July 2024.
“This figure is alarming and unacceptable,” he stated, stressing the urgency of preventing further occurrences.
The Chairman of the House Committee on Federal Roads Maintenance Agency (FERMA), Oseni reminded the House that the Council for the Regulation of Engineering in Nigeria (COREN) and other relevant professional bodies are responsible for ensuring compliance with building standards and practices.
“Despite these regulatory frameworks, the recurring collapses suggest that enforcement is lacking. The loss of lives, properties, and resources is staggering, and this disturbing trend must be addressed immediately,” he remarked.
He proposed the formation of an Adhoc Committee to investigate the underlying causes of these collapses and recommend both immediate and long-term solutions.
Also, he urged the House Committee on Legislative Compliance to ensure swift implementation of any recommendations.
The House agreed to deliberate on the motion and is expected to present its findings and proposed actions within eight weeks.
National Issues
Corruption Among Political, Religious Leaders Stalls Nation-Building – Olugbon
The Vice-chairman of the Oyo Council of Obas and Chiefs, Oba Francis Olusola Alao, has expressed deep concern over the increasing involvement of religious leaders in material pursuits, accusing them of abandoning their spiritual duties in favour of wealth and influence.
Oba Alao, who is also the Olugbon of Orile Igbon, made this statement during a visit from the leadership of the Cherubim and Seraphim Church Movement “Ayo Ni O,” led by Baba Aladura Prophet Emmanuel Abiodun Alogbo, at his palace in Surulere Local Government on Thursday.
The monarch accused some religious leaders of sharing part of the blame for the moral and political crises that have engulfed the nation. According to him, spiritual leaders, once seen as the moral compass of society, have become compromised by corruption, aligning themselves with the very forces they should condemn.
Oba Alao was unapologetic in his criticism, stating, “Ninety-five percent of Nigerian leaders, both political and religious, are spiritually compromised.”
He argued that this moral decay among clerics has made it impossible for them to hold political leaders accountable or speak the truth to those in power, as their integrity has been eroded by their pursuit of material wealth.
“Carnality has taken over spirituality. Our religious leaders can no longer speak the truth to those in authority because their minds have been corrupted. Most of the so-called General Overseers (G.O.) are corrupt and perverted,” Oba Alao added.
He stressed that this shift towards wealth accumulation at the expense of spiritual values has greatly contributed to the country’s stagnation in development and social justice.
Olugbon urged both religious leaders and traditional rulers to reflect on their actions, reminding them that they would be held accountable for their stewardship, both in this world and the next.
“The prayers of sinners are an abomination before God, hence the need for our leaders to rethink,” he warned.
The monarch concluded by reiterating the transient nature of power and the importance of staying true to sacred duties, regardless of the temptation to indulge in worldly gains. “I am a traditional ruler. I don’t belong, and will never belong, to any occultic groups,” he emphasised, drawing a clear line between his position and the corrupt practices of some leaders.
In response to the Cherubim and Seraphim Church Movement’s request for collaboration on community development projects, Oba Alao assured them of his support.
“Your requests are aimed at the development of the Orile Igbon community. I am assuring you that necessary assistance will be provided in this regard.”
Earlier, Prophet Alogbo requested the monarch’s collaboration on a range of community development projects. These initiatives include the establishment of a women and youth empowerment center, clean drinking water initiatives, a bakery, animal production facilities, and farm produce processing.
Other proposals included a diagnostic and medical center, a full-size recreational sports facility, and a home care facility for the elderly.
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