Fuel Subsidy: Understanding The Situation Like A Primary 5 Pupil

Many people do not understand the politics behind fuel subsidy and it's dangers to the development and growth of Nigeria.

The intention of the government to subsidize petrol was simply to make the product affordable for Nigerians and make life easier. So, the average price of petrol in the world can be as high as N590; however, the Nigerian Government will subsidize the product and fix the price at N185 bringing the total amount of subsidy per liter to N405.

The average consumption of liters of petrol in Nigeria per day is 60 million liters. However, Marketers of the product loads as much as 100 million liters and above per day.

This means the Nigerian Government is expected to pay as much as N405 × 100,000,000 (liters) as subsidy per day to the Marketers of the product to keep prices at N185 for instance. This brings the amounts to N40.5 billion daily and about N1.2 trillion monthly. Kindly take note that this amount can either decrease or increase following prices of petrol on the international market.

So, just try to wrap your head around it and know what Nigeria expends on fuel subsidy alone in a year – obviously some billions of dollars.

Here's the irony of the whole arrangement

1. Petroleum Marketers (major petrol dealers with tank farms) usually divert larger quantity of the subsidized petrol to neighboring countries to resell at the international market price. So, they make the same amount of money the Nigerian Government has paid on the subsidized petrol in the neighboring countries.

2. This makes the product relatively scarce in Nigeria as the left over becomes lower than the daily consumption in the country. The implication is that petrol stations will be selling fairly higher than the fixed price of N185 (some sells N190, N205, N225, N250 and so on depending on the area). And during peak periods of scarcity, which are also engineered by the marketers, Nigerians still buy same subsidized petrol for as high as N400, N500 and even N800 as the case was in the first quarter of this year while sleeping in filling stations. Again, marketers make double.

3. Marketers also import above the daily consumption of 60 million liters as seen above and still force the federal government to pay subsidy on the excesses, which are usually part of what they smuggle to neighboring countries. Again, marketers dupe Nigeria.

4. This entire scenario makes a mess of the good intention of the Nigerian government to make petrol affordable for Nigerians.

5. This scarcity and high cost of the product despite subsidy leads to arbitrary increase in the cost of living. Transportation, for instance, goes up crazily.

Moves to Remove Subsidy & Reactions 

Therefore, successive federal governments, having seen the outright abuse of the subsidy policy, have always tried to cancel the policy so that market forces can determine the cost of petrol. 

More so, the huge amount of money paid into the pockets of Marketers can be channeled to other meaningful venture such as infrastructural development, agriculture, social security, technology, health, etc.

However, whenever the move to remove subsidy is made, the Marketers are quick to shut down their filling stations and deprive Nigerians access to the already subsided fuel in their possession. This leads to instant scarcity regime and hardship (like we are already witnessing).

And while the marketers make more money on one hand, they force and instigate Nigerians against the federal government with the hardship created on the other hand. 

Then, the innocent Nigerians who do not understand the politics behind subsidies go on strike, attacks the government and force her to continue the subsidy regime. We pay more for our ignorance in the long run.
The marketers are happy; they remain the top billionaires in Africa. Everyone loves them, wishes to be like them, and celebrates them. Whereas the federal government counts her losses, takes the insult, bears the bad name and pities uninformed/suffering Nigerians like you and me.

Will you support Tinubu to break this barrier and give us freedom, or you will remain adamant and spread the hate?

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