John Campbell

Africa in Transition

Campbell tracks political and security developments across sub-Saharan Africa.

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Fuel Subsidy Haunts Nigeria — Again

by John Campbell
May 30, 2012

A member of the Nigerian Bar Association holds up a placard to protest a fuel subsidy removal in Lagos January 5, 2012. (Akintunde Akinleye/Courtesy Reuters) A member of the Nigerian Bar Association holds up a placard to protest a fuel subsidy removal in Lagos January 5, 2012. (Akintunde Akinleye/Courtesy Reuters)

According to the Nigerian press, funding for the fuel subsidy has run out, with seven months left in the year. Further, the press quotes the executive secretary of the Major Oil Marketers Association for Nigeria (MOMAN) as saying that the government has made no payment toward the fuel subsidy in 2012. In other words, it is substantially in arrears. Apparently, oil imports have continued, with a spokesman for the Nigeria National Petroleum Corporation (NNPC) stating that there is enough in the country: “But the product will not be for too long and we shouldn’t wait until we have a crisis before we start looking for a solution.” The danger is that imports of petroleum—upon which the country is dependent—will stop. That would lead to fuel shortages in a country in which most goods move by road.

The Ministry of Finance estimated daily fuel consumption at 19 million liters daily. But, according to the press, NNPC says that actual consumption has been 33 million liters. A way out would be for the National Assembly to increase the appropriation for the fuel subsidy. But President Jonathan and Ngozi Okonjo Iweala, the Minister of Finance, have said that their goal is to eliminate the subsidy altogether because of its costs and the distortions it causes in the market.

However, the National Assembly may not be happy. In January, when President Goodluck Jonathan tried to abolish the fuel subsidy, the country faced a general strike. Jonathan backed down, and restored part of the subsidy. But in the aftermath, the House of Representatives established an ad hoc committee to look into the fuel subsidy led by Farouk Lawan. It uncovered massive fraud in the operation of the subsidy, and, according to the press, it calls for the overhaul of NNPC and the Petroleum Product Pricing and Regulatory Agency (PPPRA.) The committee’s report has political traction. For example, lecturers at Ahmadu Bello University in Zaria are calling for President Jonathan to act on the report.

Though Nigeria is one of the world’s larger oil producers, it is dependent on importing gasoline and other petroleum products because of a lack of refining capacity. The fuel subsidy is very popular because it is the only means by which most Nigerians benefit from the country’s petroleum. I am told that civil organizations and trade unions have contingency plans in place for strikes and demonstrations should the government seek to eliminate the fuel subsidy altogether, as it might be tempted to do in light of the current fiscal shortfall. That puts the government between a rock and a hard place, given its apparent shortage of revenue.

Post a Comment 3 Comments

  • Posted by Chavuka

    Nigeria will disintegrate not because she has corrupt leaders or due to tribal rivalries. Nigeria will collapse simply because Nigeria no longer makes sense.

    There is no unifying set of ideals save a desire to share Oil revenue, but Nigeria is rapidly reaching that tipping point where the pressure of rapid population growth renders our large crude oil reserves useless.

    And there is no plan B.

    Everyone, including the opposition is singularly focused on 2015. No one really cares about what happens between now and then.

  • Posted by Moritzstone

    Prosecute fuel subsidy criminals is all we need in naija right now.

  • Posted by Zainab

    I find it incredibly interesting that Ambassador Campbell thinks the House of Reps committee fuel subsidy probe report “has a political traction” and linking that to the call by lecturers at Ahmadu Bello University (ABU) for President Jonathan to act on the report.

    I really don’t understand what the “political traction” is, with a report that most Nigerians actually agree with, even many government officials agree with the findings of the committee and the conclusions/recommendations of the report, despite the so-called “differences/division” between the “Muslim-North” and the “Christian-South”.

    I also am trying to see the “political traction” of a report that fingers fraudulent fuel importers from all parts of the country, hardly laying the blame squarely on one part of the country or a political party exclusively.

    Nigerians are overwhelmingly united over the fuel subsidy issue, primarily our opposition to the removal of fuel subsidies which will only serve to further impoverish ordinary people, while those who have benefited fraudulently from subsidy (those fingered in the report “with a political traction”) are allowed to go scot free with their billions of fraudulently acquired naira,

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