Nzeaka: What fuel price cut proves

By Godwin Nzeakah   |   22 January 2015   |   11:00 pm  

IN various ways and at different times, in the past three and half years, the Jonathan administration has consistently proved as Macaulay and Burke pointed out that being “a contrivance of human wisdom to provide for human wants, the end of government is the happiness of the people.”  Perhaps nothing testifies more eloquently to this today than the unexpected but popular announcement, a few days ago, of an approximately 10% reduction in the pump price of petrol from N97 to N87 per litre.  The domino effect of the reduction on the price mechanism doesn’t need further explanation here.   A cursory look at the history of fuel price increases in Nigeria shows that this is the sixth time a federal government would reduce the pump price of fuel.

   The first time was in 1993 when six days after he indirectly sacked the Shonekan led Interim National Government, installed by the Babangida administration,  Gen. Sani Abacha announced a pump price reduction of N3.25k per litre or about 35% drop from the existing N5 rate he inherited from Shonekan.   Inexplicably, however, Abacha was to raise the same price to N15 per litre or by 361.54% in October of the same year, only to reduce it yet again barely two days later by 26.67% to N11 per litre which Gen. Abdulsalami Abubakar inherited as his successor and later increased by 127.27% to N25 per litre on December 20, 1998.  Before he left office, Abubakar pegged the price of petrol at N20 per litre.  From N20, his successor, Gen. Olusegun Obasanjo upped the price of the commodity by 50% on June 1, 2000 crashing it by 10% to N22 one week later.

  Before he finally left office in 2007, Obasanjo steadily raised the pump price until the figure hit N75 per litre on May 27, 2007.  President Umaru Yar’Adua who succeeded Obasanjo reversed the fuel price mechanism in June 2007 by 15.38% down from N75 per litre to N65.  Before the January, 2012 hike that elicited strong protests especially from pressure groups, including Labour Unions, for about five consecutive years there was no increase in the pump price of petrol.  The current price cut gesture by the government is coming at a time the price of crude oil on the international market is reported to have fallen drastically.  Thus even though professional critics and enemies of the government will certainly read politics into the whole gesture, it clearly stands to reason that this is a goodwill gesture by a responsive and scrupulous government that feels the pulse of the people and it is heart-warming that members of the public have received the government’s symbolic gesture with gratitude.

   For the first time in the history of Nigeria, a government is not only reducing the price of fuel, it has also as a matter of policy in the past two years ploughed back into the economy in very transparent and accountable manner the proceeds of the subsidy it removed from Diesel (AGO), Premium Motor Spirit (PMS) or petrol as well as Household Kerozene (HHK).  This it is doing through an ad hoc but identifiable investment agency – the Subsidy Reinvestment and Empowerment Programme or SURE-P.  What many Nigerians may not know is that at say an average of $90 per barrel of crude oil, a total of about N1.134 trillion subsidy reinvestible fund accrues to the three tiers of government yearly.  Out of this, N478.49 billion accrues to the Federal Government, N411.03 billion to the state governments, N203.23 billion to Local Governments, N9.86 billion to the FCT and N31.37 billion as transfers to derivation and ecology, development of natural resources as well as stabilization fund.  

   This clarification or delineation did not exist before President Jonathan under whose administration the Subsidy Reinvestment and Empowerment Programme, an agency with a board, constituted by the government and charged with various aspects of the Vision 20:2020 is executing many projects with the Federal Governments share of the funds accruing from subsidy discontinuation since January 2012.  Such projects include critical infrastructure like power, roads, transportation, water, railway, aviation, youth and women empowerment, vocational training, health care, etc.  As its name shows, the idea of the subsidy reinvestment scheme being to mitigate or cushion the immediate and long term impacts of subsidy discontinuation on the populace, especially the poor and vulnerable, it was expected that while the Federal Government is working through SURE-P, the States and Local governments should be able to follow suit and develop their own initiatives.  But, sadly, the other two tiers of government have not deemed it fit and proper to plough back their earnings from subsidy discontinuation estimated at a total of N411.03 billion per annum depending on the state of the oil market in any given year.  And this is part of the tragedy of the Nigerian situation where the press which should equally hold all tiers of government accountable appears only fixated about it all at the federal level while states and local government hardly account for what accrues to them yearly not only subsidy discontinuation but also their earnings from the Federation Account.  

   Perhaps the intervention of the SURE-P in the socio-economic transformation of the country has been more visible in the area of infrastructure especially the once comatose railway which has not only been fully revived but also extending to a number of places formerly inaccessible to the corporation.  Another area that has benefited from the subsidy reinvestment gesture is obviously agriculture where the Jonathan administration has revolutionized the sector and rendered attractive to foreign capital.  The result has been increased enthusiasm, increased output, unhindered access to vital inputs like fertilizer and seeds facilitated by an unprecedented e-wallet system enjoyed by over 70% of farmers.  Before now it is on record that only 11% of farmers had real access to fertilizers at subsided rates.  Incidentally a prominent beneficiary of this year’s bounteous harvest that has resulted from the transformation of the agricultural sector by President Goodluck Jonathan is his APC opponent, Gen. Muhammadu Buhari.

   According to press report, to boost the campaign funds of the APC presidential candidate, farmers in Benue State are said to have donated one million tubers of yam to the Buhari campaign organisation and Chief Audu Ogbe, a member of the party’s board of trustees, has been appointed at the head of a committee tasked with selling the yams and transferring the expected proceed of about N5 billion to the Buhari campaign fund.   Certainly, there is no way Benue farmers could have been so charitable or magnanimous as to part with one million tubers of yam if output or productivity had not received a serious boost from Jonathan’s transformation agenda.  A major lesson this incident should teach Nigerians today is that even though the moon may be slow, by day break it has crossed the sky. It is said that Jonathan is weak, he is slow, etc but the race of governance is not for the strong but for the sure.  We are familiar with the fable of the feeble tortoise who outstripped the hare.  Charles Darwin taught the world that it is neither the strongest nor bravest of the species that survives, but the one most responsive to change.  That is why Jonathan has not only been able to weather every storm; he has also been able to excel in uncommon ways.  The unprecedented idea of subsidy reinvestment coupled with effective and sufficient supply and distribution of fuel in the last couple of years only confirms Goodluck Jonathan’s first-rate intelligence.  One of America’s great minds, Francis Scott Fitzgerald, wrote that the test of first-rate intelligence is the ability to hold two opposed ideas in the mind simultaneously and still retain the ability to function.  Evidently Jonathan understands the need for change but he is also not unmindful that man’s dilemma on this earth is that we hate change and love it at the same time and therefore what man really wants is for things to get better or gradual change as realists term it.  Therefore those close to the president should tell him that a thorough-bred horse never looks at the other horses.  It simply concentrates on running the fastest race and ultimately bracing the tape.

• Nzeaka, former Editor of Sunday Punch, writes from Lagos.



You may also like